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What We Learned At The 7th Annual CEM Africa Summit

August 31, 2018 at 9:53 AM

When we initially committed to being sponsors and exhibitors at the CEM Africa Summit, our team was very excited. Not only would we have a space on the floor that would give us the opportunity to meet and connect with attendees, but we’d also have the chance of exploring the sessions at this prestigious summit ourselves.

The conference took place on the 1st and 2nd of August at the Cape Town International Convention Centre, and boasted attendees from across Africa. With 500 attendees from 150 companies spanning across many industries, it was a great learning opportunity.

The main highlights from the conference sessions

The summit was structured into four main sessions:

  1. Driving Customer Emotions
  2. Calculating Experiences
  3. Extracting Value from Data
  4. Outside-In CX

Each session included keynotes from great speakers, panel discussions and workshop sessions focussed on the session’s theme. Our two favourite keynotes were:

How AI Will Let Us Be Marketers Again: Keynote by Tim Oakhill – IBM Worldwide Watson Marketing Strategist & SME

Tim Oakhill spoke about how AI-powered marketing is smarter marketing. With marketers inundated with too much data and having to meet rising customer expectations, he believes marketers are being asked to land on the moon!

“Turning streams of data that currently inundate marketers into business insights has become a necessity to win, serve, and retain customers.” – Jim Nail, Tina Moffett, Forrester Research

Marketers can create better experiences and work smarter with AI-powered marketing. By giving marketers access to data-insights like the best performing customer journey and customer churn predictions, they can free up time spent trying to reach these conclusions without AI. This will allow marketers to be more strategic and more creative.

The Role Of Data In Bringing CX To Life: Keynote by Mumbi Odame – Barclays Africa VP Digital Channels

Mumbi Odame spoke about how managing customer experience requires the whole company’s input, and a good understanding of your customers & each of their ecosystems. She covered the difficulties faced with collecting and utilising customer experience data and covered a high-level process for using data insights in your CX strategy. The key take-away was to start with your business objective, determine what data you’d need to satisfy your objective, and go about collecting this data. Once you have the data, apply advanced analytics and implement any findings from your analysis in your decision making.

She also covered measuring the financial impact of the customer experience, before and after implementing any data-driven decisions to have a clear view of the impact of changes. And for data analytics to be successfully adopted, you need to create a culture of curiosity in your organisation.

What did we do at the conference?

Well, apart from attending the sessions and learning from great industry minds, we had an exhibition stand at the conference, where we connected with attendees and spoke about our customer engagement technology. Read more on the customer engagement solution we spoke about at the summit here.

If there’s any conference or summit you’d like to see us at, let us know by commenting below!

using data analytics for customer engagement

Perry de Jager
Perry de Jager
Perry has been involved in Collections and Recoveries for the past 12 years, spending time in different market segments ranging from law firms to investment companies. At Principa, Perry has worked on extended projects within both South Africa and the Middle East with some of the largest financial organisation, providing on-site consulting within the collections and recoveries space covering strategy, process, people and technology.

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The 7 types of credit risk in SME lending

  It is common knowledge in the industry that the credit risk assessment of a consumer applying for credit is far less complex than that of a business that is applying for credit. Why is this the case? Simply put, consumers are usually very similar in their requirements and risks (homogenous) whilst businesses have far more varying risk elements (heterogenous). In this blog we will look at all the different risk elements within a business (here SME) credit application. These are: Risk of proprietors Risk of business Reason for loan Financial ratios Size of loan Risk industry Risk of region Before we delve into this list, it is worth noting that all of these factors need to be deployable as assessment tools within your originations system so it is key that you ensure your system can manage them. If you are on the look out for a loans origination system, then look no further than Principa’s AppSmart. If you are looking for a decision engine to manage your scorecards, policy rules and terms of business then take a look at our DecisionSmart business rules engine. AppSmart and DecisionSmart are part of Principa’s FinSmart Universe allowing for effective credit management across the customer life-cycle.   The different risk elements within a business credit application 1) Risk of proprietors For smaller organisations the risk of the business is inextricably linked to the financial well-being of the proprietors. How small is small? The rule of thumb is companies with up to two to three proprietors should have their proprietors assessed for risk too. This fits in with the SME segment. What data should be looked at? Generally in countries with mature credit bureaux, credit data is looked at including the score (there is normally a score cut-off) and then negative information such as the existence of judgements or defaults; these are typically used within policy rules. Those businesses with proprietors with excessive numbers of “negatives” may be disqualified from the loan application. Some credit bureaux offer a score of an individual based on the performance of all the businesses with which they are associated. This can also be useful in the credit risk assessment process. Another innovation being adopted internationally is the use of psychometrics in credit evaluation of the proprietors. To find out more about adopting credit scoring, read our blog on how to adopt credit scoring.   2) Risk of business The risk of the business should be managed through both scores and policy rules. Lenders will look at information such as the age of company, the experience of directors and the size of company etc. within a score. Alternatively, many lenders utilise the business score offered by credit bureaux. These scores are typically not as strong as consumer scores as the underlying data is limited and sometimes problematic. For example, large successful organisations may have judgements registered against their name which, unlike for consumers, is not necessarily a direct indication of the inability to service debt.   3) Reason for loan The reason for a loan is used more widely in business lending as opposed to unsecured consumer lending. Venture capital, working capital, invoice discounting and bridging finance are just some of many types of loan/facilities available and lenders need to equip themselves with the ability to manage each of these customer types whether it is within originations or collections. Prudent lenders venturing into the SME space for the first time often focus on one or two of these loan types and then expand later – as the operational implication for each type of loan is complex.   4) Financial ratios Financial ratios are core to commercial credit risk assessment. The main challenge here is to ensure that reliable financials are available from the customer. Small businesses may not be audited and thus the financials may be less trustworthy. Financial ratios can be divided into four categories: Profitability Leverage Coverage Liquidity Profitability can be further divided into margin ratios and return ratios. Lenders are frequently interested in gross profit margins; this is normally explicit on the income statement. The EBIDTA margin and operating profit margins are also used as well as return ratios such as return on assets, return on equity and risk-adjusted-returns. Leverage ratios are useful to lenders as they reflect the portion of the business that is financed by debt. Lower leverage ratios indicate stability. Leverage ratios assessed often incorporate debt-to-asset, debt-to-equity and asset-to-equity. Coverage ratios indicate the coverage that income or assets provide for the servicing of debt or interest expenses. The higher the coverage ratio the better it is for the lender. Coverage ratios are worked out considering the loan/facility that is being applied for. Finally, liquidity ratios indicate the ability for a company to convert its assets into cash. There are a variety of ratios used here. The current ratio is simply the ratio of assets to liabilities. The quick ratio is the ability for the business to pay its current debts off with readily available assets. The higher the liquidity ratios the better. Ratios are used both within credit scorecards as well as within policy rules. You can read more about these ratios here.   5) Size of loan When assessing credit risk for a consumer, the risk of the consumer does not normally change with the change of loan amount or facility (subject to the consumer passing affordability criteria). With business loans, loan amounts can range quite dramatically, and the risk of the applicant is normally tied to the loan amount requested. The loan/facility amount will of course change the ratios (mentioned in the last section) which could affect a positive/negative outcome. The outcome of the loan application is usually directly linked to a loan amount and any marked change to this loan amount would change the risk profile of the application.   6) Risk of industry The risk of an industry in which the SME operates can have a strong deterministic relationship with the entity being able to service the debt. Some lenders use this and those who do not normally identify this as a missing element in their risk assessment process. The identification of industry is always important. If you are in manufacturing, but your clients are the mines, then you are perhaps better identified as operating in mining as opposed to manufacturing. Most lenders who assess industry, will periodically rule out certain industries and perhaps also incorporate industry within their scorecard. Others take a more scientific approach. In the graph below the performance of an industry is tracked for two years and then projected over the next 6 months; this is then compared to the country’s GDP. As the industry appears to track above the projected GDP, a positive outlook is given to this applicant and this may affect them favourably in the credit application.                   7) Risk of Region   The last area of assessment is risk of region. Of the seven, this one is used the least. Here businesses,  either on book or on the bureau, are assessed against their geo-code. Each geo-code is clustered, and the projected outlook is given as positive, static or negative. As with industry this can be used within the assessment process as a policy rule or within a scorecard.   Bringing the seven risk categories together in a risk assessment These seven risk assessment categories are all important in the risk assessment process. How you bring it all together is critical. If you would like to discuss your SME evaluation challenges or find out more about what we offer in credit management software (like AppSmart and DecisionSmart), get in touch with us here.

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