A credit bureau for emerging markets, with Burak Kilicoglu

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…

That’s how I introduced my episode with Paul Randall, CEO of Creditinfo but I’m pleased to say, it is no longer true. Because in this episode of HTLMTS, I’m sitting down with Burak himself to chat about data as a route to improved access to credit in emerging markets, about lending to SMEs, and about what it means to react quickly in volatile markets.

Creditinfo can be found at https://creditinfo.com/ or, as Burak mentioned, if you want to start a conversation with one of the team, their contact info is here https://creditinfo.com/about-us/our-group-management/

They are also on LinkedIn https://www.linkedin.com/company/creditinfo-group/ (from which you’ll find links to the individual country pages)

The ESG data project he mentioned is explained in more detail here: https://chronicle.creditinfo.com/2022/10/24/creditinfo-launches-esg-data-platform/

You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect). The show has its own page there, too, and is also present, but less active, on Instagram and Twitter using the @HTLMTS handle. 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.

Oh, and if you’re in need of more banking podcasts, you can find related content at https://blog.feedspot.com/banking_podcasts/

Regards,

Brendan

The full written transcript, with timestamps, is below:

Burak Kilicoglu 0:00

From West Africa to East Africa to South East Asia, the way the evolution goes is quite impressive. You start with a loan that's for €5-€6, paid off twice, three times. And then instead of getting a €5 loan, I get a €10 loan, I get a €20 loan - that evolution happens very quickly in emerging markets.

Brendan Le Grange 0:24

In a recent study, researchers at the University of Pennsylvania found that they could bring about significant genomic changes in populations of fruit flies simply by adding different species of microbes to their food. Now, they weren't doing this because they wanted to engineer a better fruit fly - I assume, their webpage includes lots of fancy words like environmental heterogeneity, identified molecular polymorphism, and differential fitness of genotypes, so maybe they do - but it's much more likely that they experimented on fruit flies, because they have such short generations.

In this study, the changes were identified after just five generations. Still, in human terms, five generations would take 135 years to play out. It's the span from your great grandparents to your children. With fruit flies, on the other hand, Google tells me it's easy to breed more than 20 generations in a single year.

This is a tangent, but it speaks to a concept I've previously appreciated, but maybe never quite articulated, that we can create more data simply by designing strategies with faster iterations.

Welcome to How to Lend Money to Strangers with Brendan Le Grange.

Burak, it is great to see you again, welcome to the show. This is your first appearance on How to Lend Money to Strangers, but not the first time we've spoken about you. I spoke to Paul Randall about 30 episodes ago and your name came up, because I used to work for you... I was goning to say in simpler times, but if I remember right, we were actually so going through a financial crisis then as well, but different times at least. So let's start by picking up there: what were you doing in your career before you joined Creditinfo?

Burak Kilicoglu 2:20

Before joining Creditinfo, I work for about 15 years for Experian. There I used to work within the Global Consultancy Group, so I was working with financial institutions, I was working with telecommunications organisations of different sizes across EMEA, you know, all the way from the Nordics down to South Africa, from Portugal to Pakistan. It was a lot of fun.

And before Experian, I spent a couple of years at Bank of America, I was managing the collections portfolio as well as customer management side of the business for the retail portfolio. And before Bank of America, again, I spent some time in the US with Discover Card, responsible for the collection analytics. And prior to that one, boy, it's difficult to remember it's been such a long time! Again, I was on the on the collection site for an organisation called Transamerica doing credit limit assignments to, and periodical evaluation of, SMEs, as well as their private label credit card business.

Brendan Le Grange 3:31

You know, if I think particularly for Bank of America, Experian, those are really big names in the finance space, but you left about two years ago now to join Creditinfo, which at the time would have still been a relatively small challenger credit bureau in an industry that is dominated by just a handful of big names.

So maybe we could just do a quick refresher on who Creditinfo is, and maybe what you saw in the small upstart, this challenger credit bureau, that made you say, 'yeah, I'm gonna take the leap'.

Burak Kilicoglu 4:03

Absolutely. I mean, it's all a matter of perspective. Actually Creditinfo, in relation to the Experian and TransUnion and so on and so forth, is not as large. However, Creditinfo is a very fast growing organisation, and their focus is very much on emerging markets. And that was the piece that was really attractive, you know, the over encompassing idea is Creditinfo's focus is on providing access to finance within the emerging countries.

That was the main driver for me. This call to work with countries, to work in the parts of the world where everything is so dynamic, everything is so fast-moving, you take an action and you see immediately the impact of that one, you roll up your sleeves and you just basically get on with it.

Brendan Le Grange 4:47

Let's talk about that and what your team's been doing in the two years you've been at Creditinfo.

Burak Kilicoglu 4:49

So, let me take a step back and talk a little bit about how Creditinfo operates - there's two distinct engagement styles.

One is the ownership. Creditinfo owns and operates credit bureaus. The other one is a partnership, where we implement systems, we provide the necessary expertise to run the credit bureaus. In this partnership model, we operate in nine different countries and seven of those countries, you know, we work directly with central banks. So that's a very unique engagement model that we got. On the other side, on the ownership side, it is 24 different countries in which we operate.

That's if you were to look at it from an operational perspective/ the business model - can we interact with the regulators, we interact with the governments and so on and so forth.

But it's not just the governments, it's not just the regulators, Creditinfo works very closely with institutions like the World Bank, IFC, so on and so forth. So these concepts are very, very critical to achieve providing access to finance and to do that, Creditinfo provides data, Creditinfo provide solutions to make sense of the data, derive insight out of that data, some of those solutions are in the shape of software, other solutions are in the shape of analytics, you know, building scorecards, and we have the subject matter experts that provide the link, you know, how you take the data, how you modify or massage the data and how you derive insights out of that one?

Brendan Le Grange 6:17

Yeah, and I think that's really interesting, because it is clearly built with this developing market focus, or this access to credit focus in mind. It's not just a business with, you know, income coming from it's big markets, and then has a few high growth markets on the side that it tries to serve. But it's actually built and structurally designed to serve these markets. Something I don't think you would guess, when you think of a Scandinavian company.

I mean, I recently saw you in Abidjan, you really are all over the world, as you say to find ways to serve them that work for them, not just that work for a head office.

Burak Kilicoglu 6:52

Yeah, absolutely. I mean, Abidjan was actually a unique experience, because we're talking about the West African Economic and Monetary Union. You know, this is eight countries that have gotten together and are a part of that union, or the participants were the central bank of the Union, as well as the Ministry of Finance from Ivory Coast, and then the users, the members of the credit bureau. So we got 273 subscribers, 133 banks, and then in the vicinity of 94-95 MFIs/ microfinance institutions and 20 financial institutions basically in between.

And then we have utilities and telcos that also provide data.

But the evolution is quite important. So from 2017 to 2022 - a five year span - the number of unique companies that we have that is stored in the credit bureau, it's about a five times growth.

That is an incredible growth story. You got 16,000 in 2017. And then on the last number I have is in the vicinity of 307,000 - that's magnificent growth!

So imagine the dynamics in that meeting. On one side, you know you've got members who have fantastic ideas, you got members who are facing unique challenges, how do you work with them, to enable access to finance, the very concept that I have mentioned to you. Being face to face with them, then having the regulator, then having the Ministry of Finance: there is a problem? There's an answer. There's a discussion point? Everybody participates.

It was a fantastic event, basically. And that's, that's the excitement. That's the that's the thrill that you get, you know, being with people that are so motivated, so engaged, so into their businesses, and it's just, you know, everything is bubbling with ideas. Can we do this? How about this? How about that type of thing? It is a great sensation to be a part of that.

Brendan Le Grange 8:57

I think two clear pillars of the strategy there: access to credit, but also access to credit in particular for SMEs. For you, why is this such an important pair of goals, this combination of sort of access to credit, but in particular, for SMEs?

Burak Kilicoglu 9:12

I mean, everybody talks about SMEs as the underpinnings of the economy, but it is even more true for the emerging markets.

The infrastructure that you see in developed markets does not 100% exist over there. The regulator's they have the advantage of you know, looking at what's happening in the European Union, what is adaptable, what is not adaptable. If you were to put all these together, particularly from an SME perspective, the fintechs and other organisations, they are enablers from many different angles because the infrastructure doesn't exist. They basically overcome that with technology.

The digital lending, for instance, particularly in Kenya, you know, in Tanzania, you're talking about small loans, but the way the evolution goes is quite impressive. You start with a loan that's for €5-€6, paid off twice, three times. And then instead of getting a €5 loan, I get a €10 loan, I get a €20 loan - that evolution happens very quickly in emerging markets.

And again, that is one other point that is particularly exciting for us being a part of that one. SMEs are struggling, yes, they're the underpinnings of the economy, but they're struggling. Why are they struggling? Well, the main driver is they don't have access to finance, you know, they can't get credit very easily.

Then you take another step back and say that, why don't they get credit? you know, the type of balance sheets that you got in the US in the UK, so on and so forth, it doesn't exist - it doesn't exist because of the financial circumstances, it doesn't exist because of the infrastructure, and so on, and so forth. So what we're doing is we're trying to evaluate the situations and come up with solutions that are addressing those particular needs.

And as we address those needs, then the wheels start turning.

Brendan Le Grange 11:03

And, you know, we talk about big data and access to data. But you're right, that sort of 'scientists always using sort of fruit flies for their experiments, because you get so many generations so quickly, you can see evolution happening, you can see changes happening'. It's similar to that. If you've got lots of short term loans with weekly payments, you can learn very quickly, something you can't do, where maybe you're waiting a month at a time just to see if one payment is made.

But maybe if we talk about practical tools, what does access to credit look like for SMEs? How are you enabling better access to the credit that they they so desperately need?

Burak Kilicoglu 11:38

Sometimes for SMEs, especially for micro SMEs, providing data about yourself is very important, because at the end of the day, whoever grants credit is looking at your ability, your stability, as an as an institution as an organisation. And that's the point that they need to get across. But this is not in a standardised fashion, you know, for most of the SMEs. So the first point is data, how do you get data in a format that captures the basics - this could be trade information, this could be part of, you know, revenue information, you know, whatever they have.

And the creativity that I see in Africa is there are fintechs that capture that trade information coming from SMEs, the basic information about the revenues and costs and expenses, and so on and so forth. So we partner with these organisations to take that data, standardised it, put it in a format that could be used for regular assessment, periodical assessment of SMEs. That's where we come into play.

Now comes the step that you have mentioned: what do we do with the data? The first hurdle was data, the second hurdle is making sense of the data and communicate the ability to pay and stability messages to the lenders.

And that is done through the various scorecard that you have mentioned, you know, you can have an SME scorecard. But we've what we have seen is having a blended scorecard, which is here's the smees performance, here's the individual, you know, the owner's performance. If you were to take the information from that, if you were to put it into a predictive model, then we have seen an uplift on using either this information or the other information in and of itself - the combined information provides more more data or more insight.

Brendan Le Grange 13:23

I've worked a little bit with the two types of data: SME and consumer. And we've seen 'oh, yeah, the consumer data is predictive of the performance of the business'. But I've not worked before where we've actually gone out and modelled them with their purpose in mind. It's more a case of are there some data lying around - is it predictive? Let's try and use it.

So it's great to hear that actions are being taken where this data is combined and then modelled, not just making use of, of what's lying around.

Burak Kilicoglu 13:50

there is another concept. We're always thinking about, you know, the US and UK as the references, the benchmarks. If you think about Africa, not everybody lives in big cities, there's quite a large population that lives in rural areas. How do you reach to those individuals? How do you reach to microfinance institutions, the small, tiny, tiny SMEs over there?

One solution that we have designed, working with the IFC, is coming up with a portal. So the individuals or the SMEs, the micro SMEs, can go to the portal to ask for credit. And that portal eventually is working with different financial institutions who look at the applications and make their own decision. We provide the link taking the individuals in different parts of the different parts of Africa or different parts of the country and put them in contact with financial institutions.

But again, within that there's there's many different layers that you need to be thinking about. It's not just providing the portal you need to make the portals work.

You need to really understand the needs of the market because it's not a single language. The Portal also should not be addressing only the people who have who are literate There's a lot of individuals who just cannot read and write. So we're thinking about, how do we communicate these messages through pictures, or through something that you put the mouse on it, and it just talks basically, we're not there yet, but I just wanted to give you a flavour of you know, how you really need to localise the solutions, because otherwise, the solution stays here, the market needs are over here, and you're not connecting the two and the connecting the two pieces is critical to have it as a success.

These are the types of things Creditinfo does to support the SMEs and engage with them, and solve the challenges that they're facing in a very pragmatic fashion. And we're not saying we're the only ones, indeed we're more than happy to partner with different institutions.

Brendan Le Grange 15:50

In terms of the impact of those that you've seen with SMEs. I mean, you've already spoken about the growth and the rapid speed of that in West Africa in terms of bringing SMEs into the fold. We've spoken a little bit about East Africa, but I saw you recently in Spain, you were recently in Cambodia, you're all over the world. What impacts have you seen from these initiatives?

Burak Kilicoglu 16:09

We have been, you know, tracking the performance from an NPL perspective. But when we design the scorecards, when we start using the scorecards, a overtime, basically, we have seen a stabilisation of that NPL performance. And that in turn directly reflects into the lending processes, that is an indication that the lenders are feeling more comfortable with the insight that they're getting.

And they're lending more and more.

This is something that we have seen tangibly in Kenya, that reminds me another engagement that we have this time, it's in Pakistan, Pakistan, a Banking Association, basically, for individuals who are in financial needs, provide basic housing to them, allowing them to acquire a house, how do you do that assessment? When there's not a lot of data? How do you, you know, go about the two foundational questions basic the ability and stability, we're engaging with our partners in Pakistan to find the solution for that one.

Brendan Le Grange 17:02

Yeah, more great stories to hear of positive changes.

International pressures that you react to aren't always just overcoming things like logistical problems or infrastructure gaps. I see you're doing a lot of work as Creditinfo with the situation in Ukraine right, now working with MBKI to build an online chat bot to help Ukrainians fleeing that invasion to access and share their credit histories.

Burak Kilicoglu 17:29

I can give you a brief background on that. But absolutely, as you indicated, there's many Ukrainians who have left their country and the end of the day in your country, you had a credit history, you are going to a different country, and all of a sudden you start from zero.

So what we designed is basically a quick access, you know, using one of the messenger tools, and easy, verified, confirmed way of making sure that it is you who's asking for the information, go ahead and get the information tap into your credit history in Ukraine, and that feed it back to the country that you're operating in, it turned out to be quite a popular way of again, providing access to credit concept, enabling that particular concept, we're quite proud for having done that one. But again, the credit goes to the team or Ukrainian team, who came up with that idea, the whole concept is you need to put yourself into the customer's shoes. And the solution needs to be relevant to the problems that you're facing.

And that was the success of the team. Basically, that's what they manage. These are the day to day challenges they're doing, we can't develop a solution that's going to take a long time, what is a quick win that we can have that will have a positive impact on individuals lives? Like I've said, in a short timeframe, you can see the impact that you're creating. And this is, this is something fantastic.

It's really difficult to describe the value that brings to you from an emotional perspective, a satisfaction perspective.

Brendan Le Grange 18:54

And I guess it's, there's always something happening. I'm sure you're always been challenged to sort of come up with solutions in in difficult circumstances.

But obviously, the world is more volatile at the moment than it has been for a while. We're seeing interest rates, again, sort of rising after being stable at historic lows for the past decade or so. But how is Creditinfo reacting to this? How are you seeing the sort of the lenders and the borrowers in the countries you serve, react to and adapt to the volatility, the inflationary pressures we're seeing in the world at the moment?

Burak Kilicoglu 19:28

We are in constant contact with the government entities trying to get additional information because at the end of the day, it's all about information.

So if I can enrich the data to give a slightly different dimension on an individual or on an SME, that might be the one that would get the tick mark on a loan process and perspective. We are engaging with revenue authorities in East African countries. We are in engagement with different entities from the alternative data world, so to speak, we're talking to telcos and gathering telco information to come up with alternative ways of scoring. The digitalization process is really enabling us to tap into alternative data sources that we can use in a tangible way. Again, in decisioning process, we're also again working with the World Bank, IFC to look into access to finance, not only from SMEs perspective, but youth, from females, you know, is there equality over there over time? Is there development? Are we progressing in the right way? What are the things? What are the types of loans one versus the other one, there is constant communication, there's constant benchmarks that has been exchanged with various entities.

And we feel like we are in the middle of these changes. And we're the ones providing these benchmarks, these insights, of course, with the guidance of different entities and with their feedback. But again, this is a very, very interesting, very engaging place to be. And the whole team is quite motivated about that one, you know, looking into these types of actions, because whatever trends do observe, you share it with different organisations, and they do something about that.

Brendan Le Grange 21:16

Yeah, I can see why that's so motivating, I think what's also really interesting to hear, hear you describe these, the, the fact that you're right in the middle of shaping these lending ecosystems in the market to serve.

And if I think back to some of the bureau projects I've been involved in where we've perhaps launched a new bureau in a country, it's been more reactive, has been driven by something like the World Bank had the old 'ease of doing business' scorecard, and you'd get a point for having a credit bureau there. So maybe a government organisation would see that and encourage the lending industry, the banking industry, to get some bureaus involved. And then the banks would get together and go through a process that establish a bureau and share the data between the big 5 or 10, banks, whatever it was in each country, and kind of go about their business as usual just now with a little bit more security from data sharing, but the bureau was following the lending industry, rather than kind of helping to shape it.

Burak Kilicoglu 22:19

You just reminded me of something right after the school, I have a call with our CEO from Kenya, the topic is, there has been an election in Kenya and there's a new president and one of the new President's initiative for the first 100 days is to come up with a fund for the people who really and truly need credit, the layer of the population that is in need of that little support, basically, financially, our team, our local team in Kenya is basically going to be a part of that with the telco organisations with fire lenders, and so on and so forth. But the team literally volunteer to be a part of that one. And they are one of the, you know, driving groups of that initiative.

That's what I just wanted to share with, you know, the whole team in all these different emerging markets, you know, from West Africa, to East Africa to Southeast Asia, they pretty much rolled up their sleeves and they're just getting engaged with their customers, with the regulators, to figure out how we can how we can make a tiny bit of a change.

Brendan Le Grange 23:16

Yeah, and I know from speaking to Paul last time that each of these teams there, they're putting out a lot of information on their own LinkedIn pages, their own social media pages, there's a lot of content coming out of Creditinfo in terms of blog posts, and thought pieces and just updates on the market. If people are listening, and they want to track what Creditinfo is doing, what is a good place for them to go and keep track of your team's work or I guess their broader organisation's work?

Burak Kilicoglu 23:44

You mentioned LinkedIn, certainly there, you can go to Creditinfo's LinkedIn page, but more importantly, there's creditinfo.com - come and see us there. You can see different countries, you know, regardless of your geographical location, or if you want a fair, you know, focus on a particular geographical location, you got all the contact information, you can get all the details, if you want to have an overview, it is there. If you want to dive into details, it is there.

But if you want to talk to an individual, our contact information is there as well. We're here to help.

Brendan Le Grange 24:14

Great to hear and burglar before I let you go, you're obviously putting in lots of things in lots of places. Is there anything on the horizon that we can be keeping an eye out any developments that people should be going to creditinfo.com to see progress?

Burak Kilicoglu 24:28

Recently, our team in Iceland has come up with that fantastic ESG solution, I think you should go to creditinfo.com. And it is a fantastic way of doing that assessment in a very comprehensive way. very pragmatic solution, as I had indicated, we're very proud of that one. And over time, we will be rolling it out in different parts of the world. There's plans for that or that that really makes us proud leading on that aspect as well. In addition to what we have been doing,

Brendan Le Grange 24:56

Perfect. I'll put a link to that directly in the notes, but certainly worth going to look at Burak, it's been great chatting to you, again, been pleasure having you on the show. And really, again, great to hear the work that creditinfo is doing in terms of access to credit in some of these markets that don't always get the focus that they deserve. So yeah, always makes me happy to hear these stories.

Burak Kilicoglu 25:17

Pleasure is mine, Brendan, very good talking to you.

Brendan Le Grange 25:19

And thank you all for listening.

Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn where lending nerds are found in our largest concentration plus, send me a connection request while you're there.

This show is written and recorded by myself Brendan Le Grange in Brighton England, show music is by Iam_wake and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show or just www.HTLMTS.show

And I'll see you again next Thursday.