South African Lenders Have a Tough Balancing Act

The South Africa financial services industry has built a credit risk management practice with world-class sophistication. But with this sophistication comes the tough balancing act faced by first-world banks worldwide.

This was abundantly clear at this month’s FICO World Summit in South Africa, where a group of talented and savvy executives discussed many different aspects of credit management, including Big Data and social networks usage, capital management, best practices in collections and recovery, and customer engagement.

At this daylong event, I and my FICO colleagues brought several of the sessions from FICO World 2013 to Johannesburg. Some of the key discussions revolved around:

• Balancing customer value and profitability — how can a bank achieve the perfect balance between return to consumers and return to stakeholders?
• Improving capital management — how can a bank ensure lower business risk and proper allocation, maintain the financial services industry’s health, and give the regulators what they need?
• Bringing a customer service focus to collections and recovery — how can lenders collect more while treating each customer with respect, and selecting the right communication channel for each customer?

These questions and more are critical to South African lenders, as they are to banks in many other countries. Based on the discussions we had this month, it may be South African lenders who find some of the most innovative answers.