The name Creditinfo Group is globally synonymous with reliable credit scoring, empowering lenders with a holistic report on the financial situation of borrowers and, in the process, widening access to finance for smaller customers who may not yet have a public footprint to support their loan request.

Clifford Debono, Country Manager of the Malta branch, which has been operational since 2002, explains that credit bureaus are a key enabler of a sound financial and lending infrastructure, and should be an integral entity in a financial institution’s credit decision process.

“As the only authorised Credit Reference Agency & Credit Bureau, we work very closely with most of the local financial institutions on different levels. We also have partnerships with various technology providers both locally and internationally, taking advantage of being part of a worldwide group of companies,” he says.

He describes being the only authorised credit bureau in Malta as not only a huge honour, but also a huge responsibility.

“Data and sources are the first pillars of our services, and we are in a constant effort to enhance and improve our current data sources, while trying to add new ones, using advanced technology. This is the first pillar for our array of products and services – an accurate and as much as possible updated database,” Mr Debono explains, adding that Creditinfo’s services go a cut above by enabling strategic partnerships with local and foreign companies in the credit bureau industry, as well as in other sectors.

The industry has been considerably enabled through the rise of new financial technology and alternative data sources, which have made it possible to take a more holistic view of a person’s creditworthiness, resulting in a more accurate scoring approach.

“Now it’s possible to consider a person's past behaviour within the financial system and explore behaviours in different contexts and time changes. Moreover, these new partnerships and tools can help lenders meet consumers that don’t have a credit bureau footprint to empower them, as now it is possible to evaluate the creditworthiness and trustworthiness of an individual beyond their limited credit history or insufficient credit extension,” Mr Debono says.

Understandably, credit reporting relies heavily on data accuracy and on the guarantee of privacy for both consumers and lenders. Mr Debono describes this as a main tenet of Creditinfo’s operations, especially as inaccuracies could have seriously negative consequences for both consumers and businesses.

“Our role as a credit reporting agency is to help facilitate fair and affordable credit to consumers and businesses, and that’s why data accuracy is mission-critical and central to our corporate values. Creditinfo performs comprehensive and continuous examination procedures that include directly reviewing the policies and practices within the company. These steps include reviewing how data furnishes are screened, steps taken to minimise the likelihood of incorrect information on a report, measures to prevent duplicate information and any programs designed to assess the accuracy of consumer information,” he explains.

Moreover, market incentives provide another powerful mechanism to ensure improved data accuracy, as credit reporting agencies compete to have the most reliable and accurate data.

“If inaccurate data is reported, we all spend more time responding to consumer disputes instead of investing in new products and services to help consumers.”   

Accuracy is further aided by the relatively recent advent of open banking, which has the potential of providing credit bureaus with access to a wide range of financial data that was previously unavailable. Mr Debono explains that, by integrating data from various financial institutions, credit bureaus can obtain a more comprehensive view of an individual’s economic history, enabling them to make more accurate credit decisions.

“By verifying an individual's financial data across multiple sources, credit bureaus can ensure that the information they have is accurate and up to date, reducing the risk of fraud. Moreover, access to a broader range of financial data allows us to gain better understanding of an individual's financial history and to offer more suitable credit products based on their financial profile,” he elaborates, adding that for the past months Creditinfo has been investing in its operations and technology in order to take full advantage of open banking regulations that will improve individuals’ credit risk assessment and calculate credit scores.

When dealing with this level of sensitive data, it is impossible not to wonder what measures are taken to protect it, especially in view of the fact that cybersecurity is becoming an increasingly crucial aspect of data protection. On a group level, Mr Debono shares, Creditinfo has always placed security as a fundamental part of its core values, and this approach extends to the Malta branch.

“The group has a Chief Security Officer who oversees all security measures, as well as an Information Security Policy by which all business units have to abide. Creditinfo is fully aware of the importance of maintaining the availability, confidentiality and integrity of information related to the group, its employees, clients, and other partners. We are committed to securing all assets at our disposal; we take steps to identify and evaluate risks and we declare such commitments to clients, employees and external partners,” Mr Debono replies.

This is ensured through different measures such as data encryption, access controls, data minimisation, continuous monitoring and regulatory compliance. Moreover, employees throughout the entire organisation are given continuous cybersecurity educational sessions to help further enhance these efforts.

Asked whether the COVID-19 pandemic left an impact on consumer credit behaviour or led to any new trends, Mr Debono acknowledges that the outbreak did shed new light on the need to focus on the financial resilience of individuals, households and companies.

“At the same time, it has changed the way most of us live and interact with each other, which in turn has led to an impact on consumption behaviour and patterns. To quote one example, a Bank Lending Survey carried out in 2021 by the Central Bank of Malta states that domestic participating banks reported a tightening in both the credit standards and terms and conditions for mortgages, in part owing to lower risk tolerance by banks and higher risk perceptions. This was corroborated with a drop in demand for such loans during COVID-19 period,” he says.

Even though the industry remains very much in its infancy in Malta, it does face a specific set of challenges and opportunities. How is Creditinfo positioned to address these, and where does Mr Debono see the sector heading in the next few years?

“The primary challenge is that of data quality, accuracy and availability, elements that are all essential for the effective functioning of a credit bureau and a credit reference agency. However, securing access to the most basic data required for a credit bureau to function is still a constant struggle in the local scenario,” he replies.

Another challenge concerns the availability of skilled personnel, mostly due to the fact that the industry is still relatively new and still considered somewhat niche.

“I believe that these together with other challenges such as counterparty and cybersecurity risks, will continue being key challenges, even in the near future.”

But the sector also brings with it opportunities, mostly centred around the effectiveness of information sharing between different entities.

“Different theories predict that information sharing institutions alleviate problems of asymmetric information by countering adverse selection, moral hazard and information monopoly, while reducing over-indebtedness,” Mr Debono concludes.

To learn more about how credit reporting can empower businesses and individuals, visit Creditinfo.