As the aftermath of the Equifax cybersecurity breach unfolds, more companies will face scrutiny of securities-related trading and disclosure issues surrounding cyber incidents. As cloud-based computing, e-commerce, the Internet of Things, and other digital technology expands, hackers will have more and more opportunity to access different networks, so it will become increasingly important to regulators, prosecutors, and courts to learn how insiders behave in the wake of cybersecurity breaches.
Analytics India Magazine, spoke to Nimilita Chatterjee, Senior VP, Data and Analytics at Equifax to get insights on the company as well as how it plans to protect consumer data
AIMAnalytics India Magazine: Give us an in-depth knowledge of how Equifax is using analytics to provide customer solutions.
NCNimilita Chatterjee: Equifax uses the unique data assets at its disposal to build solutions. Since Equifax services both consumers and various institutions via its various services, this question will be answered in 2 parts.
For our institutional clients:
As a credit bureau, the data that Equifax has collected over the last 7 years across the lifecycle of consumers puts Equifax in a unique position of powering every decision in a lending institution with historical data based on which predictions can be made about future performance.
Given Equifax’s global and local experience as a credit bureau led by lending practitioners, it firmly believes that the balance between data availability, incisive analytics, experience of past implementations and technological hardwiring of solutions that can be realized only through sound understanding of how analytics can change the way business is operationalized.
It is this implementation and experience backed analytical DNA that differentiates Equifax and manifests itself by means of custom built solutions and a consultative approach on implementation of them. This results in high impact, high velocity and effective engagements for our clients.
Over the past few years in India, Equifax has built a repository of knowledge, experience and operational expertise in the industry. With a team of 100+ analysts based out of a global analytics centre in Bangalore, global expertise provided by our 120+ year old US parent and cutting edge tools and techniques at our disposal, Equifax is geared to create best in class solutions and products. With global lineage and local experience, it blends statistical prowess with unique data and Indian business context, to solve real problems for its clients.
Equifax’s engagements are defined by the client’s current maturity on Information management and analytics capabilities and its longstanding experience with the microfinance and retail banking industry in the country.
The leading analytical product for consumers who access their credit report is the Equifax Risk Score which predicts the probability of default of a consumer. Generically, a credit score is typically a three-digit number that represents a summary of an individual’s’ credit history and represents the probability of not paying his/her credit in the next 12 months. In India, this score ranges from 300 to 900, with 900 being the best score with the lowest probability of default. A credit report is a vital eligibility criterion for borrowers to get easy and faster access to loans. When a consumer/business borrows money, the bank sends information to a credit bureau which shares a detailed credit report and a credit score on how well debt has been managed in the credit appraisal process. The credit report also includes a summary of all the loans and credit cards and their repayment history in addition to the personal identification information it has collected from the various lenders where one may have taken a loan.
AIM: Could you speak to us about the use of data analytics by credit bureaus?
NC: The data that credit bureaus collect across the lifecycle of consumers and businesses through their borrowing and repayment journey puts credit bureaus in a unique position of powering every decision in a lending institution with data. Equifax’s data assets combined with the power of analytics and the domain expertise of its analysts places it in a position to work with its member institutions like no other player in the market. Equifax is passionate about solving customer problems using the right blend of data, banking domain consulting, technology and hardwired analytics.
Analytics forms the bedrock of products and insights in everything credit bureaus do. An example of the analytical ability and power is best illustrated by the generic credit bureau score. In most developed markets credit scores form the basis of access to credit, pricing and find various other uses too. In India as well, the credit score of an individual defines one’s access to credit. This analytical product is built on a large dataset, finds uses in multiple products from credit cards to mortgage loans and predictive of a consumer’s “riskiness”.
Data from credit bureaus also power various other use cases within lending institutions for specialized lending businesses like commercial vehicle loans etc. where specialist scores are built taking into account other information provided by the borrower at the time of taking the loan. The combined data from the credit bureau, the demographic details and the details of the asset being financed together create a powerful predictive score on asset quality and riskiness of the loan being underwritten. Credit bureaus create these specialized product based scores as well.
Analytics is also used to understand the macro lending landscape by various lending institutions given the depth and width of the data available to the credit bureaus.
In a nutshell, every loan underwritten by a lending institution uses data from the borrowers past history and also from borrowers that “look alike” to understand and therefore accordingly underwrite.
AIM: How are CRAs performing in terms of using analytics in India?
NC: At an overall level, performance can be judged from the fact that credit bureau scores have become a standard in lending for most institutions and Indian consumer awareness of credit reporting and credit bureaus is also on the rise. This is slowly influencing responsible borrowing as well and the awareness of credit scores and how it impacts one’s ability to get access to credit is on the rise too.
For credit bureaus, providing insights from the data using various analytical techniques is key to success. At Equifax, our stated vision is “To be the global leader in information solutions that creates unparalleled insights to solve customer challenges” which articulates that analytics is the future.
AIM: What are the latest trends in data analytics in India?
NC: Data is the new oil and creating usable products from this oil is what analytics drives. With the increasing amount and forms of data available, real time and near real time consumption and interpretation is what is driving the growth in the industry. Availability of large computing power and technologies that can process large amounts of data in short periods of time are driving the growth in the industry.
In the lending world, the key trends that are visible are:
- Automation of tasks that are repetitive and need minimal interpretation from a human mind using new technologies
- The use of multiple sources of data based on the customer’s consent which is giving a more comprehensive view of the borrower and therefore more accurate underwriting decisions
- Better use of technology and the internet where one can apply for loans and get approved based on minimal paper and physical interactions
- Use of skilled minds and professionals to create implementable solutions that increase process efficiency and program effectiveness which therefore drive profitability
- Driving customer experience through analytics. E.g. – automated underwriting for certain segments of customers, automatic upgrade and cross sell offers to customers who are “higher response” segments.
- Quicker turnaround times
AIM: Give us insights on the behavioural pattern among global and Indian consumers towards credit and credit report.
NC: You probably know that your credit report refers to your credit “health,” and provides lenders with an insight to know the consumers. Good credit signals trustworthy borrowers; bad or little credit is defined as too high-risk.
When you borrow money, the bank sends information to a credit bureau which shares a detailed credit report on how well you have managed your credit. The credit report also includes a credit summary of all the loans and credit cards and their repayment history in addition to the personal identification information it has collected from the various lenders where you may have taken a credit card or a loan. From the information received in the credit report, the credit bureau determines a credit score based on your previous credit performance, your current debt levels, the amount of time you have had the credit, the types of credit you have available and your pursuit of a new credit. Credit information companies have developed their individual credit scores, which is typically a three-digit number that represents a summary of individuals’ credit history and credit rating. Each Bureau uses their own proprietary scoring model to develop a credit report based on the individual’s track record on their borrowings.
With the credit bureaus being part of the lending system for over 12 years now, the awareness of credit reports, credit scores and bad repayment habits impacting access to credit has grown manifold. The use of credit bureau reports in microfinance lending has also led to increased awareness in this area.
While in the developed markets like the US, consumers are very aware of their credit score and access to credit as well as pricing of loans/credit cards are influenced by it, Indian consumers are less aware.
AIM: How has Equifax used analytics specifically in India?
NC: In every problem that we approach and solution that we build, we will deploy our expertise in lending, credit bureau and technology in analytics delivery.
We have built the Equifax Credit Risk Score which is now in its third generation and was released in the month of June, 2017. From the data received from its member banks, a credit bureau determines a credit score based on previous credit performance, current debt levels, the amount of time one has had the credit, the types of credit available and pursuit of new credit. Credit information companies have developed their individual credit scores, which is typically a three-digit number that represents a summary of individual’s’ credit history and credit rating. Each Bureau uses their own proprietary scoring model to develop a credit report based on the individual’s track record on their borrowings.
Additionally, we have worked with leading financial institutions where we use various data sources from within the organization blended with the credit bureau information to create solutions for specific business challenges and growth areas that our clients need.
- Equifax Bureau Analytics – e.g. Equifax Risk Score
- Long term analytical partners for banks where we work as a partner
- Project mode delivery for specific analytics projects
In all our engagements,
- We have a continuous governance structure from start to implementation to monitoring
- Our global data and analytics practices allow us to transfer best practices from International markets
AIM: Equifax is working in collaboration with 7 leading financial institutions in India, how do you think you as well as other companies should protect customer data?
NC: At Equifax, we are entrusted with safeguarding the data of hundreds of millions of consumers and businesses worldwide, a responsibility we take very seriously. Equifax has always and will continue to focus on traditional attack vectors – physical, network, and people. However, today’s threat landscape requires much more attention, innovation, and sophistication to detect and protect against increasingly complex threats. Equifax taps its vast data sources, analytical insight, and software to deliver effective detection and mitigation solutions to our customers and employees.
We always follows the information security best practices and is ISO 27001 certified which is global standard for Information Security. We have dedicated Information Security Team which periodically conducts Information Security Audits to identify information security risks and this gaps are mitigated in stipulated timeline.
Equifax has all the required network security controls which prevents attacker to intrude into Organization’s network. The network is regularly monitored and alerts are generated in case of any suspicious activity.
Information security Team periodically conducts information security awareness among employees and educate them about the recent threats and guide to them to follow Information Security best practices.
AIM: A credit freeze has its own problems, is that the right path to take?
NC: Globally Equifax provides the credit freeze facility but the same is not applicable here in India. A credit freeze puts a lock on your credit. While it’s in force, no one can take out a new loan or credit card in your name — including yourself. It is also called a security freeze that locks down your credit and can only be lifted with a personal identification number (PIN) that you receive when you enroll. It is one of the most effective ways for consumers to protect themselves against identity theft — and this goes for anyone at any time. The added layer of security means that thieves can’t establish new credit in your name even if they are able to obtain your personal information. Freezing your credit has no impact whatsoever on your existing lines of credit, such as credit cards. You can continue to use them as you regularly would even when your credit is frozen.
If your credit reports are accessed often for work or because you create new accounts with various financial institutions on a regular basis, it is not recommended that you freeze your accounts. The costs to regularly “thaw” your reports would tend to be excessive.
Nimilita is currently responsible for solutioning and delivery of analytical products for the credit bureau as well as for custom development. She manages a team of 100+ analysts at a specialized Analytics Centre of Excellence in Bangalore. In addition to India, this Centre of Excellence also works on critical projects for Equifax’s US business and services Equifax customers in Canada, Europe and the Middle East. Prior to this, Nimilita was a part of the team that setup the Equifax India credit bureau where she was the Head of Products for 5 years. Prior to joining Equifax, she held a senior position in retail banking and various multinational Banks like Standard Chartered and Barclays in India. Nimilita holds an MBA from XLRI, Jamshedpur and a B.Sc. (Physics) from St. Stephen’s College, Delhi.