The Association of Serbian Banks (ASB) wanted to improve the control and monitoring of credit ratings in Serbian financial markets. Investigations into credit ratings took days, and results were often inaccurate. The association needed a system that could compile and send precise reports in real time. ASB decided to set up a Credit Bureau that could provide credit rating details on individuals and businesses. The association chose a solution based on Microsoft® technology and developed by Microsoft Gold Certified Partner E-Smart Systems. The solution operates on Windows Server® 2003, and application support was developed using Microsoft Visual Studio® .NET 2003. Serbian financial institutions can now access comprehensive credit rating reports that are compiled in seconds, while the system has reduced the number of un-repaid loans nationally from 3.5 per cent to 1.18 per cent.
The Association of Serbian Banks (ASB), founded in Belgrade in 1921, offers expert assistance to its member banks and encourages the development of a uniform approach to Serbia’s financial and interbank IT systems. The ASB conducts research on Serbia’s banking systems, promotes business standards and development, and examines ways of aligning member banks with international practices.
Before 2003, Serbian financial markets had no reliable method for controlling and monitoring an individual or business’s credit rating. This was a particular issue for the banking sector, where valuable resources were used to conduct lengthy investigations to gather credit information. These investigations took several days, and the reports produced were often inaccurate.
The association required an electronic system that could provide data on client debt and distribute real-time reports. In late 2003, ASB set out to establish an individual client Credit Bureau, followed by a business Credit Bureau in 2004.
To meet the requirements of user banks, the bureau had to deliver:
- Access during office hours, with an availability rate of 99.99 per cent between 06:00 and 22:00.
- Create and send a report within 30 seconds of receiving a request.
- Consolidate more than 3,000 reports from banks, leasing companies, chain stores, and mobile operators.
Because the system would be storing highly sensitive data about individual and businesses’ credit histories, security was crucial, and the system had to include:
- Robust user access authentication.
- Authorisation for information exchange.
- Data transfer in XML format.
ASB chose to implement a solution based on Microsoft® technology developed by Microsoft Gold Certified Partner E-Smart Systems. By taking this route, the ASB felt it could guarantee the timely delivery of Credit Bureau functions within the planned deadline.
The complete solution operates on Windows Server® 2003, and application support was developed using Microsoft Visual Studio® .NET 2003. The Credit Bureau’s internal division connects to the Internet through Microsoft Internet Security and Acceleration Server 2004, while Microsoft SQL Server™ 2000 was used as a comparison database. Following successful migrations in 2005 and 2006, the solution is now based on Microsoft’s latest data centre technology:
- Windows Server 2003 R2.
- Microsoft SQL Server™ 2005 SP2.
- Microsoft .NET Framework version 2.0.
- Microsoft Internet Security and Acceleration Server 2006.
Now, when an individual or business requests a credit report, they must provide written consent to authorise the transfer of their credit information. Digitally signed, electronic
||Individuals and businesses are less likely to accumulate excessive debt. With the Credit Bureau system in place, the number of un-repaid loans has decreased from 3.5 per cent to 1.18 per cent.
Association of Serbian Banks
versions of consent forms are stored in the system. The bank counters that produce Credit Bureau statements are fitted with smart card readers for user authentication. Only authorised and trained staff can use the smart cards to send requests and obtain reports from the Credit Bureau.
The Credit Bureau system has five main process areas:
- Information collection. The Credit Bureau system communicates with systems in banks, leasing companies, and other sources to gather information on an individual or company’s credit rating. The process is synchronised with digitally signed XML packages.
- Management. Data on Credit Bureau users has to be efficiently managed for approvals, requests, reports, and complaints. The system generates original information and replicates the data for use in other parts of the system. Documents exchanged between the Credit Bureau and report users are data protected.
- Storage. Information is stored on individuals and companies that have given their consent to create a Credit Bureau report. If consent is withdrawn, the information is permanently erased from the database.
- Reporting. Gathered data is consolidated to create a report using SQL Server Reporting Services. The report template is updated daily. There are three types of report:
- Synthetic reports—summary values with no time dimension.
- Basic reports—comprehensive information from an undisclosed source.
- Personal reports—comprehensive information from a disclosed source. These have to be personally requested by an individual or business.
- Client connections. This includes standard client Web applications and business-to-business connectors. Through Web applications, clients have direct access to Credit Bureau services, and, with business-to-business connections, they can integrate Credit Bureau reports into existing business applications. The majority of users, responsible for generating more than 70 per cent of reports, are linked to the Credit Bureau system through business-to-business connectors.
Thirty-eight banks in Serbia use the Credit Bureau system. There are 3,200 system users and trained counter staff issued with certificates and smart cards. It currently has 1.9 million registered borrowers, and each one has used the system at least once.
In the past few years, Serbian banks have given an average of 700,000 loans per year. Using this as a baseline figure, ASB set the system’s database capacity at 10 times this value. This means the database can handle 6 million users—the entire population of Serbia—with no effect on the speed of report production.
Since its introduction three years ago, the bureau has issued more than 5 million reports, and the ASB has never received a complaint about system functionality.
Reliable Credit Reports Reduce National Loan-Debt from 3.5 per cent to 1.18 per cent
Veroljub Dugalic, General Secretary, ASB says: “Banks can now issue fast cash loans. But, more importantly, individuals and businesses are less likely to accumulate excessive debt. With the Credit Bureau system in place, the number of un-repaid loans has decreased from 3.5 per cent to 1.18 per cent.”
In December 2004, the International Monetary Fund (IMF) acknowledged the solution as a significant development for Serbia and Montenegro’s financial markets. The IMF now uses Credit Bureau reports to determine conditions in the country’s loan and credit card market. As a further example of the reliability of Credit Bureau reports, the Serbian National Bank will only issue an individual or business loan once it receives a Credit Bureau report. Dugalic says: “According to IMF and World Bank officials, the Credit Bureau is a unique project that has proved successful on a worldwide scale.”
Faster Loan Processes Attract New Customers
The liberalisation of the banking system in Serbia and the arrival of foreign banks have created a fast-paced, highly competitive market in which attracting new clients is crucial. With a “fifteen-minute loan,” a customer applies for a bank loan without guarantors. Based on estimates obtained from the Credit Bureau, the bank can offer a loan within 15 minutes.
Comprehensive Reports Generated in Real-Time
An individual or business credit history is updated and consolidated daily in line with new data. Reports show current and potential debts, and the system indicates whether or not a debt is repaid on time. The Credit Bureau produces 10,000 reports daily for individuals alone. Each one contains 136 information fields and can be obtained in real-time. In fact, the Credit Bureau is now the fastest provider of this service in Europe.
Platform for Future Expansion
An important feature of the Credit Bureau information system is its ability to adapt and integrate new processes. These can be changes in business policy or legal issues, such as the legal requirement for electronic signatures for electronic sales. Looking to the future, Dugalic says: “We’re preparing the service for availability 24 hours a day, seven days a week. After that, the Credit Bureau services will be available internationally, which will open up even more possibilities for business users.
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For more information about E-Smart Systems products and services, call (+381) 11 30 50 200 or visit the Website at: www.e-smart.co.yu/index2.html
For more information about Association of Serbian Banks products and services, call (+381) 11 30 20 760 or visit the Website at: www.ubs-asb.com/
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