Russian telco Rostelecom uses big data analytics to improve credit scoring
SAS® Credit Scoring speeds customers’ credit risk assessment
Rostelecom, one of the largest national telecommunications operators in Russia and Europe, has created a new credit scoring system to automate credit risk calculations for each customer. The new approach reduces the risk of overdue accounts and accelerates revenues. It also boosts operating income before depreciation and amortization (OIBDA) by cutting the amount of funds the company must set aside to cover risky debts. Rostelecom has already reduced international operators’ bad debt reserves by US$3.8 million (224 million rubles).
Built using SAS® Credit Scoring and implemented by AT Consulting, the system considers factors spanning the entire credit management cycle, from contract signing through expiration. Decisions are based on statistically sound information derived by analyzing big data.
"Effective credit scoring brings a number of positive impacts to our company, especially in terms of improving operating efficiency,” says Kai-Uwe Mehlhorn, Senior Vice President and Chief Financial Officer of Rostelecom. “The system increases collection rates, provides an individualized approach to addressing clients’ debts, takes into account various risk evaluation criteria and lowers the cost of collection. It also decreases bad debt reserves, which positively affects Rostelecom’s OIBDA. In addition to improving internal efficiency, the scoring system has the potential to increase revenue through further data monetization, with the possibility to grow our digital service offerings.”
The credit management process is automated and based on international best practices. In particular, the system customizes user experience based on regional affiliation, and supports lifecycle management scorecards and retraining of analytical models.
The first implementation stage will evaluate international operators’ credit risk. This allows Rostelecom to assess telecom provider risk for non-residents, calculating their credit limit according to the company’s policies. The company can continuously monitor operators’ creditworthiness through integrated gateways to external data sources, such as credit agencies that provide financial and customer information. By the end of 2017, the system will expand to score credit risk across all sectors, providing automation to macro-regional branches of Rostelecom.
"The problem of non-payment or late payments in telecom is fundamental. Introducing a credit scoring system traditionally used in banking enables Rostelecom to use a risk-based approach to manage accounts receivable," says Naeem Siddiqi, Director of Credit Scoring and Decisioning for Risk Solutions at SAS. “SAS Credit Scoring enables companies to accurately assess risks that arise in relationships with clients and contractors by analyzing large amounts of data – both within the company and from external data sources. Accurate credit risk assessment not only controls the level of overdue payments, but also determines volume limits and optimizes work with problem debts."
PJSC Rostelecom is one of the largest national telecommunications operators in Russia and Europe. The Group operates in all segments of the telecommunications market and covers millions of households in Russia. Rostelecom is an undisputable leader of the broadband and pay-TV markets in Russia with over 12.2 million fixed-line broadband subscribers and over 9.2 million pay-TV subscribers. The Group is a market leader in providing telecommunications services to government bodies and corporations. It is also an important innovator that provides solutions in the field of medicine, e-government, cloud computing, education, security, and housing and utility services.
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