In a congested retail banking market in Lebanon,
CreditBank is trying to stay ahead of its competition by upping its
investment in risk analysis. CreditBank’s deputy general manager
for retail operations, Elie Khoury, and head of retail operations,
Hanadi Saad, discuss the bank’s retail priorities with Meghna
Mukerjee
Go deeper with GlobalData
The retail banking market in Lebanon is crowded and the
population is overbanked. Banks have surplus cash, an oddity in
today’s depressed worldwide economy. But corporate and commercial
transactions are limited, leaving lenders to focus heavily on the
retail side of their operations; and they face a big challenge to
differentiate themselves.
Lebanese lender CreditBank – though
not one of the largest three banks in Lebanon – is taking a
multi-pronged approach to try and move ahead of its rivals.
With the aim of accelerating growth
while controlling risk, CreditBank has implemented the Capstone
Decision Accelerator software by FICO, provider of analytics and
decision management technology.
CreditBank is using FICO’s Capstone Decision Accelerator for
originations, and custom predictive analytics for auto loans,
personal loans and credit cards. CreditBank bought the FICO
software in June 2010.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataEarly results from the
implementation of the software include a 50% reduction in manual
underwriting. The adoption of FICO solutions was essential to
“control the growth and profit” for retail banking, says Elie
Khoury, CreditBank’s deputy general manager for retail
operations.
He told RBI: “We have
previous experience in working with retail banks in Lebanon and we
have seen what happens if you work without having the controls in
place.
“We needed to have systems and
analytical scorecards that would help us mange the risk on a
long-term basis.
“FICO provided us with an engine,
which is smart, intelligent, and flexible, and provides the
scorecard that will help us monitor and fine-tune the risk of the
retail division.”
According to Khoury, a major
difference after the implementation of the FICO solutions is that
CreditBank has now “shifted from having a system within a man to a
man within a system”.
“From manual underwriting to
automated decision-making that is consistent and objective – that
is crucial for us,” adds Khoury.
Head of retail operations Hanadi
Saad agrees.
Saad says: “We want to have all our
strategies captured into one system and come up with automated
decisions so that no one can influence the decision-making process.
At a later stage we can infuse the decision-making process into all
the bank’s networks.”
The cross-selling ability that the
FICO solutions can provide CreditBank is also advantageous, says
Khoury, as “cross-selling is very important in a competitive
market”.
There are many challenges in the
retail banking market in Lebanon that arise only due to its
competitive nature, says Khoury.
“It is a population of over 4m
people and there are now 62 banks,” he says.
But the biggest challenge is the
lack of a centralised credit bureau, says Khoury.
“It’s a bit of a jungle. And in
that jungle you really need a centralised credit bureau,” he says.
“The key issue is you can’t breathe in an overcrowded,
over-competitive market with primitive tools or manual
underwriting.
“You need to get ahead of
competitors and understand the portfolio, interact with your
customer on a one-to-one basis, and offer them the right product at
the right price.”
Implementing the FICO solution will
help CreditBank grow its portfolio “in a healthy manner in an
unhealthy environment” as it is “very important how we manage risk,
understand risk, monitor risk and interact with that risk”, says
Khoury.
Khoury says he looks at other banks
in Lebanon – especially the biggest three lenders – as “elephants
in a China store”.
Hanaadi adds that another trend
among Lebanese banks is to simplify the eligibility requirements
for a retail customer.
“When you have a retail customer,
usually there are some documents that are required from the
customers,” she says.
CreditBank is looking at a further
segmentation of its retail portfolio within a scoreband to be able
to “give a better product offering” to customers.
CreditBank is also planning to
launch a new retail housing product specifically for professionals
who are looking to invest in an office or business space.
“We are talking about specialised
industries like doctors, lawyers that would like to finance the
purchase of a business office. We are looking at that right now,”
says Khoury.
The bank already has specialty lending products to assist
customers with funding weddings and to purchase jewellery.
Mobile banking launch
CreditBank is also planning the launch of its mobile banking
channel.
“We are in the phase of
implementing the m-banking solution. We are testing it right now,”
says Khoury.
With mobile banking, CreditBank
will try to grow its share of the youth segment of the market, but
remains committed to the branch channel.
“The older generation would still
like to go to the branch, say hello to the teller, wave at the
branch manager and have a cup of tea,” says Khoury.
CreditBank has 17 branches across
Lebanon. Though CreditBank has plans to expand its branch network,
opening new branches is subject to the approval of the Central Bank
of Lebanon. The regulator does not allow banks to open more than
two new branches a year, informs Khoury.
“So our growth is limited by
regulatory directions from the central bank,” he says.
CreditBank is currently in
discussion with FICO to implement another solution for the backend
of the business.
“FICO has a solution called debt
manager but that will come to enhance our risk management practice
at the collection side,” says Khoury.
CreditBank is also exploring the
option of launching itself across social media platforms in the
coming months.
Jack Shepherd, client partner at
FICO, sums up the project succinctly.
“It is a very competitive
marketplace in Lebanon. CreditBank is a small bank but they are one
of the faster growing ones. We have provided them with scorecards
to use on their loan portfolio, credit cards and other standard
retail products,” says Shepherd.
“We have provided them with our decision engine business
accelerator. Here the big thing we provide them with is
expertise.”
