Fico caters to the need for risk-management

Corporate May 10, 2014 00:00

By Nophakhun Limsamarnphun
The N

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Analytics-software firm in demand as banks play safe in lending amid slowdown

Fico, a US-based analytics-software company, has reported a big jump in sales of its products in Thailand during the prolonged economic slowdown.
Yuttapong Sakulwilaingam, country manager for Fico Thailand, says the company’s software products are mainly used by banks and other financial institutions to manage their credit risks to prevent an increase in non-performing loans (NPLs).
Because of the protracted political crisis, the Thai economy has been hit hard, with forecasts for this year’s growth in gross domestic product lowered from 5 per cent to less than 3 per cent. This has prompted banks and financial institutions to step up precautions in their risk management.
Yuttapong said Fico’s annual sales in Thailand averaged Bt120 million in the past few years, but first-quarter sales this year jumped by more than 50 per cent from the same period in 2013.
Asset quality has dropped over the past several months, especially personal loans, credit-card loans, car loans, housing loans, ranging from Bt50,000 to Bt10 million per customer.
The quality of loans granted to small and medium-sized enterprises, which range from Bt10 million to Bt50 million per customer, has also been affected by the political crisis and economic slowdown.
Dr Andrew Jennings, chief analytics officer of Fico, said: “Analytics is the use of data by banks in particular to better understand their customers, in terms of whether a client is likely or unlikely to repay the loan.
“It’s natural that banks and financial institutions are under stress and NPLs are increasing even though the percentage is still relatively low, at around at 2 per cent. 
“Having a good understanding of the good customers and the not-so-good helps the banks not to overreact to the current situation. It gives them control in a more strategic way, since the natural tendency is to pull back or draw back loans which were hastily approved in order to prevent the situation getting worse. 
“In terms of Thai consumer confidence, it’s certainly low, the lowest in 12 years, so consumers are feeling uncertain, and this means less credit growth at commercial banks.
“Banks have to get clever on how they find the right customers. Our analytic model helps them to be more intelligent by knowing where their main risks lie and prevent them from developing into something bigger than they might otherwise be, such as providing some degree of assistance to customers who are in trouble.
“Analytics also help banks price their products such as car loans properly – especially in the aftermath of the government’s first-car incentive scheme.
“They need to know if customers should be asked to [make] a bigger deposit or whether the loan payback period should be longer or whether the interest rate should be higher, taking into account various market and other factors.
“Rather than doing this on an ad hoc fashion, the analytic model helps them do it in a more systematic way.”