Aggregation of data for consumer empowerment
Aggregation of data for consumer empowerment23 March, 2018 •
We spoke to Billy Owino, CEO of TransUnion Kenya, about the organisation’s strategy of analysing multiple sources of data to better understand consumers and their financial lives.
Tell us about TransUnion’s transition from a credit information bureau to a risk information service and its role as an aggregator of data?
Globally, TransUnion has over 60 years’ investment in technology, and it made the transition from a credit to a risk information bureau some years ago. If you look at our operations in Africa, we acquired Credit Reference Bureau Africa – operating out of Kenya but covering several other African countries – and many of these markets are still operating similarly to “your grandfather’s bureau”. Consumers in these countries typically only associate credit bureaux with negative ratings and blacklisting.
We’ve conducted workshops in Kenya with traditional clients to explain how our work can drive their strategy. The banks are being disrupted by fintechs, but they are often slow in reacting to change. We’ve shown them a view of how they are sitting in the market across every product they have, as well as the behaviour of their customers, and after the first round of engagements we started seeing a change.
As an example, we asked one bank to estimate the percentage of their clients that were accessing mobile loans. Their estimate was 1% of existing clients (they were confident their own loan product sufficed) and we were able to show them that approximately 40% of their clients had a mobile loan! This prompted a strategy discussion around digital lending.
TransUnion has invested heavily in analytics capability in order to offer these solutions to clients. In terms of our Kenyan operation, we are leveraging South African analytics staff quite a lot, but we are also upskilling Kenyans.
TransUnion wants to give individuals a sense of ownership over their own credit data. What else do you think should be done (by financial service providers or regulators) to give people control over their own information?
The Kenyan government is working on new privacy laws, which should be published soon. Questions around data ownership will probably be raised more often as the market matures. We have tried to put consumers’ credit information at their fingertips. Previously, people had to travel to Nairobi for a credit report, but we’ve launched an online platform, and every consumer is entitled to one report annually. Individuals can also access their credit score via our app or an SMS. TransUnion has introduced alerts so that people are informed when an institution checks their profile, when their score has changed or if a loan has been taken using their ID number. The last is important because we’ve seen that with mobile loans, certain cases of fraud are staring to occur.
Globally, we are watching initiatives in the EU regarding open banking and APIs (application programming interfaces). In terms of digital loans and consumer awareness, we’ve seen that consumers often don’t understand the information the app will scrape and so we’ve raised a red flag and suggested more consumer education is required.
There has been concern that easier access to credit (which has been made increasingly possible as fintechs harness alternative data) is leading to increased indebtedness. Has TransUnion noticed increased levels of indebtedness, which it is attributing to revised methods of credit-scoring?
We currently have 8.7 million unique mobile-loan borrowers in our bureau view. This is up from 5.4 million in 2016 – representing 60% year-on-year growth. In the same period, non-performing mobile-loan accounts (NPLs) have increased from 2.6 million to 4.3 million. The mobile NPLs have, however, dropped from 22% in 2016 to 12% of the total mobile-loans market at the end of 2017.
Furthermore, the average number of mobile-loan accounts per person has doubled from two to four in the past year, while the total mobile loan balances have grown from $966 million in 2016 to $1.7 billion in the same period. These figures indicate robust growth in the mobile-loans market.
At TransUnion we’ve started to see loan stacking as nothing stops people from borrowing from multiple providers. In fact, it’s possible to borrow from all the platforms within one hour. Nobody has a view of all the loans an individual has and therefore the number of non-performing loans is likely to rise.
The average ticket size of a mobile loan is $50. Most platforms start by offering loans from KES500 (approximately $5) and build from that. The less-informed consumer may have taken an initial loan out of curiosity and may not be able to pay it back and (s)he then stands the risk of being negatively listed.
Mobile gambling has become a “thing” in Kenya (technology is an enabler, but it also has associated risks). We haven’t found a way to link this directly to mobile loans yet, but it is possible and quite easy to get loans to gamble, and so we assume it is a growing issue. It should be noted that from origination to payment, the average time it takes to get a mobile loan is three minutes – meaning that if I need to place that bet and don’t have the money, I can easily take a mobile loan for it.
Have you noticed a change in the way that your clients approach data collection or seen that they have new objectives regarding data?
We are finding that there are interesting datasets (primary or secondary) and that entities which own the data are increasingly looking to monetise it. As an example, Safaricom has publicised that it has a team looking to monetise the telco and KYC (know-your-customer) data it holds for customers. Organisations are shifting from using primary data for compliance purposes to exploring how they can use data to better profile clients for financial inclusion purposes.
Outside of the credit space, which companies or data initiatives in Kenya are providing interesting insights into the lives of consumers? Could those insights be translated into financial services?
We are watching telcos in this region, and I’m seeing interesting data use by big supermarket chains and their loyalty programmes and by government – particularly the open data initiative driven by the Kenyan government. The farming space is exciting – many NGOs are doing interesting stuff including the UN’s Food and Agriculture Organization, Acre Africa and the MasterCard and Bill & Melinda Gates foundations. Twiga Foods is a company to watch. They’re digitising the data in the agricultural value-chain from harvest to end consumers and are ultimately able to give farmers access to credit based on that data.
As head of TransUnion Kenya, what are your short-to-medium-term priorities?
My priority is to lead the business transformation of TransUnion Kenya from being just a credit reference bureau to a fully-fledged information solutions company. This includes delivering more value to our traditional clients in the financial sector so that they view us as a strategic partner and not just a vendor with an overhead. We have also started the process of enhancing our consumer engagement by putting our solutions at their fingertips. Our mobile service called Nipashe (Swahili for “Inform Me”) does exactly this by allowing consumers access to the information and tools they need to monitor their credit profiles on their phone.
We are constantly looking at initiatives or partners with whom we can work to extend financial inclusion. We already have a rich dataset around credit histories, and we want to drive partnerships with other players that have complementary datasets, so we can build better profiles. A Kenyan parent will always prioritise paying school fees, but when approaching the bank, they might struggle to get a loan because they have no formal credit history – this even though they never defaulted on paying school fees for their now-adult children. What if we could get data on school-fee payers and use that to build credit histories?
A kiosk owner in the village typically gives goods on credit; (s)he has a ledger with details of the clients who purchase items on credit and pay off at the end of the week. Could we pull that data together and enable aggregation of data to empower consumers from a financial inclusion perspective? If we get it right, we will be living up to our promise of information for good.
Billy Owino joined TransUnion in March 2017 as CEO of its Kenyan operation. Prior to joining TransUnion, Billy held a number of senior business development roles in IT and the telecommunications industry. He is passionate about the potential for tech in Africa.