How Analytics can help MFIs to sustain in the recent Kenya - - PowerPoint PPT Presentation

How Analytics can help MFIs to sustain in the recent Kenya regulations constraints?

MFI ANALYTICS INSIGHT Sidi Yasser El Jasouli , 8th November 2016, Nairobi

• 1. MFI Insight Analytics

2-MFIs Challenges and CAP Rate dilemma 3- Loan portfolio Management 4- Credit Scoring

15th

anniversary

2 locations 1 continent

1 founder et 4 parteners With more 50 years BI experiences In Europe , Africa, USA et Asie

50 achieved

projects for more 15 clients International partner network ( Paris , London , DRC , Kenya, Uganda, Morocco) missions achieved in 6 countries différents Over 3 continents

+20 consultants

4

Technology Trusted by the top global players Providing impact to the largest players with the state of Art technology

Source : Eric Lamarque, Finance Contrôle Stratégie Volume 2, N° 2, juin 1999

Commercial Bank Value Creation Chain: Costly support activities are rarely adapted to emerging markets. Traditional banks business models are too heavy and are not efficient enough. The model of mobile phone penetration in Kenya: Mobile Phone Penetration in 2015: 88% Fixed Telephone Lines in 2015: 4/1000 inhabitants

Source: Communications Authority of Kenya, Annual Report 2015

VS

New technologies in Microfinance:

• Business Intelligence
• Cloud Computing
• Mobile Banking
• Digital Fingerprinting
• Analytics
• SaaS

Reducing operational costs and maintaining a high credit portfolio quality are the key elements to ensure the growth and sustainability of a financial

• institution. The regulators requirements have never been as strong as they

currently are on these questions. Additionally, there are also macroeconomic constraints to overcome in Sub-Saharan African countries, indeed, maturities are shorter and the amounts lent are lower, so it is vital to be as efficient as possible. A clever monitoring that incorporates predictive models for a better credit portfolio management enables the reduction of operational costs and increases performance in terms of productivity. The increasing regulatory reporting requirements of Central Banks and the changing regulations (especially in terms of setting interest rates) require internal audit tools to measure performance, monitor properly delinquency and improve regulatory reporting.

CAP RATE LAW QUALITY EFFICIENCY

• Increase staff efficiency
• Decrease operational costs
• Automatisation of processes
• Foster branchless channels
• End physical documentation
• Better service to customers
• Accurate reports
• Strong audit & monitoring tools
• Fraud reduction
• Adapted products

Challenges in terms of:

An accurate knowledge of your portfolio and the ability to make relevant analysis is necessary to enhance your operations and take strategic decisions.

• Loan Portfolio Performance monitoring
• Balance analysis
• Delinquency per Aging
• Outstanding Balance at Risk
• Concentration Analysis-(region –business)
• Vintage analysis
• Benchmark analysis &Trend analysis
• Per Branch
• Per product
• Per Industry
• Credit Scoring System ( application – Behavioral )
• Write-off and recovery tracking-
• Workflow management

• Agile solutions provide an

insights to all levels of the hierarchy in the organizations

• Better monitoring lets you take

appropriate decisions

• Allows you to make forecasts

through accurate analysis with various granularity levels

.The many available analysis and the aggregation of your different

databases into a unique one will be elements that can support your

• perations and improve your organizational processes.

.Your value chain will be streamlined and the costs incurred to expensive and inefficient support activities will be greatly reduced. .The implementation of our solution in your organization will quickly impact your operating costs which will be significantly reduced because of the efficiencies gains. . On the other hand a better management of your resources to tools which will support you in forecasting future trends will greatly decrease the delinquency in your portfolio. .The combination of those factors will have a direct impact on your income ( trends shown on the graph are estimated on an annual basis).

Intangibles Results: Financial Results:

Challenges:

• It costs the same to manage a

$50 loan than a $1000 loan

• Short life cycle of loans
• Low average amount of loans
• Lack of financial data

The use of an adapted credit scoring tool based

• n alternative data.

An efficient Portfolio Management & Monitoring tool.

Credit Assessment can be done before lending out loans using Financial Data and Alternative Data and such as:

• Demographic Data
• Social Data
• Mobile Data

Risk Assessment Product Offer Score Product Name Overall Risk Suggested Loan Amount Default Probability Suggested Collateral Odds Annuity

• Credit Scoring Tools assists in cleaning

the assets by eliminating borrowers that are not credit worthy and may affect the portfolio delinquency and default probability.

• Fewer calculations are needed for

carrying out data search