Reports and Analytics

1. 1
•The existing data reporting and analytics system relies on the CBS for both live transactional reports and more extensive reporting
and analysis.
•There is a lack of a dedicated data warehouse (DW) for aggregating data from the CBS, hindering the efficiency of analytics
processes.
Condition
• • Lack of Dedicated Analytics Infrastructure: The absence of a dedicated data warehouse for analytics indicates a gap in the
SACCO's infrastructure, preventing the efficient aggregation and utilization of data for reporting and analysis.
• • Absence of Aggregation Strategy: The SACCO may lack a comprehensive strategy for aggregating and managing data for
reporting and analytics, contributing to the current inefficiencies in the process.
Cause
•Ideal is to have a separate data warehouse (DW) for the Analytics to aggregate data from the CBS and pool into this for further
reporting and analysis.
•Only live transactional reports would pick data from the CBS directly and all other reports and analytics will be done using
aggregated data stored in DW – updated on EOD each day.
•This will enable some non-CBS external source data (such as BNR rates etc.,) could be stored in the DW and used for the analytics
/ reports.
•All pre-defined Analytic / Financial / Regulatory Reports are generally run in the night post EOD and published to the dashboard
of each user as appropriate.
•The process to develop the same would be to o List the reports / analytics and its content. o Determine the best aggregation
plan for the data to meet all reporting and analytic requirements as identified. o Set up data cubes accordingly. o Set up the
system and process of aggregation of data to the DW. o Standard reports to be produced from this after EOD. o Ad hoc analysis
reports are also to be enabled in this.
Recommen-
dation
•To be executed following a discussion to assess development effort and related CAPEX for the DWH build.
•To be defined during the combined bootcamp between Development team and Business team
Business
Team
Comments
Current Scenario

2. 2
Gather Information
Collect relevant data about the
member, including personal
information, financial history,
employment status, income
level, and any existing loans or
credit facilities they have with
the SACCO.
Assess Credit History
Review the member's credit
history within the SACCO,
including their repayment
behavior, outstanding debts,
and any defaults or
delinquencies.
Analyze Financial Position
Evaluate the member's
financial stability by assessing
their income sources, assets,
liabilities, savings, and
investments. Consider factors
such as debt-to-income ratio
and liquidity.
Evaluate Risk Tolerance
Determine the member's risk
tolerance level by
understanding their willingness
and ability to take on financial
risks. This can be assessed
through discussions,
questionnaires, or surveys.
Consider External Factors
Consider external factors that
may impact the member's
financial situation, such as
economic conditions, industry
trends, and regulatory
changes.
Assess Stability and Reliability
Evaluate the member's stability
and reliability based on factors
like employment tenure,
consistency in income, and
overall financial discipline.
Review Behavioral Patterns
Analyze the member's behavior
regarding financial decisions,
spending habits, savings
patterns, and previous
interactions with the SACCO.
Assign Risk Rating
Based on the collected
information and analysis, assign
a risk rating to the member.
This rating can range from low
to high risk or can be
categorized using a numerical
scale.
Document Findings
Document all findings and
assessments in the member's
profile, including the rationale
behind the assigned risk rating.
Monitor and Update
Regularly monitor the
member's financial activities
and update their risk profile as
needed, especially in response
to significant changes in their
financial situation or external
factors.
Implement Risk Mitigation
Strategies
Based on the member's risk
profile, implement appropriate
risk mitigation strategies, such
as adjusting credit limits,
requiring collateral, or offering
financial counseling.
Communicate with the
Member
Communicate the risk
assessment findings and any
resulting actions or
recommendations to the
member in a transparent and
constructive manner.
Process to create a risk profile for a member

3. 3
Parameters used by credit scoring models
Credit History
• This includes factors such as the individual's payment history on
existing credit accounts, the length of credit history, the types of
credit used (such as credit cards, mortgages, or installment loans),
and the amount of available credit being utilized.
Credit Utilization Ratio
• This ratio measures the amount of credit being used relative to the
total credit available. A lower utilization ratio is generally seen as
favorable.
Payment History
• Timely payments on credit accounts are typically viewed positively,
while late payments or defaults can negatively impact credit scores.
Credit Inquiries
• The number of recent inquiries into an individual's credit report can
affect their credit score, with multiple inquiries within a short
period potentially indicating higher risk.
Types of Credit
• Having a mix of different types of credit, such as installment loans
and revolving credit accounts, can positively influence credit scores.

4. 4
Credit Age
• The length of time an individual has held credit accounts can impact their
credit score, with longer credit histories generally being viewed more
favorably.
Public Records
• Bankruptcies, foreclosures, and other negative public records can
significantly lower credit scores.
Debt-to-Income Ratio
• This ratio compares an individual's total monthly debt payments to their
gross monthly income and is used to assess their ability to manage
additional debt.
Employment and Income
• Some credit scoring models may consider an individual's employment
status and income level as factors in determining creditworthiness.
Behavioral Analysis
• Some newer credit scoring mechanisms incorporate behavioral analytics,
analyzing non-traditional data such as social media activity or online
shopping behavior to assess credit risk.
Machine Learning and AI
• Advanced credit scoring models may utilize machine learning algorithms
to analyze vast amounts of data and identify patterns that traditional
scoring methods might miss.
Parameters used by credit scoring models

5. 5
Risk-weighted aggregated approach for marking member loans as NPL
Risk-Weighted Aggregated Approach
• RWAA is a methodology used by financial institutions, including SACCOs, to determine the level of risk associated with their loan portfolios.
• It involves assigning specific risk weights to different categories of loans based on the probability of default and potential loss given default.
•Risk Assessment Process
• SACCOs typically assess various factors to determine the credit risk of member loans. This assessment includes factors such as borrower credit history,
collateral, loan purpose, and economic conditions.
• Based on this assessment, loans are categorized into different risk buckets, such as low risk, moderate risk, and high risk.
Determining Risk Weights
• Once loans are categorized, specific risk weights are assigned to each category based on the probability of default and expected loss.
• For example, low-risk loans might have a risk weight of 20%, moderate-risk loans 50%, and high-risk loans 100%.
Aggregating Risk-Weighted Exposure
• After assigning risk weights to individual loans, the SACCO aggregates the risk-weighted exposure of its entire loan portfolio.
• This involves multiplying the outstanding balance of each loan by its respective risk weight and summing these values across all loans.
Identification of (NPLs)
• Loans are classified as Non-Performing when they meet specific criteria, typically related to overdue payments or failure to meet contractual obligations.
• In the context of RWAA, NPLs are identified within each risk category based on predefined criteria set by the SACCO or regulatory authorities.
Treatment of NPLs
• Once identified, NPLs may be subject to specific provisioning requirements and risk management measures.
• SACCOs may need to set aside provisions to cover potential losses associated with NPLs, thereby safeguarding their financial health.