Dubai : It's going to be a busy calendar for Zaid Kamhawi, the chief business officer of Emcredit, will be maintaining in the days and weeks ahead. Not without reason either.
It was earlier in the month Emcredit was formally anointed as Dubai's official credit bureau through a decree, thus making it mandatory for all banks and other lenders operating in the emirate to share information on their retail clients' borrowing and payment history.
In one stroke, the decree ensures an individual bank can no longer make the call on whether it should share such information with Emcredit and, through it, with other lenders operating here. All of them with loan exposure in Dubai will now have to, period.
Where Emcredit is concerned, the decree has come as a game changer, and at just about the right time. Fears of a wave of consumer loan defaults, particularly on mortgages, hitting the banking sector may not have come to pass, but the authorities have done well to put in safety mechanisms now and not later.
Emcredit now becomes the de facto depository of credit related data of all residents with a banking history in Dubai. Going forward, Emcredit will even issue credit ratings for each individual, making it less of a hit-and-miss decision where banks are concerned.
Based on this information, it can ensure that a bank will have all of this available whenever an individual walks in seeking a loan. If the said individual does not have an appropriate track record, the alarm bells will start ringing at the bank based on the Emcredit data.
When Kamhawi sat down to talk about Emcredit's medium-term priorities, it was with the confidence the hard miles have already been put in and it will be smooth running from now on.
Gulf News: What changes at Emcredit in the wake of the decree confirming it as Dubai's official credit bureau?
Zaid Kamhawi: At the operational level, it places clear rights and obligations on the part of banks and other lending institutions in Dubai to provide Emcredit with data about their clients and how they have behaved in their payments. The decree applies to each licensed lender operating in Dubai and that's already quite a substantial base.
On our part, making us the official credit bureau for Dubai places additional layers of responsibility in the way we handle — and protect — vital data. By making it inclusive for all lenders, it lessens the future risk the banking sector assumes in dealing with any future loan applicant.
At the strategic level, nothing much has changed. Emcredit is committed to building itself into a world-class credit bureau. If anything, the decree would accelerate the process for us.
What about your internal processes? Don't they require a serious upgrade to handle all of the new client partnerships that come with the decree?
If we are talking about our legal infrastructure, there were already certain elements in place such as our own code of conduct on how we handle the credit-related data on behalf of clients. We were also a signatory to the Data Protection Law regulated by the Dubai International Financial Centre.
Well before the decree came in, it was clear there was a need for a credit bureau to work closely with the whole of the banking sector. Whatever happened during the recent downturn made this need all the more urgent.
Now, by being able to access to all of the available data on consumer loans from all sources through a credit bureau, a new comfort zone has been created for banks.
Obviously, armed with the decree you will be looking to reaching maximum coverage in the shortest timeframe. Right?
We have a 30 per cent coverage of the consumer credit data available in the market, and our priority in the next 12 months is to take it past the 80 per cent mark. The top 10 or 12 banks here account for 80 per cent of the credit transactions, so it's a given we will be working to get them on board. Presently we have six banking clients of which two are among the top 10.
Banks recognise the need to share data with each other and we can play the role of a medium to perfection. We have the tools to do it.
If all of this data is available to us and then on to other lending institutions, it builds up to a substantial base for banks to arrive at informed decisions on how an individual is likely to behave in future on his loans.
How soon would that be?
It's not as simple as it may sound, we have our work cut out. A lot of detail needs to be mapped out as we do not take on all of the information that's with a bank. The information made available should subscribe to a certain quality that we can be comfortable with.
The larger banks operate multiple back-end systems and it would then take longer to consolidate data. But on average we are sure this process would take between two to three months.
Even with all of this, there is no guarantee of making a loan approval process 100 per cent foolproof, is there?
No, there never can be. But there will be stability for the financial services sector through accessing the data from a credit bureau. This is factual information on an individual's borrowings and liabilities, total credit exposure and how he has behaved in meeting his loan obligations.
A bank will then have a pretty good idea on whether it should sign up with that individual or forego the opportunity. We are talking of banks future-proofing their credit assessment practices that would hold up well during the good times… and bad.
But on your own is there something on the cards that would better help your clients?
A credit rating score is what we do not offer right now, but will do so once we get our credit coverage beyond 80 per cent. We are talking about a year from now when we will be in a position to come out with scores.
It's something all credit bureaus should be in a position to offer. By attaching a score to each individual we have on our data base, we simplify a bank's decision-making process when it comes to approve a loan or not.
Any heavy investment you foresee on the tech side of things for your data centre?
The data centre is maintained in-house (Emcredit has its offices in DIFC) and is fully secured. In fact, the centre is run separate from the IT needs for the rest of the office. A lot of emphasis has gone into making it as state-of-the-art as possible.
Emcredit is wholly-owned by Dubai's Department of Economic Development. Is the shareholder structure likely to change?
As of today, there is no change in the ownership structure.
The UAE Ministry of Finance is studying the feasibility for a federal credit bureau. How do you view that?
As I see it, we have our hands full with all that we need to achieve in Dubai in the next few months and more. There is a lot we can, and will, do.
‘It is not an overnight process’
Dubai : As Emcredit's chief business officer, Zaid Kamhawi has built on a track record of more than ten years within the banking and financial services sector in the Gulf.
This includes being a management consultant to the likes of Peppers & Rogers Group specialising in collections and credit.
Part of the launch team at Emcredit, which went live with its operations in January 2006, Kamhawi's primary role is to promote the company's credit information products and solutions to the financial services industry.
With the recent decree by Dubai confirming Emcredit as its official credit information bureau, it figures that his tasks may have got just a tad easier.
Kamhawi does not quite see it that way. "I have my work cut out and the kind of transformation we seek to bring out is not an overnight process. It requires diligence and mapping out a lot of the processes in fine detail."
Public sector clientele
It's not just the banks and financial institutions that find merit in signing up for Emcredit's portfolio of services. Many of Dubai's leading public sector agencies are already among the company's clientele, including the Land Department, the Real Estate Regulatory Authority, Dubai e-Government and Dubai Police. Another notable name is Abu Dhabi's Department of Economic Development.
As of now, Emcredit holds a 30 per cent coverage of credit-related banking data in Dubai. This works out to nine mullion consumer identification records, 900,000 commercial subjects and nearly 400,000 credit subjects.
— M.N.
