Automated Lending Processes Enable Better Risk Management in SME Lending in Asia, Advises Experian

24 May, 2010, Singapore - Experian, the global information services company, advised today that automated lending processes using credit information more commonly found in consumer lending environments will enable lenders to better manage their exposure to risk when lending to SMEs.

SMEs in Asia represent around 99% of businesses, and in some countries like Japan, SMEs make up 99.7% of business. SMEs in Asia account for three-quarters of total employment, one-third of exports, and play a critical role as suppliers to large export manufacturers. As a result, SMEs clearly play a fundamental role in the economy and development of future wealth. 

In many Asian countries, SME bankruptcies and non-performing loans have risen faster than those for larger firms.  

Experian has identified the growth potential of SME lending in Asia, where the use of centralised decision support solutions and scoring techniques enable lenders to automate credit risk decisions, and increase operational efficiencies while reducing bad debt.  

Experian today revealed that the key sources of data for use in SME lending decisions, comprises:  

  • Business demographics: Data about the industry group, age of business, number of employees, legal structure, turnover, etc. 
  • Credit or public record information: Accessing information shared through credit bureaux. A dynamic feed of information showing an entity’s payment performance history with other lenders and suppliers can provide more robust and predictive coverage of SMEs. 
  • Financial data: Current assets, current liabilities, total assets and liabilities, working capital, revenue, profit, net worth… to measure liquidity and profitability. 
  • Data on the principals of business: Research has shown that in very small and newly established businesses, future credit performance of the business is strongly reflected by the past credit performance of its principals. Where a business already exits and credit performance information is available, blending this with consumer credit information on the principals can add significant value to the credit risk assessment. 

Manu Panda, Managing Director, Experian Decision Analytics, Asia Pacific said: “By blending internal and external customer data, and automating decisions where possible, lenders are able to improve the quality of risk based decisions, reduce the cost to serve and improving the speed and consistency of decision making. It can also help to ensure that viable smaller businesses continue to have access to the financial services they need to play a fundamental role in the national economy and development of future wealth.”

About Experian’s Decision Analytics division
Decision Analytics is the international division of Experian specialising in providing credit risk and fraud management consulting services and products. For more than 30 years, it has developed its best practice analytical, consulting and product capabilities to support organizations to manage and optimise risk; prevent, detect and reduce fraud; meet regulatory obligations; and gain operational efficiencies throughout the customer relationship. With clients in more than 60 countries and offices in more than 30, the Decision Analytics division of Experian delivers experience and expertise developed from working with national and international organisations around the world across a wide range of industries and business size.

Margaret Lam
VP of Marketing, Asia Pacific
Tel: +852 2839 5276
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