Tuesday, July 19 2011 12:06
ACRA: Towards coverage of new market segments by scoring
ArmInfo. Interview of Executive Director of ACRA Credit Bureau Artak Arzoyan with ArmInfo News Agency
Mr.Arzoyan, in 2011 ACRA finally introduced a scoring system, at which it has been working for three years. What kind of characteristics has it got? How much efficient is the system in the current economic conditions of Armenia?
ACRA's scoring system has been quite efficient since Apr 2011. ACRA's scoring system is based on two types of scoring: descriptive and prognostic. The first one describes current credit history in figures while the second one makes projections. The average scoring rate on Armenia's credit market ranges within 700-750 scores, with the maximum level being 800 scores. The above-mentioned figures prove that the loan book of our banking system is of rather high quality. We can observe positive macro-economic trends. They are galvanizing the credit market in its transition from the crisis to a new growth.
How do you assess the current level of risk management in the consumer crediting market?
The local banks and credit companies have renewed their approaches in assessing risks and are now able to assess them more accurately. The best example is the overdraft mechanism, already allowing banks to issue loans equivalent to a borrower's three and even four salaries. It is noteworthy that alongside with activation of consumer crediting, the average amount of one consumer loan has also increased. In particular, in 2011 this index has grown by 20% as compared to 2010. The loan amount growth can be explained by the inflation in consumer market. But the key reason is that the banks have gradually started displaying a liberal approach by basing on new risk management mechanisms.
Mr.Arzoyan, what can you say about the credit market coverage in Armenia according to ACRA's data, and how many loans fall on one borrower?
The lending activity in Armenia is quite high. Almost 44% of the population use credit services with an average of 2-3 loans issued per borrower. This is a good index for the time being.
Mr.Arzoyan, throughout the world not only the financial and credit companies and individuals make use of scoring services, but also enterprises of various fields. What is the situation like in Armenia?
I'd like to point out that today not only banks and credit companies but also individuals can inquire of their scoring rates on-line if they have a login and password and have paid for the service by means of a virtual card, ArCA or MasterCard. We are planning to simply this procedure: as soon as we solve certain technical problems with the ArCa processing center, our customers will no longer have to go to the office to get a login and password and will be able to get a score on-line on the basis of e-commerce and passport data identification.
The scoring spectrum in various countries includes such products as assessment of the borrowers' solvency, for instance, concerning utility payments. In Armenia only your bureau gives all the main characteristics of the borrowers. Is not it hard for ACRA to develop the market all by itself? What do you think of creation of certain specialized bureaus in Armenia?
In this issue the territory and number of population of the country matter. I think that one credit bureau is still enough for Armenia. As regards the types of scoring, today we have a wide range of services: scores concerning plastic cards, mortgage crediting and other consumer loans. In mid 2012 ACRA is planning to introduce new products concerning utility payments and for this purpose is collecting necessary information from relevant structures.
The Government's stimulating policy has allowed us to start active negotiations with agencies operating in telecoms and housing and public utilities. When assessing a credit history and forming a score sheet, ACRA uses the data provided by not only banks and credit companies but also companies like ArmRusgasprom, Armenian Water & Sewerage and Yerevan Jour.
The negotiations with ArmenTel will be finished in a few days. The talks with the other two operators - VivaCell-MTS and Orange Armenia - will be started shortly. Their data will allow us to create new types of products. As you see, we are dynamically developing our services and by mid 2012 we will have a package fully meeting the requirements of modern industry.
What investments is ACRA Credit Bureau going to make for its further development?
The ACRA Credit Bureau expects 70mln-80mln AMD operating profit in 2011 against 50.6mln AMD in 2010. The growth will be due to active flow of credit reports. The profit will be spent on technological improvements. We are developing due to our serious and secure platform meeting the needs of banks and credit companies.
Thanks.
By Lilit Aslanyan
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