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Scoring model for retail mortgages in Russia

Gorodskoi Ipotechny Bank, the mortgage specialist in CIS and Russia, has implemented Experian's analytics models for evaluating potential borrowers.

Gorodskoi Ipotechny Bank is a greenfield bank established in late 2003 with around $40 million capital registered by the Central Bank of Russia. The Bank specialises in originating, servicing and securitising residential and commercial mortgage loans in Moscow, St. Petersburg, and other major regional cities including Samara, Nizhniy Novgorod, Rostov, and Yekaterinburg.

The application scorecard provided by Experian will enable the bank to optimise risk assessment and to apply an individual strategy for each customer at the application stage. The new approach will ensure objective and quicker decisions on applications filed by potential borrowers and will allow the bank to assess their level of risk. At the same time it increases operational efficiency by enabling the automation of the preliminary application analysis.

Gorodskoi Ipotechny Bank intends to use the scorecard in all mortgage programs in the regions where it maintains its presence. The implementation of this project was made possible as a result of the partnership between the bank and Experian formed during an earlier ’data audit’ consulting project, and the recognition of Experian’s experience in the development and implementation of several application scorecards for mortgage operations in Russia. The high quality of historical data accumulated by the Bank helped to significantly increase the efficiency of the models implemented.

Commenting on the project, Olga Sadovskaya, Board Member of Gorodskoi Ipotechny Bank, said: “This system enables our organization to transition from an expert model for borrowers evaluation to a model which also uses the bank’s statistical data and other criteria for making lending decisions. As a result, the decisioning process becomes simpler, application review times are reduced along with operational and process costs. Finally we benefit from an overall reduction of risk component thanks to a more accurate assessment of the probability of default at the application review stage.”

Alexander Belenky, Business Development Director of Experian’s Decision Analytics division, said: “Mortgages are perhaps, the most complex credit product available to consumers and we are especially pleased that Gorodskoi Ipotechny Bank is improving its processes with Experian’s support. The Russian banking market is entering a new stage in its development when specialization enables banks to create more competitive products, manage risk with greater efficiency and therefore better meet customer needs.”

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