Home Credit advances with digital technology

When receiving a loan application, how does Home Credit verify its customer information?

Customers usually go to our points-of-sale at consumer goods stores or motorbike dealerships to register for an installment loan.

The customer needs to provide us their personal information, like an identity card, phone number, and employment. We also take information about the items they bought, as well as their purchasing history at the store.

Our system then will check other information sources, including external databases and the Credit Information Centre under the State Bank of Vietnam, which stores the credit history of all customers in the past five years. From all of the information gathered, our system will generate a score for that customer.

Depending on the score, we will decide the next step. We can do a quick approval, or call the client, their referenced contacts, or their employer before giving a final decision. The result will be sent to the sales agent with the customer.

All of the above is done within a few minutes and is completely automatic. Ninety five per cent of Home Credit Vietnam's customers receive results within 15 minutes, at an average of five minutes per person.

Although Home Credit Vietnam receives thousands of loan applications everyday, thanks to the outstanding internal scoring system, we can make decisions in just a few minutes. Customers are satisfied with that.

How can your company make a quick loan decision and at the same time maintain low risk levels?

We have transferred the credit rating system from our mother company in the Czech Republic. The automatic rating system was developed for many years by foreign experts and then adapted to each country where Home Credit has operations.

In Vietnam, it has been applied and improved continuously to fit with the market's new developments. This is a valuable asset that not all finance companies have because it takes many years to develop. In addition, we have implemented a project called Big Data, which is a database of credit information for our individual customers. That helps us to judge credit risk before lending to a customer.

Also, Home Credit is the worldwide leader in managing risk in the consumer finance market. Risk management tools used by us are developed by the mother company based on many years of experience in emerging markets. However, the final set of credit and collection policies for Home Credit Vietnam are tailor-made according to the country's specific needs and practices. I'm proud that we always keep our non-performing loans ratio under 4 per cent. Compared to the international standard, this level is relatively low for the consumer lending industry.

How does Home Credit utilise the databases of social media sites like Facebook?

Data on social media is a huge and useful information source which we can utilise to develop our business. In fact, in other countries Home Credit is researching the ability to integrate the information of customers on Facebook into the underwriting process. The more information about customers we have, the less time we need to make a loan decision.

For example, Home Credit Philippines has started to use Facebook data in a pilot test in the first quarter of 2015, to prove that this data can be beneficial for the underwriting process. The point of pilot testing is to check which data collected on the application form can be verified using Facebook.

They made some findings which are important for risk management, for example that they were able to find 77 per cent of customers on Facebook. They also matched Facebook and loan application photos, and names on Facebook and those used on applications.

Home Credit Vietnam will soon apply these findings into our business.

Source: Vietnam Investment Review