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TheCredit Editorial

Dear Readers,

After the success of the previous two issues and an effort to achieve all desired goals, we are pleased to

present you the third issue of TheCredit SIMAH’s newsletter in both language Arabic and English.

Our newsletter is the first of its kind in the Kingdom, specializing in credit and targeting the community of credit professionals and experts in our country. TheCredit aims at promoting the development of a robust

and healthy credit culture in line with the vision of SIMAH. We see ourselves as instrumental in the development of Saudi Arabia's credit ecosystem, which is composed of businesses, individuals and

Governmental bodies.

Every issue of our Newsletter will include articles from leading credit experts, interviews with key

stakeholders, case studies and insights on the credit market, drawn from the SIMAH Credit Bureau. It will also present success stories and case studies provided by our Members who would like to share with you

their own experiences of how SIMAH’s data, solutions and experts have helped them in improving their

credit and business performance.

We hope this Newsletter will achieve these ambitious goals and that it meets your expectations. We count on your continuous support, and should you have any comments, suggestions or wish to have a relevant

article published in the next issues, please contact us at: newsletter@simah.com

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Maximising the Benefit of Credit Bureau Membership

Credit bureau data has, for years, been widely adopted in different markets across the globe, across a number of different industries, particularly banking, consumer finance, mortgage lending, vehicle finance,

telecommunications and even by some Government ministries. However, even today, with a few notable exceptions, the use of the extensive consumer and commercial credit data that a bureau provides is often

restricted to just checking potential customers at the point that they apply for a new product or service. This situation is no different in Saudi Arabia.

Whilst credit bureau data is a vital part of understanding and helping to calculate a prospective new customer’s ability and willingness to repay a loan or mortgage, for example, it is only one example of how credit bureau

data can be used in order to improve decisions across the entire customer and credit lifecycles. Often, many organisations and users of credit bureau data fail to use the data in other parts of their business where it could

add significant value and this in turn can have the effect of reducing the return on investment that the client

achieves from being a member of the credit bureau.

One solution to achieving higher ROI and value from being a client and member of a credit bureau is to undertake a Credit Bureau Maturity Matrix review. A Maturity Matrix is a methodology which organisations use

to benchmark one of their key business processes or functions against accepted global best practice. Maturity

Matrices have been used for improving key credit business processes such as collections or originations by many banks and credit providers for a number of years. A Credit Bureau Maturity Matrix (CBMM) employs the

same methodology and approach but in this case in order to help organisations to better understand how they can improve their usage of credit bureau data, technology and services and so create a roadmap to

implementing improvements that will, in turn, generate better ROI and value.

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The CBMM methodology examines four key areas in detail, notably: Strategy; People; Process and Technology and maps each of these key areas to both a current and desired state. Once the organisation understands

where they currently compare to best practice in respect of these four areas verses where they want to be, they are then able to create a roadmap and series of improvements to get them to their desired state.

Within each of the four key areas, a series of metrics and measurements is defined that enables the organisation to identify where they currently are in respect of being a Follower, Leader or Visionary and this then provides

the starting point for building the roadmap. For example, under Strategy we might consider the following items:

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Under Technology, some of the key metrics might include:

It is not necessary for every organisation to want to be a Visionary against each metric in every category

(typically there are 15-20 metrics per category), nor is it desirable, given cost, resources and timing constraints.

However, what is important is that the organisation that goes through this process is clear on what they want to achieve in order to improve their current state and then commits to the roadmap and improvements that

need to be implemented in order to achieve this.

What the CBMM does, therefore, is provide a structure and methodology for companies that use credit bureau

data to improve the value they can generate from the bureau, its data and other services. It is an efficient and effective means of identifying new areas of opportunity to deploy credit bureau data and to better uti lise this

data to enhance current Strategies, People, Processes and Technology in order to improve competitive positioning, ROI and, ultimately, financial performance. Large organisations and complex businesses, such as

commercial banks are consistently looking for ways to improve their own processes and investment in data,

systems and people. The CBMM provides a solution for any organisation looking to improve its use and deployment of credit bureau data.

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Ian Read

Chief of Credit Excellence (SIMAH)

Banker of the future Report

The Kingdom of Saudi Arabia has ambitious plans as part of its Vision 2030. This Vision can only be realized through its talented people, as the Chairman of the Council of Economic and Development Affairs Deputy Crown

Prince Mohammad bin Salman bin Abdulaziz Al-Saud so eloquently states:

‘’Our country is rich in its natural resources. We are not dependent solely on oil for our energy needs. Gold,

phosphate, uranium, and many other valuable minerals are found beneath our lands. But our real wealth lies in the ambition of our people and the potential of our younger generation. They are our nation’s pride and the

architects of our future’’.

This brings me to the heart of the article, the importance of transforming and enhancing the talent of the next

generation of bankers.

Understand the expectations of the new generation of bankers – also known as Gen Y!

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According to the latest E&Y Banker of the Future Report, Gen Y will constitute 72% of the global workforce

by2025. Their career objectives and attitudes toward work will shape the workplaces of the future. Understanding their strengths and expectations is the first step to success. Here are some key To-DOs:

To-Do #1: Learn how to get the best out of Millennials. Embrace their collaborative and entrepreneurial

natures. Balance their strengths with those of other generations and let their tech skills lead digital change and

innovation in the workplace.

Assess technology’s impact on the workforce

Believe that robots will be running the city in less than 10 years? E&Y tells us to “stop the scare mongering,

and start strategizing!” It’s not about reducing staff where automation can replace them. The challenge is to transform and up-skill for new roles, which is much more complex.

To-Do #2: Start imagining three to five years ahead. Ask yourself, what will be the three most important skills to add valuable human intervention? Begin grooming those skills now.

Change Culture to Encourage Diversity of Thought

Financial performance will be driven by an internal culture of innovation, in which everyone has a role to play. Diversity of thought arises from a variety of background and experience. As they say, “the whole is greater than

the sum of its parts” – meaning that the way you combine people into teams is when magic happens.

To-Do #3: Encourage diversity in the workplace. Promote and foster a supportive, flexible work culture. Think

about how to create a great team. For example, for each creative person, a linear thinker balances out the equation.

Nurture and Empower a Collaborative Workforce

While innovation is key, don’t let “intrapreneurism” divide your teams. Remain united with common vision, values and goals, and ensure that the right processes are in place to bring out the best in your teams.

To-Do #4: Rethink your HR life cycle and adopt fresh approaches at each stage to attract, nurture and retain talent. Try new things – crowd source solutions in the organization, implement an internal hackathon, and

harness the power of “test and learn” in your organization.

So, what to you need to remember? In the banking and technology transformation, be mindful of

the three powerful change agents: process, product and people.

Michelle Katics Founder and CEO (BankersLab)

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SIMAH Launches “SIMAH APP" for Smart Devices

The Saudi Credit Bureau (SIMAH) has launched the second version of SIMAH APP for smart devices, the first of its kind across the Middle East. The application was developed according to the highest specifications to ease the access of its

clients to their credit reports and enjoy all online services at any time and from any place.

SIMAH demonstrated that the new version of the application which operates through iPhone and Android systems is

equipped with new online client services enabling them to register in SIMAH services and create an account to receive their credit reports easily and safely. Further, the application allows its users to review their credit data in an interactive graphical

way that encompasses active credit products, default products, guaranteed default products, narratives, in addition to reviewing bounced credit cheques if any. SIMAH also allows its clients through its new application to examine the full credit

report, download and save a copy of it on their devices to print it out.

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Growth in the Demands of Automotive and Educational Sectors

The Saudi Credit Bureau (SIMAH) reports indicated an increase in the number of membership applications during 2016; the

number of registered members has reached more than 235 by the end of the second quarter of this year.

Registered memberships covered a number of areas and activities in both public and private sectors including the banking

sector, service sector (telecommunications, water and gas), insurance sector, automotive sector, government funds, as well as government bodies such as the Ministry of Housing, the Ministry of Justice, the Saudi Arabian General Investment

Authority in addition to providing services for financing and leasing sector, automotive sector, real estate sector, health sector, education sector and furniture and furnishings sector.

By the end of the second quarter of this year, membership’s applications were the highest in the education sector, followed by the automotive sector.

This escalating growth in the number of members is due to the importance of credit data for all business sectors and its

contribution in credit merit assessment of current/potential clients. Further, it helps beneficiaries in making sound decisions

based on credit risks assessment in a quick and objective way.

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More than 63,000 Individuals subscribing to “SIMAH” Services

The number of individuals who have registered and subscribed to SIMAH’s Direct to Consumers services has reached 63.384 during the first half of this year (2016). An increase of 174% compared to 2015, when the number was 23.103.

Likewise, the number of Credit Reports delivered directly by SIMAH to consumers was 159.038, with an increase of 30%

compared to 2015. The credit reports are nowadays mostly distributed to consumers through SIMAH’s on line channels (website or SIMAH APP via smart devices). This increase is related to the spread of awareness among clients on the

importance of credit reports. Consumers are increasingly aware that monitoring their credit reports periodically helps them keep the level of their debts under control and improves their credit merit.

In order to address this rapid growth in the number of enquiries from Consumers and requests of credit reports, SIMAH has recently upgraded its credit report for Individuals with new features that make reports more user-friendly and improve

the customer experience.

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SIMAH and Qarar host successful workshop for banking and finance professionals

SIMAH, Qarar and their partner BankersLab last month hosted a successful workshop entitled “Mastering Effective Collections in a simulated lending environment” Leading the sessions for the event were domain experts Ms. Michelle Katics,

founder and CEO BankersLab and Mr. Roshan Mall Senior Associate at Qarar.

The workshop was targeted at Retail Banking Managers and Executives, Risk Managers, Collections Managers, Product

Managers and Analysts.

The aim of the workshop was to learn from our industry experts, and to be immersed in a simulated lending environment

to battle it out in teams, the winner successfully emerging as the most effective virtual bank. In addition to learning and the having the opportunity to practice strategies that would lead to improved collection effectiveness, participants were

encouraged to use the knowledge gained to make an immediate impact when they returned to their own respective organisations.

The workshop covered a review of collections concepts and best practices, teams managed virtual portfolios in a simulated lending environment using the award winning CollectionLab simulation software. Areas covered included collection

management, economic stress, product growth, staffing and resource allocation.

The course attended by 27 practitioners from 12 major banking and finance companies. Was deemed a success by the

majority of participants with a satisfaction rating of 89%. A typical comment summed up the mood for many participants “What I liked most about the CollectionLab was the Bank Simulation; it was very smart and the reports straight forward,

friendly challenges, getting the idea of strategy adjustment in terms of collection, it seems like a real case, so nice for my work.”

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Saudi women and credit

Between 2011 and 2015, the number of women being granted new credit products increased significantly,

from 186,336 to 307,811. as outlined by the Graph below:

As the number of women who apply for credit has increased, so has the number of women whose applications

are accepted (more than 30% since 2014, as shown in the graph below). There is no doubt that women will become an even more important part of the overall consumer credit population in years to come as access

to credit becomes more and more available, and – with SIMAH’s robust positive credit bureau – information

asymmetry between lenders and borrowers is reduced.

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The Saudi Credit Bureau (SIMAH) is the first and sole licensed national credit bureau offering consumer and commercial credit information services to respective members in the Kingdom of Saudi Arabia.

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Disclaimer: The views and opinions expressed in this Newsletter are those of the authors, and do not necessarily reflect the official policy or position of SIMAH.

Editorial Management - Aljawharh Al-Hamed Designed and managed by SIMAH