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Financial Risk Management

Financial Risk Management

This network brings together professionals involved in the oversight and management of their company's financial risks and exposures as well as solution vendors, in order to discuss risk issues including interest rate risk, foreign exchange risk and commodity price risk, among others.

Flying on the Wings of Curiosity in the Sky of Prosperity

30 March 2012  |  2845 views  |  1

Flying on the Wings of Curiosity in the Sky of Prosperity… What Determines a Credit Bureau’s Success

As published today by The National Association of Credit Managers, the Credit Manager’s Index is now at the highest level seen in over a year. The “New credit application” index has grown from 59.5 up to 60.4 this month.

The global economy is recovering and the flow of credit applications is increasing. As a result, the challenges of credit reference bureaus must rise above the interchange of credit information.

Financial management professionals require more advanced services: application processing and loan servicing capabilities, identity fraud prevention, and more. The need for these advanced services arises because financial institutions strive to streamline their workflow and ensure the most accurate decisions.

Data aggregation services are essential not only for client origination. Also, monitoring payment patterns significantly adds value to credit reference services. For instance, in 2011, consumers were more likely to pay their auto loans before their credit cards and mortgages, according to TransUnion's Payment Hierarchy study. Over one third of those consumers with delinquency were delinquent on a mortgage while current on their auto loans and credit cards. Information on divergence in payment patterns in this case would have been of value for lenders in each of those sectors.

Satisfying informational needs of the subscribers is a core function of any credit reference institution, but providing fragments of information is not enough. To succeed in today’s market, credit bureaus must implement a robust framework that will allow subscribers to maintain the complete profiles of the borrowers.

TagsCardsRisk & regulation

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 03 April, 2012, 15:57

Although contrary to typical personal PFM advice to pay down mortgages ahead of any other debt, the results of the TransUnion Payment Hierarchy study make perfect sense in a real world: If they get booted out of their homes, they need their cars to get somewhere and their credit cards to survive the trip! 

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