The little credit bureau that did, with Paul Randall

When I was living in Denmark and working at Experian, my boss’s boss was a rockstar, you would never hear Burak Kilicoglu’s name mentioned without an associated compliment. And I wasn’t the only one to notice, so he was soon snapped up by Creditinfo to be their Director of Global Markets - a perfect sounding guest for this show, right? Unfortunately, though I tried, I never managed to get Burak on…

… which is why I was doubly happy to be chatting to today’s guest, Burak’s boss and Creditinfo CEO, Paul Randall 🤣

We talk about disrupting the credit bureau industry, about improving access to credit in developing markets, and about sharing knowledge back-and-forth between developed and developing markets.

You can find more information at https://creditinfo.com/ but if you want to jump straight to their news, that’s over here https://chronicle.creditinfo.com/#, while an example of the cookbook we mentioned is here https://chronicle.creditinfo.com/2020/12/16/creditinfo-cookbook/

And as Paul mentioned, they’re also on LinkedIn - here for the group, https://www.linkedin.com/company/creditinfo-group/, but also for each of their markets via a quick search.

You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24

If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.

Regards,

Brendan

The full written transcript, with timestamps, is below:

Paul Randall 0:00

Often people think of the Nordics as a long way away from Africa, but recently, we've seen the sharing going the other way. This is something that we've really worked hard on - sharing that knowledge across markets. In East Africa, you know, first movers on mobile wallets but then we've got in West Africa, the use of the utility data, but also, although many of the variables are quite similar, you know, it's very important to look at the nuances of the data in that context.

Brendan Le Grange 0:33

Iceland is home to just 371,000 to hardy souls. It's so small, in fact, that when you Google it from the UK, the first page of results are all for the local grocery store chain of the same name. That's a little unfair, because I checked and they only have a population of 30,000 employees, but I digress. The point is, Iceland is not a market we would quickly think of, if we were to go looking for the next David to take on one of the financial industry's various Golliaths.

But then again, the men's football team did surprise the world by making it all the way to the quarterfinals of the Euros in 2016, beating England along the way, which I mentioned only for reasons of historical accuracy, of course. Nevertheless, I probably shouldn't be that surprised, then, that Creditinfo, the now 25 year old credit bureau headquartered in Reykjavik, is making such big waves in the industry.

Welcome to How to Lend Money to Strangers with Brendan Le Grange, as I chat to Paul Randall, CEO of Creditinfo, about disrupting the credit bureau industry, and leveraging data and tech to facilitate access to credit.

Paul Randall, welcome to the show, you're CEO of Creditinfo, and I'm delighted to be talking to you today. Because Creditinfo is a company I tried to get on very early in the show's life - I used to work for Burak, as you know, and he now heads your global markets, as I understand it, but either the contact details I had for him for all or he was avoiding me, but nevertheless, great to have you on!

I think what really intrigues me about the Creditinfo story, is that Creditinfo seems to be a rare disruptor in the credit bureau industry. This is an industry that has actually enabled a lot of the innovation we hear about in lending over the last decade or two, but the industry itself is still really concentrated in the three big names that have been there forever.

But before we get into that, let's take a moment just to talk about your own background, because before you joined an ambitious little credit bureau, based out of Iceland no less, you were already well established in a traditional credit risk role with one of those big three credit bureaus and having worked for some big name banking brands.

Paul Randall 2:56

Yeah, thanks, Brendan, for having me on the show. And really excited to talk about Creditinfo and a little bit of my background. I started off, actually, as a young graduate and got into credit with mailorder. And I think that's always shaped my mind in terms of seeing credit as a facilitator for buying goods, a means to an end rather than an end itself, and also the way that it's much more dynamic when you're talking about smaller values.

And so I think that side of credit, away from just banking, was always in my mind and also seeing credit as a dynamic industry, not something that is relatively slow with established banks.

During my career, I'd worked for Scorex, who was similar to Creditinfo, across multiple countries expanding geographically and providing really quite niche consultancy. After that was acquired by Experian, I think the structure and organisation of how to deliver a consultancy changed me and many of my colleagues from having an in-depth knowledge about credit to having that knowledge together with the way to communicate it to different levels.

And having got those skills and also had a fantastic time with Experian transforming some of the South Korean banks after the crisis, I think when I was approached with the opportunity to join Creditinfo - and I saw the possibilities and the diversity of what was happening - together, with perhaps, the yearning to be involved in some some level of ownership and some managing a specific unit, which I started with the Decision Analytics, that was really the motivator that drove me forward.

Brendan Le Grange 4:35

Okay, so yeah, the move from the biggest name in the industry to one of the small startups wasn't as dramatic as it maybe seems from the outside, you already had that experience in the more entrepreneurial side of credit and the more dynamic side of the industry.

So you made that decision to move to Creditinfo and it seems like a fantastic choice to have made, all of 15 years ago. In that time, Creditinfo has grown from strength to strength, and your career has obviously progressed significantly within the organisation, what has it been like for the 15 years since you made that decision to make the big move?

Paul Randall 5:11

No, I think, to be very frank, I think some of the early days were quite challenging, because whereas I expected to be going into an organically grown organisation, which I had been in previously, if we referenced Scorex, initially, a lot of the growth of Creditinfo was through acquisition. And it wasn't until Reynir won a fantastic opportunity in Kazakhstan to deliver the Consumer Bureau, beating Experian against all the odds, that the company started to change to focus on more traditional credit scoring, away from the Icelandic model of building a lot of different data sources primarily on business information.

And so that meant there were there were new challenges to be faced, which was that, perhaps, the current managing directors weren't immediately bought into the concept of having decision analytics and moving that forward. And so it was a very methodical and slow process to explain the benefits and really sell internally. The second phase, after the crisis, Reynir took a view to then really focus on organic growth with the setting up of new credit bureaus around the world, which is created much more the footprint that we have today.

Brendan Le Grange 6:23

Yeah, let's talk about that a bit. Because the first time I really became interested in credit info was after watching that wonderful video that you can find on YouTube - and I think on your website as well - where Reynir discusses the history and the nspiration, or the culture, I guess, more so, behind Creditinfo. And it is really something I recommend everybody watch, because he's obviously very charismatic in that, as well. But I think he opens it by saying, "I think in 10 years time, we'll be big". And it's a wonderful understatement in hindsight, because as you said, there's been a lot of growth since then, but also global expansion to 30 plus countries.

What are you doing differently? Because yeah, as I said earlier on, this is an industry where TransUnion is 50 years old, Equifax more than 100 years old, Experian more than 200 years old, how've you come in there to win those deals and to - and I guess we'll dive into this more as well - but to enter these markets, which were ignored, intentionally, in some ways, just seen as too difficult to enter, what's your approach that has made this work?

Paul Randall 7:21

So I think a little bit of the backstory of this was that development funds lost a lot of money at the beginning of the 2000s. And they were often subsidised by IFC/ World Bank/ EBRD. And what they realised was to actually support the lending in countries, as well as giving funding to banks and microfinance they also had to build the financial infrastructure. And so a team was set up in the IFC to support organisations, to support poor central banks and countries, to change the legislation and to create an infrastructure - and one of those elements of the infrastructure was credit bureaus.

Reynir recognise this and wanted to be able to put credit bureaus in any of these countries. So what we needed was effectively a pre formatted solution that we could put in relatively cheaply, just parameterize that and then deliver it to those countries. We built the software, and at the same time we also build a team, who were actually going to support that process. And so Reynir's vision was that this infrastructure was needed in every country, and that Creditinfo were the company who were actually going to deliver to each of those countries.

Brendan Le Grange 8:37

My understanding is that you're not waiting for all the traditional infrastructure to be in place, you've really embraced, right from the start, alternative data or different data approaches. You're not waiting for the three big high street banks to all agree on a format to submit to you and all those things that have scared the other players away, you went in there with the intention of building a credit bureau and then finding a way to get the data you need to make that work.

Paul Randall 9:02

I think certainly that was true in the very early days. I think in the second wave, we had the advantage of good legislation that actually enforced the regulated entities to provide that data in a structured way.

Which obviously takes time. And so while that's happening, in parallel, we're also looking for as many data sources as possible to add and also knowing that additional data sources are going to be needed to onboard individuals who are not in the financial infrastructure at the moment or the formal financial infrastructure. We continue to do those things in parallel. If we look at most developing countries, we see that perhaps at the start of a credit bureau journey is perhaps you know, 5% to 8% of the population who are covered by formal finance. Typically, if you can get two or three other parts of the financial infrastructure involved, you can take that number relatively quickly up to 35% to 40%.

Brendan Le Grange 10:01

I think what's interesting with that approach, as well, an easier route to take would be to say, as a credit bureau looking to expand into new markets, looking to grow, we will go into markets where there's existing credit bureaus, we will be the alternative bureau that keeps the primary ones on their toes, you know, we'll make some money there and then we'll look to make market share. Countries that would make many managers nervous about what was involved. So what is your approach to finding new markets? I mean, I see you've recently just launched in Angola, how do you look at the world map and decide where you're going to make your next move or expand your businesses?

Paul Randall 10:53

So I think some extent he was led also by what the infrastructure was changing, and perhaps in the legal infrastructure to allow credit bureaus and support credit bureaus. So that was often the trigger for the next country. And because in that way, at least, we know, we've got it in chance of succeeding.

Also, we're looking at the strength of the central bank, I think that's an important aspect - we found that often in countries, the the central bank, in particular, is often the most respected entity in the country, and their strength and power is important to have a relationship with them. And then we're looking for a certain level of political stability and population size - also, given that ratio of 5% to 15% - we have opened in some very small countries. But certainly the potential to grow is important for us,

Brendan Le Grange 11:45

it is really reassuring to hear a good word spoken about regulators and governments because it sounds like a lot of countries are taking a much more proactive approach where they're thinking about this as a financial infrastructure as a problem that they're solving rather than just here's something that needs to be rubber stamped and put in place and forgotten about

Paul Randall 12:04

For sure.

And I think it's really helped a lot. And it's important for us in terms of the way we approach it is also to have local leadership, local people have the right understanding of the market needs, and also constantly communicating with the regulators. Because even if there is that first flush of excitement often can become lower in the pecking order of priorities. So it's important that we keep lobbying and making sure that we're getting the continued support when we're actually investing a lot of money to actually set up credit bureau.

And I think, you know, reflecting on your question earlier about the comparison with some of the big boys, it is quite a large investment for us and our size, and it takes a long time to build and a lot of patients and for sure, there is always some hiccups on the way and challenges. But I think with a little bit of determination now, one can get through that process.

Brendan Le Grange 12:55

Yeah, and I guess there's a silver lining in that, that when you are going in and we thinking about it from scratch, we can kind of leapfrog some of the structural complexities that we have in other markets that have grown organically over the last 40-50 years in terms of the data the way it's produced, where it comes from, you know, who's considered as credit providers issuing the data, they can all be set up with the modern world in mind, when you looking at the data that goes into some of these new bureaus. Is that still driven by the big name banks? Or who are the key players in these markets?

Paul Randall 13:32

Yeah, that first 5% to 7% - it is going to be the banks who provide that, and perhaps with the history, but then that next from up to 35|% to 40% is often the telcos we have a huge relationship with Safari comm in Kenya is an obvious one. But you know, really, we're engaging with all the the telcos, we're also discussing with the utilities. So we have big relationship in Cote d'Ivoire, with the electricity. And that's particularly important for perhaps some of the businesses who are on the SME side who want to have that first footprint on a credit bureau. Well, then we'll also look for other government aspects, often for validation and KYC. So we may be looking at stolen passports, we may look at ID lists may be looking at car registration. So we're constantly engaging with anybody who has that information. But the real volume, particularly in Africa at the moment is coming from the telcos.

Brendan Le Grange 14:25

Yeah, and you mentioned the SMEs. We're recording this the week that episode on the Thailand landscape went out and the Thai credit bureau is relatively rare, at least in my mind, in that it has the consumer side as well as SME data in the credit bureau, but it sounds like in your euros you're rolling out that is also happening more and more.

Paul Randall 14:45

No, very much. Oten from a regulation perspective, the banks and microfinance need to provide us with all the information on consumers and businesses. Now there's a lot of focus amongst the NGOs and div element organisations around supporting SMEs. And I feel that we've probably got the biggest database outside of South Africa of SMEs in Africa. And I think at the moment, obviously, we've reciprocity the focus is on exchange of information within those providing information within the credit bureaus.

But I think through the concept of direct to consumer, or businesses taking control of their own data should allow us to provide that information on a wider scale to support trade. And recently, we took an international credit report for a business in Kenya, within the credit bureau, we knew which banks weren't servicing them, how much when that was being serviced. And I felt that if they wanted to trade internationally, you know, this was the information that was really critical. And so you know, our next stage is really to develop ways of providing that information to a wider audience to support trade.

Brendan Le Grange 15:52

Yeah, and I think as I said, before, we started recording, I've had a few episodes on SME lending, it's not my area of expertise, but to just hear how many hoops SMEs need to jump through to get credit, it is really worrying when that is the engine of growth around the world. But a lot of developing countries, it's small business owners, micro business owners, that underpin the economy. So I think anything that helps them is good for the people as a whole.

Paul Randall 16:16

Could I just add to that the one of the areas that we're working quite a lot with on the mobile lending is for SMEs as well, where they're perhaps processing much of their transactions through mobile wallets. And we're also using that aggregated information to support the lenders and providing credit to the SMEs there as well,

Brendan Le Grange 16:35

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Paul Randall 16:49

The mobile wallets information I see, in a way, as a parallel option to Open Banking. It's really where somebody's having their financial transactions give us an indication of their income or their ability to spend, as well as some some indication of the consistency of salary over time and the income. So I think what we've seen is combining that with the the credit bureau data, you know, really provides a really strong indication of risk.

And we talked about the different data sources, some of the data sources we may not be holding within the the credit bureau, but what we're trying to do is actually facilitate so we can provide decision modules where we're bringing together that data that may be held by the telco or the bank in the mobile wallet and combining that with the credit bureau data so it's easier to use to generate those decisions for the lenders.

Brendan Le Grange 17:39

So I think back not too long ago, in the credit bureau world, we might sell a bit of software to help connect the bureaus, but it will be either go all two credit bureau A, if that doesn't work for you, you reroute it all to credit bureau B. But it's great to hear them a more open approach where, yeah, it feels like it is more of this 'built for the modern age' approach where data comes and goes from all sorts of different sources, and not always from the right organisations who fit in a credit bureau world that could still be interesting to us.

Paul Randall 18:11

You're absolutely right. And the different data could vary for different markets. And I think this is something that we've really worked hard on is sharing that knowledge across markets. So we might have in East Africa and you know, first movers on mobile wallets, but then we've got in West Africa, the use of the utility data. And so really the sharing of that information. And you know, often people think of the Nordics as a long way away from from Africa. But there's initiatives that we're doing there that are something that can be followed, and different data sources, different sharing of information. And recently, we've seen, you know, the sharing going the other way. So the Nordics also asking about, you know, the use of mobile data, how that can be integrated.

This is really, I think one of the key things that we need to think about as an organisation is making sure that the learning that we have is one shared across the different regions, but also that we have to then integrate it. So it's relatively easy and low cost to roll out in new markets.

Brendan Le Grange 19:16

That sounds like Creditinfo is uniquely well placed to do that, in that you don't have a traditional growth path where you would have bought a multibillion dollar US business a multibillion dollar UK business and you would have had these internal behemoth and then a smaller part that's doing the emerging markets doing the the innovation that no matter how much priority it gets will always be seen relative to the big businesses, your whole business is built around these diverse markets and serving them.

And in a first for the show. It's really well reflected in a cookbook that I see that you've got that I think showcases an appreciation for the diversity of the markets you serve and valuing what the different parties can bring.

Paul Randall 19:59

Yeah, we've done that for a couple of years now, actually, I was very touched when I read the most recent version. And the first story because we had a story together with the recipes was about and in, and the slavery Museum and the whole history around the different buildings. And for me, that also really brought it together about how important it was for people to share those messages of their countries. And then being able to give the book to colleagues and to customers and partners with, you know, showing that this is credit info and the diversity that we represent.

Brendan Le Grange 20:33

Yeah, and I think a really nice way to take that message home. Food is such a great way of moving culture around the world.

Now, earlier, you mentioned open banking. So maybe we should jump to that quickly. Because in some ways people talk about open banking as a credit bureau killer as the thing that would replace credit bureaus in time, but you're fully on the open banking train. So you've got an open banking division of your own rolling out open banking products around the world. So what is your philosophy on open banking?

Paul Randall 21:02

Yeah, I think for us, we're very much focusing on being able to deliver it in our markets together as a blended solution, the different components of credit risk, they default indicator, but also affordability risks, so we can look at those in different dimensions, and potentially also the fraud risk. You know, there is many very good players out there who are very focused on just one aspect. For us it was about really complementary solutions, enabling customers to have all the information necessary together in one solution.

Brendan Le Grange 21:35

You just spoke about credit scores there. And we did talk about the different markets you're in the markets have many listeners wouldn't have experience working in what's your approach to rolling out data products in a market - obviously, your background is in Scorex, I'm sure credit scores are as close to your heart as they are to mine.

Paul Randall 21:52

Yeah, I think he's obviously one of the first solutions that we roll out once we've got information and some history, and we've got some really powerful scores, although many of the variables are quite similar. You know, it's very important to look at the nuances of the data and the changes, perhaps over time in data. And you know, some of those aspects that I mentioned before, where you have perhaps 7% of the market have got more traditional type lending, perhaps with an average loan of about $3,000. And then you have perhaps a further 35% to 40%, with average loan of either $20 to $50, it's important to make sure that we're looking at the information in that context, and perhaps building two suites of models to make sure that they're relevant for the type of lending that's been made.

But also, there is a surprising amount of crossover that we are including the different variables from the different data sources within our final models. And then we see as our role financial education for the financial institutions to see where the benefit is of using scores. As they move to digitalization and more automated processes,

Brendan Le Grange 23:04

It can take a while for people to become comfortable with the idea of a score, but that score is there and that some people are using it. It's obviously the first step. And I think if we're looking at how do we take loans at scale onto people's smartphones, it will always be underpinned by some form of credit models. We've spoken so far about your mission of facilitating access to finance a more in terms of your willingness and ability to go into markets that that others may not bet I was looking through the website, and it's not just restricted to expansion to developing markets are serving underserved populations through new data.

I see you also published some really interesting research on closing the gender lending gap, which was interesting, because normally, you hear something like the gender pay gap, but you've got to look at it from a lending point of view. So what was it that you found there?

Paul Randall 23:53

So I think what we saw was, is often seen that the access for for women was considerably lower than that of men. We also know that organisations such as the World Bank, and very interested to close this gap, and we're providing those insights to them and working with them and the lenders about how their approach may change over time. And I think perhaps our initial role is to highlight what the situation is, and perhaps also across different types of lending, because we we have that information.

I know you recently were speaking with FICO about the use of benchmarking and I think there's something we're trying to bring in perhaps not in the same level of depth. It's an important tool to highlight some of the perhaps I should say bias towards certain groups and how we can work with the lenders, NGOs to try and firstly support education and secondly, perhaps change the approach to some of the lending in certain situations.

Brendan Le Grange 24:49

Clearly Creditinfo, is still after all these years now, well established, but still a very ambitious organisation with lots going on what is next for you, where should we be watching in the next year or so?

Paul Randall 25:03

So I think what I would like to see is probably on a couple of different fronts, I would really like to use more data across border, whether it be for as we mentioned before, about individual SMEs supporting the trade side of the business, I would like to make sure that each of our countries are towards the 40% of coverage and higher rather than the five and 7%, which may often be the starting environment. So where necessary, we'll be involved in lobbying, as well as the natural growth of the market.

And then the other aspect is a focus on ESG in terms of using our data to actually support different types of lending, more relevant lending, whether that be more in the Nordics, where perhaps it's about more regulated aspects of the type of lending has happened, or a different perspective of lending in Africa. So perhaps also to give confidence to international investors to broaden the lending and also feel that they are lending to the right type of organisation with the right governance.

Brendan Le Grange 26:06

And that's really where the brunt of climate change, if we just sort of focus on that is going to be felt. So you talked about innovation, moving back and forward. I think it's a space where, you know, the Nordics, probably markets were developed enough that that's a problem you can focus on. But really where it's going to be felt first and foremost is in developing markets. And you know, some more so than others that I'm sure that having that link between the two is going to be really powerful for both sides of that chain, when we look at something like that, which is a very new problem for all of us to think about.

And if people want to keep an eye on that, if they want to learn what you're doing, they want to explore some of those markets, you're in some of these success stories you've had around the world, where can they go to learn more about Creditinfo?

Paul Randall 26:50

So pretty much all our news is either on the website, www.creditinfo.com or on our LinkedIn pages, so we have a group page and then we also have pages for each of our regions where people can see if they're particularly focused on our local market.

Brendan Le Grange 27:06

Perfect. I'll drop a link to those in the show notes as well. Paul, thank you again for joining me today. It's been a pleasure chatting to you. We're looking forward to seeing what Creditinfo does next.

Paul Randall 27:16

Thanks a lot. Brendan really enjoyed being on the show. Thanks a lot.

Brendan Le Grange 27:19

And thank you all for listening. If you enjoyed that, please do rate and review on your preferred podcast platform and share widely including on LinkedIn and while you they send me a connection request. The show is written and recorded by myself Brendan Le Grange in Brighton England and edited with assistance by Kane Hunter show music is by I am weak and you can find full written transcripts now in several languages, show notes and more content at www.HowtoLendMoneytoStrangers.show

And I'll see you again next Thursday.