As 2017 draws to a close, we reflect back on the year of credit. Some of the key themes that featured this year for us included:
- Provisioning compliance. IFRS9 was a large focus of many organisations this year with the looming 2018 deadline. Whereas the guidelines recommended that IFRS9 models be in place from FYE 2016/17 and run in parallel with the IAS39, we found that in many cases lenders did not do this and have run impact assessment prior to the deployment of IFRS9 for the FYE 2017/18.
- Collections remained a primary focus for our clients in South Africa yet again in 2017. Whereas the collections space has been almost entirely operational, we’ve seen many collections departments and agencies introduce more analytical advances (right-time-to-call, for example) and collection virtual assistants (Agent-X, for example).
- Machine Learning has arguably been the buzz phrase of the year. Many of our clients are embracing the concept of automating some of their decisioning, but how much automation is too much?
- Finally some old themes re-emerged including how to use randomisation to ensure a true champion/challenger test and what to consider with regard to a multi-bureau strategy. I wrote Blogs on these topics this year.
As we mentioned in our previous post on our Top Machine Learning Blogs for 2017, we are using a different approach this year. Instead of compiling our usual list of Top 10 blog posts, we are tailoring our year’s top blog collections to the blogs you want to read and clustering them by topic.
Today my focus is Credit Risk Solutions.
According to our data, these are the Top Four blogs that you should be reading to stay informed when using data to inform your credit strategy:
The International Accounting Standards Board published IFRS9 Financial Instruments in July 2014, a framework that introduces a number of new principles into bad debt provisioning that would require lenders to change the provisioning methodology and possibly some business practices in order to remain compliant.
It is expected that IFRS9 adoption could lead to a material increase in provisions. The IFRS9 framework and key considerations for retail unsecured lending are described in this high-level overview infographic.
If you’re involved in credit risk and existing customer marketing, you’ll know that random numbers are frequently used when deploying different strategies. As strategies grow more complex and numerous, so the role of the random number grows more important. In this blog post, I’ll cover what randomisation is, why you should do it, when you should do it and what else to consider.
Although not a new concept, very few credit-granting organisations have deployed a true multi-bureau strategy in their organisation. It is, however, talked about fairly regularly, but often dismissed as “too hard” or “not important enough”. So why should you consider a multi-bureau strategy? What are the key considerations? How do you go about deploying a multi-bureau strategy? This blog series will address these questions.
Finally we looked this year at the history of credit in the South African fashion retail sector. Most industries owe their levels of sophistication to visionaries in their space. The South African credit industry is no different. Whilst the bureaux and the banks have played a significant role in developing the South African credit landscape, arguably the fashion retailers have also played a pioneering role in revolving credit. And so our vibrant industry owes much to the role of the fashion retailers. But how did it all begin?
And that brings our year’s wrap-up to a close. Remember, if you aren’t yet IFRS9 compliant, you can reach out to us to see how we can help you build a solid and clear path to compliance before the deadline.