Modernizing consumer lending
in Vietnam

VietCredit aims to revolutionize the consumer finance market with SAS^®

The consumer lending market in Vietnam has undergone years of explosive growth. Record-high levels of consumer spending are predicted to drive continued growth in the sector over the next several years, attracting a slew of new banks and foreign investors.

A spinoff of the Cement Finance Joint Stock Company, VietCredit has positioned itself to capitalize on this opportunity. The company invested in SAS to power its credit risk modeling for making fast and accurate credit decisions, like what credit limits to set and according interest rates.

“VietCredit sees that consumption demands have been booming for a decade, and we want to provide financial products that fulfill our customers’ needs and promote the development of the market in Vietnam,” says Chief Risk Officer Le Phuong Hai.

A sophisticated decision engine

The ability to properly assess credit risk is essential for making good lending decisions. But many Vietnamese citizens are new to banking, and thus there is a lack of credit history for making accurate assessments. This can result in higher interest rates on loans, lower credit limits or even denial of loans or credit cards for customers – not good for business.

SAS addresses this challenge by giving VietCredit a better way to understand, evaluate and authenticate potential customers. The solution, which includes SAS Credit Scoring and SAS Intelligent Decisioning, enables the bank to collect and analyze information from social networks, telco and utility providers, and e-commerce vendors to shed light on consumer behavior patterns.

This insight allows VietCredit to assess new customers quickly and offer loans and credit cards to a previously untapped market – applicants without a credit history. Within its first five months of operation, VietCredit issued 11,000 credit cards with a total credit limit of $11 million. The bank plans to scale this number to 200,000 cards in the next 12 months.

“My previous experience with SAS gives me confidence that we made the right choice for our credit risk requirements,” Hai says. “The landscape we operate in is competitive, with fintechs and traditional banks fighting for a share of the pie. The vast capabilities of SAS will stand us in good stead.”

Up and running quickly

The speed in which the bank assesses risk is also notable. Prior to SAS, it used Excel spreadsheets for loan origination, credit scoring and decision making. This process was slow and error-prone, which could damage the customer experience. Today, VietCredit can make a credit decision in as little as five minutes. And soon the company will launch pre-approved cards, giving cards to customers on the spot and activating them at the conclusion of their meetings. This is a sharp contrast to the several days it can take financial institutions using legacy systems to return a decision.

Pivoting from decision-making speed to model-building speed, one of the common issues in credit risk modeling is the long model life cycle. Different data definitions between business units, poor data quality and insufficient IT resources are some challenges that prevent models from going into production quickly. With help from SAS, VietCredit was able to get its model up and running swiftly, the result of a strong partnership, according to Hai.

“Our team is lean, and we really appreciate the detailed documentation and training that SAS provided,” he says. “We were able to productionize our model quickly. Their commitment to supporting users is proof to me that SAS approaches each customer as a partnership.”

More use cases in sight

Credit risk modeling is just the start of VietCredit’s analytics journey. As Vietnam’s consumer lending market grows, the company has the technology to evolve with it. The open and flexible nature of the SAS Platform enables the bank to reuse and scale its data, business rules and analytical models across different use cases.

Future focus areas include customer intelligence, capital calculation, IRB, ICAAP, enterprise stress testing, model risk management, expected credit loss, fraud detection and prevention. All these areas are ripe for analytics and will support business growth in the long run.

“In the today’s economy, no company can succeed alone,” Hai says. “SAS has been a true partner in helping us toward our mission. I wouldn’t hesitate to recommend SAS to others, even to a competitor. After all, it’s our customers – the Vietnamese people – who will benefit from lower interest rates and faster loan approvals.”