Determining the best approach to implement CCR for your organisation
The benefits of Comprehensive Credit Reporting (CCR) are well known. Most credit providers are convinced it will change their businesses for the better.
Enthusiasm has also picked up in the last month to begin the transition to CCR sooner rather later. This is due to the Office of the Australian Information Commissioner (OAIC) decision that has removed one of the biggest roadblocks stifling uptake of CCR over the past 12 months.
But for all its benefits, it’s a big job that will affect changes to systems, bureau scores, internal scorecards, refer rules, refer reasons, refer queues, overrides and more. This leaves many Credit Providers asking
“Where should we start?”
First and foremost, you will need to get buy-in across the business. It’s important the credit scores on which decisions are made remain stable throughout the CCR transition.
Below are three approaches which describe the options open to you when beginning the transition to CCR:
1) The “Infrastructure First” Approach
Suitable for businesses who want to take low-risk early advantage of CCR participation, and test the waters to see how CCR might affect credit decision making. This approach has already been adopted by a number of larger lenders.
“Infrastructure First” is a 2-stage staggered approach. You would continue to use your current logic initially, while upgrading the technology first, and then undertake the analytical conversion later:
- First change your system onto the new Equifax Apply system and schema while maintaining the status quo on the risk side.
Equifax Apply was designed to smooth the volatility caused by data loads during transition.
Here you would continue to use the bureau score you currently deploy to make lending decisions. But since Equifax Apply service allows multiple score provision, you are also able to request Equifax Apply Negative score and begin to internally analyse its utility in your credit management framework.
TIP: This is a “systems” type project, and tends to be run as an IT-led initiative. Be careful to ensure Credit Risk Managers and analysts are involved too, because they know best how the risk characteristics affect decisions in the real world.
2. The next step is to supply data to the bureau and officially introduce comprehensive data and scores as a secondary project, which is run mostly by the risk team.
2) The Traditional “Step by Step” Approach
This approach is for those who just want to dive on in and position themselves quickest to capture market share. Credit providers would look to divide the approach into four manageable project areas:
- Start with CCR data supply – Collect the new data and supply it to the bureau.
- Apply the analytical service PreView to your data. This shows how data and scores would have been different under a comprehensive environment and views the impact of the swap sets and approval rates.
- Change your system to integrate to the new Equifax Apply service.
- Support your upgrade with Portfolio Management Solutions, with Alerts and other solutions, to help complete the credit risk picture.
3) The Traditional Approach, “with a twist”
Similar to the Traditional Step By Step approach, this is about getting some quick wins as soon as possible with Alerts or Batch Portfolio solutions.
The implementation of Equifax Apply can be quite a large project with some complexity whereas an accelerated implementation of relatively low-tech services such as Equifax Alerts, Behavioural or Collection Scores may allow some payback to the CCR journey investment.
- Start with data supply.
- Portfolio Management (Alerts, Collections or Equifax Manage).
- Equifax Apply origination system.