KUALA LUMPUR (Jan 24): Alternative data sets are required for credit assessment in the post-pandemic world, as the historical models in place may not be reflective of the current situation, said Standard Chartered Malaysia Bhd chairman Datuk Yvonne Chia.
During a panel discussion at MyFintech Week 2022, Chia said the credit models being used today are premised on “equilibrium macroeconomic assumptions”, or in other words, these models are based on the assumption that conditions are normal.
“As you can see with the Covid-19 pandemic, this is not normal. It is quite clear to see that there is a need for transactional data, such as incoming and outgoing payments, which would give insights on credit capacity behaviour across retail and microbusinesses,” said the veteran banker, who is the first woman in Malaysia to be chief executive officer of a bank here.
The former CEO of Hong Leong Bank noted that the traditional credit models which, for example, state that repayments must be within 30% of national income can be helpful but are no longer useful.
These transactional data points could include supply chain linkage data and even e-commerce data, which could augment the traditional data, Chia said.
“Banks will have to extend their relationship with other external providers like the new banks, disruptors and startups. This is where we can talk about a form of open banking — opening up data sharing platforms,” she said.
ShopeePay Malaysia head Alain Yee concurred, highlighting the importance of collaboration between the public and private sectors in establishing new critical capabilities such as an open data ecosystem, national identity registers and advancing the shared payment infrastructure.
“This will be crucial for the advancement of data-driven decision making, for example, in credit scoring and increasing resilience of the financial system as well,” he said.
Yee said partnerships and collaborations have bore fruit, pointing out the significant growth in digital payments as a result of collaboration between banks, e-commerce platforms, e-wallet players and PayNet.
Besides that, he also highlighted the government’s e-Belia programme, which resulted in over one million youths registering and adopting the ShopeePay e-wallet.
Bank Negara Malaysia deputy governor Datuk Abdul Rasheed Ghaffour said the Financial Sector Blueprint 2022-2026 looks to “push the boundaries of finance” amid the uncertain operating environment, which has called for “enhanced dynamism”.
“Partnership between private and public players features quite prominently in the blueprint, perhaps even more so in the context of digitalisation.
“We have emphasised strategies that seek to strengthen cybersecurity arrangements, promote the development of infrastructure that is interoperable, and advance common standards as well as data governance and privacy principles,” said Abdul Rasheed.