Consumer CreditScore Philippines (CCS) is rising to the challenge of bringing more Filipinos into the financial fold by introducing credit scores.
An analytics services company, CCS seeks to model the Philippine credit data into a credit scoring system based on America's FICO Score, the universal credit score used by credit bureaus in over 25 countries, which has led to better decisions that drove higher levels of growth, profitability and customer satisfaction.
The development comes on the heels of initiatives from the Bangko Sentral ng Pilipinas (BSP) encouraging financial institutions such as banks and other microfinancing entities to liberalize lending channels.
Rated one of the best central banks in the world, the BSP is aiming to achieve broader financial inclusion and spur economic activity.
Nestor Espenilla Jr. placed this at the top of his long to-do list following his appointment as BSP governor in May 2017, explaining that a "good robust banking system" was simply not enough in order to better serve the general public.
“The banking system is there and anyone and everyone must be able to use those services in a way that is affordable and efficient for them," said Espenilla. "If I were to summarize it: nobody gets left behind."
Two years ago, the BSP implemented a series of policies to stimulate financial access and democratize lending. BSP Circular 908, cited in the central bank's Financial Inclusion Initiative 2016 report, said that today's financing climate provides lending opportunities to agricultural and fisheries sectors.
There has been progress since. A 2017 report from the Brookings Institution says the Philippines ranks among Asia's leaders in financial inclusion following the reformative policies.
“Circulars that enhanced regulations for pawnshops and remittance agents that facilitate access to basic financial services allowed banks to use third-party cash agents and help expand access to financial services,” read the Brookings report.
Yet many Filipinos still have not been able to take advantage of these developments. Money is there for the borrowing, but few have access to it. There is so much more that needs to be done.
"Aside from the push for financial literacy, lending institutions are encouraged to lend money to the public," said Rene Buenaventura, Chairman of the Board of CCS Philippines. "But effectiveness will only go as far as the money being borrowed on reasonable terms."
The introduction of Credit Scores, the one CCS will introduce in the local market, is the panacea to bridge that gap.
These Credit Scores will level the playing field, eventually allowing people from all walks of life to borrow money on equitable conditions, especially if they have good credit profile.
CCS is working with FICO in the provision of a comprehensive credit scoring platform that can be tapped by various financial and non-financial institution in helping them reach a wide variety of customer segments in the Philippines (banked and unbanked segment). FICO, through their Financial Inclusion Initiative, is a strong proponent of financial inclusion both in the Philippines and around the world.
FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. The company inspires millions of people manage their personal credit health.
It has established offices around the world serving industries including financial services, health care, insurance, automotive, public sector, retail, pharmaceuticals, telecommunications, travel and hospitality, media and entertainment, high tech, and utilities. In the US alone, FICO scores are used in over 90 percent of US consumer lending decisions.
For the majority of Filipinos with no measurable credit history, CCS is developing an alternative credit scoring system using telco and utilities data.
"The simple equation is that people with access to money, will spend it. The availability of credit scores to facilitate responsible lending spurs consumerism and perks up the economy, " said Klaas van Wyk de Vries, CCS Chief Operating Officer.
Financial inclusion is an important strategy for overall growth of a country, economists all over the world agree. It empowers the poor to manage finances and reduce vulnerability to financial distress, debt and poverty.
It was not coincidence that the largest expansion of prosperity was seen in the United States from 1993 and 2000 when lenders began using FICO Scores to make fast, unbiased and responsible credit decisions – a scenario that CCS knows can be replicated in the Philippines.
Interested parties may check out Consumer CreditScore Philippines by visiting www.ccs-ph.com
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