Point of view

Four things we think the market has wrong.

These are working theses, not generic commentary, each written up as a paper. Three are published; the fourth follows before the end of the year.

I

A bureau score is built to rank everyone. No lender lends to everyone.

A bureau score’s measured performance is a property of the test it was measured in, not only of the score. Measured the way a lender actually uses it — forward, on the population that applies, over the horizon the exposure runs — the same score is answering a harder question, and answers it less well.

Paper I sets out why, and the four levels a credit function can run to measure the score on its own book.

Read the paper →
II

The bureau tells you where the customer stands. Cash flow tells you what is changing.

Cash flow is not a better bureau. It is a different observation of the same customer, and the value is in what the two together support that neither supports alone. The rails exist in both markets; coverage does not yet follow.

Paper II sets out what the evidence shows, what it does not, and the tests that show whether it changes decisions on a Gulf book.

Read the paper →
III

The employer is the shock the customer’s credit history cannot see.

Job loss is among the best-evidenced causes of consumer default. In the Gulf it reaches beyond income, and it arrives through the employer, often for many borrowers at once.

EMPLOYER → INCOME → RESIDENCY → REPAYMENT

Most lenders manage the employer at the door. Paper III argues the value lies after it.

Read the paper →
IV

The back book is where the unclaimed money is

Most lenders are better at originating customers than at managing them continuously — line management, activation, retention, repricing, collections treatment, customer-level intervention.

The usual objection is that affordability and regulatory constraints limit what can be done. They do. But a constraint on the size of an intervention is not a constraint on the quality of its targeting, and a large amount of permitted opportunity is simply going unmanaged.

Writing

In-depth analysis on the economics of consumer credit in the GCC.

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