Prevention From Credit Stress

In the press conference, to introduce new development in the data sharing processes for better services, APACS, UK’s payment association made very important announcement. For credit card industry, APACS is a nodal agency & this announcement was made on behalf of credit card industry in UK. It was clarified that all APACS members will be sharing behavioral data on their customer’s accounts with each other with this announcement. On this issue, all the members from APACS have agreed & committed themselves. This will be started initially with five major credit card issuers such as HBOS, GE Money, and Capital One, MBNA & BARCLAY card & furthermore it will be applied to other card issuers. These five major credit card issuers will be sharing their data with each other from this month onwards.

 After discussing with their IT experts, other card issuers will be also following the suit very soon. With this data-sharing scheme, those who are going through bad financial crisis will be identified. For the credit card industry for further betterment of their promises towards the lending policies, this new scheme will be a platform, as set up by banking norms, which will be in the system by March this year hopefully. General procedure for lending is before lending, previous history of the customer is checked along with their balance sheet & credit limit as well.

For better understanding of the customer with the data related to their payment history, this new initiative will help, what customer has paid is really equivalent to the minimum payment due to him; changes in credit limit & there occurrences; up to what extent the remove the cash from their savings account, & whether the customer is registered with any kind of promotional deal or not. It is really an important category in terms of promotional deal because it gives clear demarcation between those people who are paying minimum balance due to them, but they are not able to repay the minimum due to financial crisis, but are avoiding currently because of the bad deal they have got. This innovative idea of data sharing will give clear picture of the customer’s credit & debit history to the lenders.

For responsible lending, this will definitely make a good & positive impact in long-term commitment. To have overlooked on their customer's bank account, this new data-sharing scheme will also allow lenders & will be crucial information source while deciding to lend those customers who are struggling to shave up their existing bad loan. To guide their clients in early stage of debt, this will also help the card issuers.  

APACS official head of card payments Paul Rodford commented that in future, the Holy Grail for lenders is to have an instant access to the data that could predict the customer's ability to pay back the credit. At earlier stage, it can be identified itself, for those people who are showing symptoms of heavy bad stress & confirming that those who are already struggling for it are not given further credit to invite more trouble. Rather it is really a good remarkable milestone in card industry & for responsible lending, it will help card industry's long-term commitment. It is more than a hard work as compared to investment put in will benefit for the customer to come to this step.                

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