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Local banks however satisfied with their own credit checks at credit bureau addresses. At least two American firms are considering setting up consumer credit bureaus here to help banks track the credit history of potential clients. But some of the local banks are not too hot about this idea, because it would mean duplicating what they already do.
Executives of the Hawaii-based Credit Bureau of the Pacific Inc had visited Singapore twice last year to scout for business opportunities, while officials of another firm, Fair Isaac, were in town earlier this month to explore the market. Credit bureaus track the credit history of individuals, based on information compiled from banks and financial institutions. A participating bank then buys the information on a "need-to-know" basis when it has to make credit decisions, like extending loans or giving a credit card to a client.
CBI is an affiliate of Equifax Information Credit Services, one of the largest credit information sources in the US for financial transactions. In October last year, CBI officials also met the Monetary Authority of Singapore to discuss the banking secrecy laws, said its president, Mr Franklin Pang. But even if it ventures in successfully, CBI's would not be the first such information service here.
Among others, a law firm, William Lai & Alan Wong, has since 1983, been operating for its clients a database which tracks almost 80 per cent of the credit card and personal loans market in Singapore. However, its clients -which include Citibank, American Express, UOB and OUB -can access information only on debtors or card users who have "turned bad", that is, individuals who have a public legal record. Confidential information on "good" clients would be locked in by their respective banks.
A credit bureau, on the other hand, makes available to subscriber's positive information on the customer's credit history -such as, if he has been prompt in his payments. CBI may also face competition from Fair Isaac which, unlike a bureau that only provides a database, uses such information to rank individuals according to their creditworthiness. For example, an individual who pays his credit bills promptly will have a higher credit score than another who delays payment every month. Talks are still at the exploratory stage, said Fair Isaac's executive vice president, Mr John Woldrich. He added that it may consider a venture here with a US credit bureau partner, which he declined to name.
Contacted last week, the Big Four banks shrugged off the need for such credit bureau services, although some foreign banks are more receptive. Mr Eric Saw, general manager of DBS Card Centre, said that as the local market is dominated by a handful of banks, they may find it cheaper to call each other to check on clients instead of subscribing to a bureau.
Besides, the Government had already tabled the Banking (Amendment) Bill last year to liberalise banking secrecy laws and let banks share information on card holders who have defaulted on payments, he added. But HongkongBank's card centre manager, Mr Dilip Kothari, noted that the bureau was another form of control as it would allow banks to keep track of multiple card ownership which is not currently controlled by regulators. "A bureau will remove the subjectivity from the credit decision-making process and help banks to manage their bad debts, as the extension credit could be curbed to those with a bad history," he said. Mr Peter Ellis, American Express' senior vice president and area general manager, added: "A credit bureau which gives more information on customers and safeguards the assets of banks can only be an advantage."
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