by Kevon Browne
St. Kitts and Nevis (WINN)—The Eastern Caribbean Central Bank (ECCB) has launched the 26th season of its series, ECCB Connects, examining the Eastern Caribbean Currency Union (ECCU) Credit Bureau.
The episode includes an interview with Van Reynders, CEO of EveryData ECCU Limited, who provides an overview of the bureau’s operations and impact on the region’s credit system.
Reynders, a professional with extensive experience in credit bureau and risk management across various markets, described the function of a credit bureau.
“A credit bureau is an institution licensed by a central bank, such as the ECCB, to operate as a credit referencing agency, in the ECCU in this case, with a mandate to collect and protect credit-related information from a number of financial institutions, in this case being primary data providers, banks, credit unions, microfinance, and then with the purpose of consolidating that information into credit profiles, credit reports, with the primary function of making that information available to financial institutions, so that at the time of lending, they can have a consolidated view of their borrowers to make informed decisions about lending criteria.”
The ECCU Credit Bureau operates under the ECCB’s Credit Reporting Act, which mandates that financial institutions, including banks, credit unions, and microfinance organisations, share credit data with the bureau. Reynders noted that the bureau initially focuses on primary financial institutions and plans to include secondary data providers, such as insurance companies and retail credit agencies, in future phases.
The bureau aims to facilitate access to credit by providing comprehensive data to lenders.
“What we are doing as a credit bureau is we are reducing the barriers of access to credit, all right? And this is really where the power of the credit bureau is, is that financial institutions, when they want to lend to borrowers, don’t have information on their borrowers. Who is my borrower? What is their exposure? Or where else do they have credit? And what is their propensity to honour their obligations? Or what’s the likelihood of me getting my money back? And because of that lack of information, it’s very difficult for lenders to give credit, right? And so there [are] high interest rates. There is [a] high demand for collaterals. They reject loans because of a lack of information. And so what we are doing is we are collecting this information and making it available to lenders in real-time at the time of application so that we can reduce these barriers of access of entry,” Reynders explained.
The bureau’s data collection supports more informed lending decisions, potentially reducing high interest rates and loan rejections due to limited borrower information.
Reynders also highlighted the benefit of the bureau’s data for borrowers, including those using microfinance services.
“We can build reputational collateral with a small microfinance where it’s easy to get credit. But then, through using the credit bureau, if I then walk into a more formal finance institution to get [an] SME loan or vehicle financing, that institution can use your reputational collateral from the lower levels of credit and say, now we know who this person is. We can see the KYC.
We can see that they’re a good person that; they honour their obligations. And we can also see their full exposure so we can be certain that they can afford this loan. And that makes it easier for the financial institution to give the credit.”
Data protection is a critical component of the credit bureau’s operations. Reynders emphasised that the bureau adheres to strict data protection regulations, granting access only through explicit written consent from consumers.
He clarified that consumers must provide written consent for each credit transaction, and this consent is specific to each application.
“Even though we are collecting their data, we protect that data at all costs. We’re a data protection company, essentially. We collect this information and protect it from unauthorised access. It’s very strict, the regulation around that. We get audited by the central bank. We have internal auditors as well as external auditors. So, really, what I want to emphasise here is that no one will have access to that information unauthorised without the written consent of the data subject. So although we sit on this consolidated database, if an authorised user, such as a person at the bank, wishes to check my credit report, they have to get written consent from me as a consumer,” Reynders stated.
Understanding the implications of the credit bureau and its functions empowers consumers and lenders. Consumers will access more information on the intricacies of getting credit and loans.
As ECCB Connects progresses, future episodes will further explore the implications of credit reporting for both lenders and consumers. Watch episode one below:
