Saudi Credit Bureau (SIMAH) Enables Millions More Consumers to Access Bank Loans After Introducing FICO Score

Highlights:

SIMAH has introduced the FICO® Score to the Saudi market helping to grow financial inclusion and enabling lenders to increase their portfolios
Millions more Saudis can access loans since the FICO Score introduction in 2011
SIMAH won a 2022 FICO^® Decisions Award for financial inclusion

The Saudi Credit Bureau (SIMAH), a leader in credit bureau information management in the Middle East and North Africa (MENA), has administered the successful rollout and adoption of the FICO® Score by lenders in the country, enabling millions more Saudi customers to receive loans from banks. This growth in financial inclusion was made possible by SIMAH’s advocacy efforts with financial institutions and a parallel education campaign with consumers.

“We have been on a journey in Saudi since 2011, to grow lending and increase financial inclusion through the adoption of advanced risk assessment tools,” said Swaied Alzahrani, CEO of SIMAH.

Prior to the implementation, lenders in the region had been relying heavily on salary data to assess a consumer’s propensity to repay a loan. This meant that numerous segments such as the self-employed, entrepreneurs, retirees and others struggled to access loans. SIMAH worked closely with lenders to demonstrate the predictive power of scoring and the potential it had to increase portfolio performance.

“Initially, to facilitate adoption, SIMAH offered lenders the use of scores free-of-charge to test and demonstrate their predictive power,” explained Alzahrani. “The results were strong, so it didn’t take long for lenders to be convinced and adopt the FICO Scores provided by the bureau, which allowed them to onboard new customer segments reliably.”

The second challenge was educating the Saudi public about credit scoring and the financial behaviours that would be most effective for building and maintaining a healthy credit history and score.

“SIMAH sought to address the importance of having balanced credit commitments, that were paid on time,” said Alzahrani. “This was significant, as initially numerous false narratives existed among consumers, such as the idea that one should have little or no credit to ensure you could maintain a good score.”

Built in partnership with leading global scoring expert, FICO, SIMAH worked to solve their business challenges by developing risk assessment tools using a fully empirical scoring model, fitted to their local market. SIMAH was the first to offer a scoring product in the country. Now in its fourth version, the empirical FICO^® Score model based on SIMAH data offers a new scoring mechanism and incorporates important local factors that present unique and enhanced value to Saudi lenders and creditors.

Over 700 Saudi Arabian specific characteristics were developed to account for the nuances, constraints, and trends of the Saudi market. Due attention and analysis were given to features such as salaried loans, expatriates, and telecom data. These important local factors were then used to create predictive characteristics that presented unique and enhanced value to Saudi lenders.