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
1 founder et 4 parteners 2 locations 15 th With more 50 years BI experiences 1 continent anniversary In Europe , Africa, USA et Asie International partner network +20 consultants ( Paris , London , DRC , Kenya, Uganda, Morocco) missions achieved in 6 countries différents 50 achieved projects for more 15 clients Over 3 continents
Providing impact to the largest players with the state of Art technology Technology Trusted by the top global players 4
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. Source : Eric Lamarque, Finance Contrôle Stratégie Volume 2, N° 2, juin 1999 The model of mobile phone penetration in Kenya: Fixed Telephone Mobile Phone VS Penetration in Lines in 2015: 2015: 88% 4/1000 inhabitants Source: Communications Authority of Kenya, Annual Report 2015
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 Challenges in terms of: EFFICIENCY QUALITY • Increase staff efficiency • Better service to customers • Decrease operational costs • Accurate reports • Automatisation of processes • Strong audit & monitoring tools • Foster branchless channels • Fraud reduction • • End physical documentation Adapted products
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
Intangibles Results: Financial Results: .The implementation of our solution in your organization will quickly impact . The many available analysis and the aggregation of your different your operating costs which will be significantly reduced because of the databases into a unique one will be elements that can support your efficiencies gains. operations and improve your organizational processes. . On the other hand a better management of your resources to tools which will support you in forecasting future trends will greatly decrease the .Your value chain will be streamlined and the costs incurred to expensive delinquency in your portfolio. and inefficient support activities will be greatly reduced. .The combination of those factors will have a direct impact on your income ( trends shown on the graph are estimated on an annual basis).
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 An efficient Portfolio Management credit scoring tool based & Monitoring tool. on alternative data.
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
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