Interview with Ahmad Amoudi General Manager, CRIF Jordan
How did the establishment of a Credit Bureau by CRIF come about?
In 2010 the Credit Bureau Law was passed by Parliament in Jordan. A year later, a bylaw required an operator to own 51% of the bureau. It had to be a foreign company with experience in the sector. CRIF participated in the tender, was selected in May 2015, and licensed in December of the same year by the CBJ.
After we created the infrastructure required to operate, we signed contracts with banks that started working on the technical development of data. Nineteen of the 25 banks in Jordan contributed towards this data. Once we received the data, we launched; that was in October 2016, and by February of the following year, all 25 banks were contributing data to the Credit Bureau. Through the participation of all 25 banks, we are able to pull all information on any subject from the database.
Phase two was then put into swing: this was to get micro-financers, credit card issuers, leasing companies, financial institutions, insurers, the Amman Stock Exchange and telecommunications companies on board. All these entities also provide credit, so we needed their participation.
What is important about us is that we ensure stricter transparency all round. Now all these companies can fully analyse any client before granting credit. This was where our true value was understood.
How do you contribute to minimising risk and still increase inclusion?
The fact that some people aren’t bankable does not necessarily mean that they are high risk. Not bankable means that they don’t have all the documents that a bank requires. From first-hand experience, some of these clients obtain loans from micro-financers at interest rates of 30-40%. They are, nevertheless, committed to repaying these costly loans. They don’t keep financial statements, but they do have viable businesses and they do make their payments.
By providing transparency about the section of the population or business sector that is not bankable now, do you ensure that they become bankable in the future?
The CBJ receives subsidised funds so that banks can lend to SMEs at lower interest rates. The Jordan Loan Guarantee Corporation (JLGC) is offering loans to start-ups and micro-entrepreneurs. We come in as CRIF and say that we can show their history. Funds are then channelled to the clients by the CBJ at the subsidised rate. Working together, we want to support and encourage SMEs to grow and allow the economy to grow. We are counting on the fact that this ecosystem can work to the benefit of the economy. There is risk; however, we are offering the tools for all the parties involved to become stronger.
“What is important about us is that
we ensure stricter transparency all round. Now companies can fully analyse any client before granting credit.”
The financial sector here has worked conservatively to ensure sustainability, but that means only around 25% of people have access to finance in Jordan. Does CRIF help banks work with more people and companies?
In Jordan we have always drawn the line at a certain level of risk. In this we are different from the US, for example. The risks we analyse relate to whether an entity will make it in the economy. We’re focused on SMEs to help create employment, increase the GDP, and invest in productive companies. These risks are necessary, but they are always calculated. We won’t simply sign off on loans of 60-70%, unless they are guaranteed to represent a return on investment. Banks must feel confident and secure about re-payment, but before our establishment banks were excluding lenders who didn’t have collateral. Now, with CRIF, they have different indicators to consider, based on collateral, cash and reputation. We provide tools for the banks to use at their own discretion.
The service that we offer is supervised, regulated and heavily influenced by the CBJ. Risk assessment must come from trustworthy sources and must constantly be updated. What we’ve seen is that all parties must be engaged, as a national strategy, with everyone working together. The CBJ must allow banks to relax their regulations, but simultaneously to protect their assets.
The Credit Bureau has started a re-payment culture. CRIF plays a key role in ensuring compliance with, for example, payments being made on time. Clients become more compliant and banks feel safer when extending services. We create benefits at the level of the lender, of the economy, and of society.
How do you assist the different sectors of the Jordanian economy, outside banking?
Engaging the whole banking sector in less than one year is a great achievement. We have very good data on a large number of people and corporations, and the banks, as our collaborators, can rely on our information to make important decisions.
We’ve engaged with 15 companies from sectors other than banking and are working to get more companies on the database. We prepare full reports and do full due diligence on them.
In 2018, we hope to provide companies with every tool they need to make informed decisions about applications. Usually obtaining a credit card means a lot of red tape and can take up to ten days; now we will provide direct credit scores, which means that within two hours you could get a credit card. We are offering tools based on global best practices to make credit-granting easier, quicker and safer. We allow our clients to be pro-active in monitoring their clients. We are furthermore planning to establish a Legal Entity Identifier. This ID means that a Jordanian could do business overseas, since foreign companies that look him up can access his information.
This is using blockchain technology to simultaneously allow for ease of business abroad and protect against fraud. We look at what information pertains to risk assessment using a technology called SkyMinder.
We are not only allowing for consolidation and transparency; we are seeing the entire banking sector become even healthier. Jordan is working hard to make its investment culture attractive, to stabilise its economy and entice investors here. We aren’t only a credit bureau; we offer many different services. CRIF may be a private company, but we are having a national impact