CRIF is a global company specialising in the development and management of decision support systems worldwide. Here the CEO of the company, Carlo Gherardi talks all things credit industry, while also Finance Monthly’s readers to CRIF and its recent achievements in the field.
CRIF has been able to carve itself out a very important role as a provider of credit support solutions: what’s its story?
Founded in 1988 in Bologna (Italy), CRIF specialises in credit and marketing information, analytics, credit solutions and process outsourcing offers financial institutions, utility companies and businesses qualified support in every phase of the customer relationship. Moreover, since 2011 CRIF has been a European credit rating agency recognized by ESMA. Today more than 3,300 banks and financial institutions, 44,000 business clients and 190,000 consumers use CRIF services in 50 countries on a daily basis.
What kind of global growth strategy have you adopted?
CRIF’s growth is driven by a global approach and vision, so that today we have a direct presence in 26 countries. We are constantly involved in international start-ups and acquisitions, and since the beginning of this year we have completed four new acquisitions: in Germany, Bürgel, one of the leading business information companies with 130 years of experience in risk management and a staff of approximately 500; in Germany and Poland, the operations of Deltavista, one of the leading providers of credit bureau data and risk management services in these countries; in Russia, Microfinance Technologies Center, a growing industry player specializing in the delivery of credit risk assessment services for the microfinance sector; and last but not least, in Taiwan, CCIS-China Credit Information Service, the largest and leading credit information agency in the country and one of the most important in the Far East.
Has the positioning achieved in international markets been recognized?
IDC Financial Insights recently confirmed CRIF in their prestigious Top 100 ranking of solution providers that derive more than one-third of their revenue from financial institutions. This Top 100 ranking, which is based on 2015 revenues of hardware, software and IT services to financial institutions at a worldwide level, provides validation for vendors in a highly competitive and regulated marketplace as well as highlighting influencers that are shaping the industry. Moreover, CRIF is cited by Gartner, Forrester, CEB TowerGroup and other independent research companies, an important recognition of the completeness and robustness of solutions and support offered by CRIF to its customers as they grow.
What are the main drivers for the development of the credit industry in the near future?
The scenarios are extremely variable in the different geographical areas we work in. In Europe, the main challenge for credit institutions is most definitely the recovery of profitability in a context characterized by very low interest margins, by the negative impact of non-performing loans which, in some countries, are still significant, and by increasingly stringent regulatory constraints. Within emerging countries the central theme is governance of the tremendous growth in order to remain sustainable. In all cases, technological developments open up new digital business scenarios, with implications on a process level and for fraud prevention controls.
Regarding regulatory aspects, what impacts could something like the IFRS9 standard, for example, have?
As regards credit exposures, the new IFRS 9 standard represents a breakthrough in an attempt to deal with banks’ loan books in a more balanced and insightful way. A more realistic system is, inevitably, a more complex system. Adapting the investment and loan portfolio to the new three-stage impairment model requires banks to develop new risk metrics, their calibration/validation based on data that are as extensive and robust as possible, and uniform and strict application to the whole credit population. All this must be achieved by taking profit from risk parameters that banks already estimate and use (typically, for credit risk management purposes), aiming for maximum consistency and minimum duplication of effort. Moving from words to facts will prove an exciting – yet still complex – challenge. Furthermore, moving from the old to the new system will trigger a huge change compared to current measurements. This will impact on banks’ profit and loss accounts – above all in the first year of application – and capital levels. Managing the changeover in a context where institutions are requested to increase and retain capital (also to avoid constraints on dividend distribution) will prove the most sensitive phase from a technical point of view, and paradoxically the one that banks will face – by definition – while still unexperienced with the new standard.
What answer can CRIF offer to respond to the needs of credit institutions?
Financial institutions worldwide turn to CRIF to achieve growth, mitigate risk, reduce end-to-end processing costs and be compliant-ready. Using know-how, insight and technology we enable our customers to achieve sound and optimized decision-making and compliant processes in every phase of the credit lifecycle. In a number of countries we integrate the power of a unique information asset, with a comprehensive suite of credit management products, as well as the ability to deliver local expertise, in order to bring concrete results to banks and financial institutions worldwide, from strategies to solutions, covering the entire Credit Framework needs. Our philosophy is to support our clients with a “forward looking” approach to allow them to be ready for ever-changing business, customer and compliance requirements, giving them the confidence, stability and agility to balance external demands with business objectives.
How are CRIF solutions integrated into credit processes?
Over recent years, leveraging both our international experience and collaborations with “best practice” institutions on an international level, we have made significant investments so that our solutions and services can enable the complete re-engineering of the management and IT procedures that support a more “modern” style of credit management, both in terms of business challenges and changing regulatory requirements. The CRIF offering combines consultancy and analytics, software, operational activities and information assets for complete credit management: from origination to portfolio monitoring, quickly intercepting and managing any credit deterioration. All this while ensuring complete governance, consistency between strategies and operating processes, and compliance of both the solutions and services provided. CRIF’s management procedures are also designed according to the most effective business and relational criteria with the end customer, Basel guidelines and, more recently, new European control and operational requirements (AQR and SREP).
In relation to the management of impaired credit, what support can CRIF provide to credit institutions?
A central aspect for many credit institutions today is the management of NPLs. In some countries, CRIF is able to provide end-to-end support for impaired credit, both in terms of the improvement of internal processes and of the management platform, including the Loan Tape to Supervisors, and enhancement of portfolios subject to transfer, as well as outsourced debt collection and complete servicing, using a partnership approach with the institution.
In relation to insurance companies, on the other hand, how is the CRIF offering structured?In order to support insurance companies in their objective of operating a profitable business and improving knowledge of their customers, CRIF Insurance Solutions provides tools for more accurate profitability assessment and anti-fraud management at the key stages of the process: quotation, underwriting, claims handling and fraud detection. For instance, in the UK CRIF provides a range of services to the insurance industry which help manage broker acquisition, ongoing monitoring, and the overall process of general and life insurance for both SMEs and personal lines insurance. This includes pensions, life insurance and general insurance such as motor, home, personal injury and travel insurance. Furthermore, fraud is a major issue for financial institutions worldwide, and consumers pay an extra percentage on their premiums as a direct result of losses experienced by insurance companies from fraud. The concept of sharing information to combat fraud and reduce insurers’ operational costs has gained importance in recent years. The level of sophistication of the systems depends on the country, the level of data shared by insurers, the legislative framework, and access to supplementary external data.
Founded in 1988 in Bologna (Italy), CRIF specialises in credit and marketing information, analytics, credit solutions and process outsourcing. It offers financial institutions, utility companies and businesses qualified support in every phase of the customer relationship thanks to 3,600 staff professionals and 57 subsidiary companies. Moreover, since 2011 CRIF has been a European credit rating agency recognized by ESMA. Today more than 3,300 banks and financial institutions, 44,000 business clients and 190,000 consumers use CRIF services in 50 countries on a daily basis.