The Business Year

Marwan Ahmad Lutfi


Data Accuracy Over 99%

CEO, Al Etihad Credit Bureau (AECB)


H.E. Marwan Ahmad Lutfi has been the Chief Executive Officer of Al Etihad Credit Bureau since September 2013. Lutfi led the set up and launch of the sole credit bureau in the United Arab Emirates and has been instrumental in establishing it as a key enabler for the financial services industry and a powerful data platform that enriches users with knowledge, analytics and sophisticated products that cater towards other key sectors like telecommunications, utilities and real estate. Prior to his current role, Lutfi was the Deputy CEO & Managing Director of Business Development at the Dubai International Financial Centre (DIFC) where he has helped reinvigorate the development and sustainable growth of the centre during economic downturns. His career path also was shaped through his regional role as Principal with Abraaj Capital, the region’s largest private equity player then, Thuraya Satellite telecommunications and Emirate national Oil Company.

“The portfolio monitoring services and the early warning systems allow institutions to proactively engage clients.“

How did centralized credit data reporting come to evolve in the UAE market, and where does it stand compared to the rest of the GCC?

Centralized credit data reporting is not new to the UAE, where the Central Bank has used it for a long time. The establishment of Al Etihad Credit Bureau, however, marks a change in that we operate under the regulatory oversight of the Central Bank, but aim to integrate with all of the other banks so that data flow could become more systematic and automated. Our goal is to build a totally interconnected, objective system with minimal manual intervention that allows us to monitor any errors with ease. From our original product, the credit report and score, we have grown to offer around 10 products. The last two years, especially, saw a kind of revolution in our offering. While the UAE was one of the last GCC countries to establish a credit bureau, we have achieved in only four years a level of operation that puts us almost head-to-head with our counterparts in Saudi Arabia, for example, who have been operating for 15 years. Our system is as advanced as it can get, with data accuracy rates of over 99%, which we achieved within one year. What’s more, some other GCC countries approach us to learn how they can achieve that. That said, we are not reinventing the wheel, as we use experienced vendors.

What role does Al Etihad Credit Bureau play in the Emirati banking sector?

Al Etihad Credit Bureau’s products are intended to optimize a commercial bank’s internal processes. When we introduced the Credit Report in 2014, and the Credit Score in 2017, it was still a new concept in the Emirates. It is still critical for banks to facilitate the underwriting process, and we have multiple value-added services that allow them to monitor portfolios. We also offer our own alert services, wherein we can observe all of the customers in a bank’s portfolio every day, and then send the bank reports on sensitive events that might impact its credit risk . Through this offering, we act as an early warning system for banks. Our efforts to push our system within the marketplace paid off, as we saw immediate adoption of the credit score within the national banking system— one year in, almost 80% of all reports issued included the Credit Score. The UAE has a highly progressive banking sector, which tends to jump on anything that can add more value. Credit scores were only the beginning, and now we are working on developing several other indicators that can benefit market operators and, ultimately, the economy itself. In 2018, for example, we launched the Skip Indicator, tailored to loans, which gives banks an indication of the likelihood of an individual to miss more than two payments successively. This has proven extremely useful, and over the next year we will launch several other indicators that will add even more value.

How is the Credit Bureau expanding its portfolio of indicators, and what kinds of data inputs drive this expansion?

Al Etihad Credit Bureau receives extensive inputs from banks—nearly 120 data points. If you factor in the internal aggregation of this data, we have more than 2,000 relevant data points. The bureau has not, however, stopped at financial services. We have also begun drawing from the telecommunications sector, which is probably the highest-volume market. We now have the UAE’s two main operators supplying data to us. Their data primarily concerns obligations and defaults. As the business model of the telecom industry evolves, our output plugs into their decision-making systems as well. These days, phones are as expensive as laptops, and no one pays cash for them. Consequently, operators are pushing mobile devices on payment plans, and once you get into payment-plan mode, you are automatically in credit mode. So, telecom companies have in many cases become credit providers and need to assess the ability of people to repay them. Another type of data we are getting into is from the utilities sector. In this space, as well as telecoms, we want to develop alternative scores not necessarily based on credit information. There is a huge population in the UAE that has never borrowed before. When someone lacks any credit history, we have to ask ourselves how we can provide some indication of their credit risk. Enter telecoms, utilities, and other sources. Utility bills are a form of obligation, meaning that everyone who engages with them creates a record of payments, which in turn might indicate how a person will behave with credit. The Credit Bureau already has a system in place for some non-borrowers, but our current goal is to develop it further. When it comes to putting data into action, machine learning and predictive analytics, in particular, have played an integral role. In 2018, we ran deep and extensive analytics to help develop our credit scoring model. We adopted cutting-edge machine learning technology to help us with this, which has made our model even more powerful from a prediction standpoint. Now, the second generation of these technologies is under review. We are always reviewing our machine learning model with the Central Bank and using regulatory standards on par with Europe or the US. When we talk about machine learning, our philosophy is that it is more about increasing efficiency in identifying behavioral trends than it is about just letting machines do the work.

In the UAE’s expatriate-heavy economy, how does credit reporting flow across borders?

With respect to individuals arriving in the UAE from other countries, gleaning data can prove to be difficult. The laws around cross-border data exchange are extremely cumbersome. Most countries are protective, as is the UAE, and under the current laws data export is a prohibitive process. We have looked into collaborating with other markets, but the legal challenges and thinking are all the same. Several entities with which we are in talks believe that data is proprietary, and they are restricted from sharing data outside their country. Of course, everyone has a mandate, but in reality, data belongs to the individual. The Credit Bureau’s borrowers hail from more than 100 countries, and so we are focused on setting an example by exploring ways to make our own data more accessible overseas. The people that get penalized the most by preventing data movement are the good borrowers, because they sometimes have spent decades developing a strong credit history, only to have to start anew when they return home. To some extent, we have already been successful. Our recently launched digital channel allows individuals to access their credit reports online, anytime and anywhere. Two weeks after we launched our App, we had downloads from over 100 countries, and purchases from around 20, indicating that people were possibly utilizing their UAE credit history to re-establish their creditworthiness elsewhere. This was a use case that really surprised us. It has also been the highest and fastest adoption of any digital channel we have ever seen, with 85% of reports now being accessed digitally. The majority of those who use offline access methods are companies because identifying the legal representative is not as easy as it is for individuals requesting their own credit reports. But we are looking for ways to automate the process for them as well.

What steps are being taken to build a climate of credit market awareness and financial literacy within the UAE?

The Credit Bureau’s website is an excellent source of information about what credit scores are, and what impact them. Since 2018, we have also been highly active in credit education initiatives for the public. For example, we recently signed an MoU with Visa, to partner with them to run financial literacy and education missions in the UAE. We run similar programs with the Ministry of Youth, Injaz and Emirates Foundation. On the industry side, our mandate and the ease and transparency of our services increase banks’ awareness on multiple fronts. When we first started, some people thought that a credit bureau would slow down business. Now, however, if you compare banks’ financial reports before and after the launch of the bureau, there is a clear trend in profit growth, which is potentially linked to a reduction in non-performing loans. Since late 2017, the Central Bank of the UAE has mandated that all banks must do a credit assessment for any loan application they receive. This has taken away any reason a bank might have to say that they were unaware of certain reporting data. Furthermore, banks are able to see all of the data points in the system. Alternatively, banks can also take higher risks and price them accordingly, and in fact some entities specialize in this. Our other value-added services also play a role in strengthening financial literacy for customers. For example, the portfolio monitoring services and the early warning systems allow institutions to proactively engage clients who may be facing financial stress, making them more aware of what they need to be doing to maintain a healthy credit score.



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