MAKATI CITY, 11 December 2020 – The Policy and Economic Research Council (PERC), a think tank based in the United States, together with the Makati Business Club (MBC), a private non-stock, non-profit business association, recently released the findings of its study which reviewed and assessed the Credit Information System in the Philippines.

In the virtual forum entitled "Philippines Credit Information System Forum: Driving Credit Information as a Strategy for Recovery and Inclusion" held in November, PERC and MBC took note of the prevailing issues in the current setup of the Credit Information Corporation (CIC)—the country’s sole public credit registry and repository of credit information—and presented recommendations and possible measures forward.

The forum was graced by Sen. Sonny Angara, author of R. A. No. 9510 or the Credit Information System Act (CISA), Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno, and Securities and Exchange Commission (SEC) Chairperson Emilio Aquino, all introduced by MBC Executive Director Coco Alcuaz.

Milestones, accomplishments

The MBC-PERC study sought to provide useful information to all stakeholder groups across the Philippine credit information ecosystem through gathering their insights, experiences, and observations.

Atty. Aileen L. Amor-Bautista, CIC SVP for Business Development and Communications, expressed her gratitude to MBC and PERC for pushing through with the study even amid the pandemic.

“We are grateful that the MBC and PERC study was able to recognize all our notable accomplishments, our mission-oriented leadership and staff, and awareness-raising efforts. From the initial resistance by some covered entities, a total of 534 financial institutions from across all sectors are now submitting live or actual credit data of their borrowers to our database,” Atty. Amor-Bautista shared during her keynote message.

The study acknowledged the CIC’s accomplishments including its volume of credit data which is now at 22 million unique individual records.  

“The CIC has made incredible contributions despite some real significant constraints,” PERC President Michael Turner said, citing the increase in quality and quantity of data shared with the central repository. “And it’s not only a pipe-in to the CIC, but also pipes out to the extent that there are accessing entities—lenders who are making use of CIC data for varying purposes including origination and risk assessment.”

As of date, the CIC has a total of 79 accessing entities including major universal and commercial banks, rural and thrift banks, microfinance, lending and financing companies, cooperatives, and government lending institutions.

Key findings, recommendations

One of the key findings presented by Atty. Joel Arzaga, lead researcher of the MBC-PERC study, is the dual role of the CIC as a public credit registry which aims to collect and collate data and help regulate an industry,  and as a revenue-generating service provider which needs to earn profit to sustain its operations.

The study likewise suggested that “while the CIC could earn fees, it should not be considered its primary source of revenue,” emphasizing the need for the government to substantially increase the CIC’s budget allocation.

Another key finding is the importance of proper management of data quality in developing an effective credit reporting system.

Asia Pacific Finance Forum Coordinator Dr. Julius Caesar Parreñas also stated that in many emerging markets like the Philippines, building an effective credit reporting system faces a number of practical challenges including the lack of unique identifiers for different data subjects at reasonable cost and poor quality of data, among others.

“Economies have to take measures to meet these challenges by including the introduction of unique identifiers such as individual IDs in conjunction with central ID databases to enable verification, development of a digital identity system to remove the need for in-person authentication of individual’s documents, and promoting automation of data collection,” Dr. Parreñas said.

Meanwhile, the CIC highlighted that the credit reporting format required by the credit registry is the same for all lenders.

“It is the data collection side of the lenders varying from one to another which makes the reformatting of data requirements potentially difficult for CIC,” Atty. Amor-Bautista explained.

She further clarified that the CIC has created a preferred environment for its accredited credit bureaus as channels for distribution: “We are also actively promoting them as a better source of data because of their value-added services such as portfolio monitoring and credit scoring which are outside the mandate of the CIC.”

The SVP likewise shared how the CIC’s Primary ID (PID) Number Tagging System was able to address one of the long-standing challenges in ensuring data quality: the lack of TIN, SSS, and GSIS IDs among borrowers of microfinance institutions, cooperatives, and rural banks.

Ways forward 

Atty. Amor-Bautista also reiterated how the CIC concurs with the key findings of the study “that data quality needs to be further improved, that the government should boost funding for its credit registry, and that the CIC should focus on continuing to be the largest, most accurate, highly available credit registry in the Philippines.”

The MBC-PERC study further suggested that the BSP may be a better regulator of the CIC than the SEC, citing an international best practice of a nation’s central bank housing the public credit registry.

“With the proposed restructuring of the CIC—while maintaining its legal mandate—we look forward to a more efficient and more effective credit registry to service not just financial institutions, not just MSMEs, but all Filipinos to establish creditworthiness, here and abroad,” Atty. Amor-Bautista added.

CIC’s newly elected President and CEO, Atty. Ben Joshua Baltazar, also expressed that the CIC is definitely open to exploring the proposal of transferring the CIC to the BSP. He also served as a reactor in the virtual forum as a liaison to the two agencies, and enumerated the notable contributions of the SEC to the CIC.

Other reactors in the virtual forum were BSP Managing Director and CIC Director Vicente de Villa III; TransUnion Philippines President Pia Arellano; Bankers Association of the Philippines (BAP) President Cezar Consing; and UBx Philippines President John Januszczak.

“I look forward to working with you all. I expect that this will not be a flash in the pan kind of engagement. In fact, I think this will birth into deeper and multiple engagements with every stakeholder and partner that we can engage with,” the PCEO ended.

PERC Director of Research Patrick Walker delivered the closing remarks and emphasized that the purpose of the research was to identify major challenges that do exist, highlighting major shortcomings, proposing potential solutions, and consequently having a productive dialogue among key stakeholders in the credit information sharing space in the Philippines.

This press release has been featured in BusinessMirror and Manila Insight.