Credit Reporting on the Web: When Database Scalability Really Counts
Not too long ago, in the Dominican Republic - the second largest country in the Caribbean - manual reference checking, a process requiring several weeks, was the only way to verify credit. With a population of more than eight million people, a better system of generating reports was necessary. The Credit Information Center of the Americas (CICLA) was built around InterSystems' CACHE to help close the gap between credit inquiry and information delivery.
Not too long ago, in the Dominican Republic – the second largest country in the Caribbean – manual reference checking, a process requiring several weeks, was literally the only way to effectively verify the credit of a person or a company. With a population of more than eight million people, a better system of generating reports was necessary to meet growing demands. Recognizing a business opportunity that could grow beyond the boundaries of the island, the Credit Information Center for the Americas (CICLA) was formed to close the gap between credit inquiry and information delivery.
Today, CICLA is running a Web-based credit report generation application that handles an average of 100,000 requests per month, delivering key credit data in just a few seconds, for a fast-growing customer base of financial institutions and credit-granting firms. The transition from a small business with a great idea to an organization using advanced information technology as the first step to becoming a player in the global e-business sector has introduced major challenges. However, the projected payoff that can come from maintaining a leadership position in the Dominican Republic’s credit reporting industry and expanding operations into other Caribbean countries provides a powerful incentive.
CICLA, which began operations in 1994, was the first established credit bureau in the Dominican Republic. Headquartered in the capital city of Santo Domingo, the company is focused on a single business initiative – generating timely, accurate credit reports. From the beginning, CICLA relied on information technology, generating credit reports from data maintained on an internal database. Fairly rapidly, however, it was apparent that the organization’s first-generation system would have to go to a new level in order to meet the needs of a high-growth, increasingly sophisticated customer base.
The search for database technology with the capacity for rapid business growth and expansion into neighboring Caribbean nations began in 1997. Key selection criteria included:
• Scalability. CICLA had early plans for expansion and no desire to switch database technologies in order to grow.
• High Performance. Customers’ expectations for fast data delivery were high in 1997 and have grown with the adoption of Web technology worldwide.
• Reliability. Loss of information access and delivery can make rapid inroads in the customer base when the customers are highly competitive lenders.
Based on these criteria and an in-depth evaluation of multiple enterprise database technologies, CICLA IT specialists selected the CACHÉ e-DBMS from InterSystems Corporation.
Building a Client/Server Infrastructure
CICLA’s transition to a new-generation operation began with the development of an application system designed to generate full credit reports, including employment data, credit information and relevant public records based upon requests from a nationwide customer base. Developers were able to build the core system, including more than 75 separate processing routines and thousands of lines of code in just five months. The Credit Report Generation Application went live in March 1996, on a distributed client/server network that processed about 2,000 credit report requests a month and has since been growing geometrically.
In this first incarnation of the system, clients accessed and received credit reports primarily through dial-up access. The application uses a modem attached to several analog phone lines to connect to a database server. Under this scheme, the average time for the client to receive a credit report from time of inception of data to retrieval time is about 35 seconds.
Although the dial-up scenario is efficient, it became obvious that the expanding CICLA operation would grow even faster by providing customers with convenient Web access to the credit information on the database. At the same time, the phenomenal growth of global e-business opened the door for larger markets internationally. The fact is that information has never been a hotter commodity than it is now. The age of e-business has elevated the level of competition between lenders to unprecedented heights. By March 1999, CICLA made another transition by adding Web-based credit report generation to the product mix. The changeover was accomplished in two stages. Customers with frame relay access to the CICLA system were the first to make the move to the Web with the rest of the user base following in a progression that was complete within 18 months.
A Shared Perspective
Information users have enthusiastically welcomed CICLA’s Web-based approach to credit reporting. Even the most computer-shy are already using PCs to handle processes, such as spreadsheet management or word processing, and can provide a listing of their customers and pertinent information for the CICLA database in an Excel format. In those rare cases where the CICLA system is their first exposure to the world of information technology, it’s a simple matter to assist them with digitizing the primary data and to introduce them to the world of the PC.
Once that has been accomplished, the hookup via modem or ADSL and the ISP of each customer’s choice is quick and painless. And accessing the appropriate credit information at CICLA’s Web site is literally just a matter of entering minimal data. For individual reports, the only information needed is first name, last name and social security number. Credit reports on a company are generated based on entry of only the company name and city location. Based on this input, CICLA delivers detailed reports that include:
• General data (name, date of birth, etc.)
• Addresses and phone numbers
• Employment records
• Credit data
• Public records
• Inquiry records
Given the system’s ease of use, minimal input requirements and detailed report generation, CICLA had literally no roadblocks to overcome in terms of helping their user base to adjust to a new e-business environment.
Equally key, the internal programming staff also embraced the new Web technology without any qualms. The versatility of the CACHÉ programming language contributed greatly to this rapid acceptance. For example, CACHÉ enables development using both relational and object approaches, depending on which is most appropriate. While CICLA developed one of several client interfaces using CACHÉ SQL, developers also rely on CACHÉ object technology to adapt very quickly to changes requested by customers on an ongoing basis. In effect, programmers have the choice of using the development approach – object or relational – most suited for solving a given problem. As a result, although some developers required training to get up to Web speed, the flexibility of the CACHÉ e-DBMS platform combined with the ability to minimize database administration requirements virtually eliminated any resistance to change.
E-Business in Action
The decision to Web-enable the business-critical client server application was an obvious move and one that reaped measurable ROI in terms of cost savings and productivity increases. One example from a customer’s perspective: An average bank customer with about 60 information users on the dial-up network would spend $1,500 for monthly analog line rent and $7,500 for line installation fees. However, with Web access, the customer needs only one dedicated line at a cost of $250 per month. Monthly savings for the customer are more than 80 percent, a major competitive advantage for CICLA.
Internally, CICLA’s savings are reflected in dramatic reductions in the time needed for installation, training and application support. Prior to adding Web access, user training and software installation at remote client sites averaged three to four hours. Web technology has made it possible to reduce the time needed for training and installation to a mere six minutes, on average, because it is no longer necessary to install the proprietary client access software on the end user’s PC – all one needs is a Web browser. Support costs have also plunged because changes and enhancements are made to the server-based application and the results are immediately accessible to all PC clients via the Web. As a result, CICLA has been able to cut manpower requirements in half, in terms of supporting customers using the credit report application on the Web.
The success of CICLA’s transition to credit reporting based on advanced information technology is immediately visible and quantifiable.
Today, CICLA serves all of the nation’s banks and credit card and loan issuers – some 350 customers and more than 2,000 individual information users. Using CACHÉ, the application has seamlessly scaled about 1,000 percent from initial volumes of about 7,000 report requests to about 120,000 requests/month. The average response time is less than two seconds for delivering complete, detailed credit reports, even during peak hours.
In addition to meeting CICLA’s requirements for scalability and performance, the database technology has proved out in terms of reliability, enabling 99.99 percent systems availability for the 24x7 operation – and that’s without a single database administrator. Equally critical for future growth is the cross-platform compatibility of the CACHÉ e-DBMS. In February, CICLA migrated the application from an IBM RS/6000 to a Sun Microsystems Ultra 450 running Solaris – an operation that involved only a database copy procedure and was accomplished smoothly and seamlessly.
The move from manual credit reporting to an e-business environment where credit information is available in a matter of minutes, or seconds, has had a major positive impact on the economics of debt in the Dominican Republic. In the first instance, credit information was limited to what could be manually obtained from sources that the would-be consumer would volunteer and what the credit grantor might already know about the applicant. As a result, very little credit was granted at the consumer level. Even at the corporate level, credit was typically restricted to a relatively small circle of companies, effectively limiting the rate at which the island economy could grow.
Today’s economic picture is decidedly different. Over the last seven years, the increasing accessibility of credit information has resulted in:
• A 50 percent reduction in commercial bank accounts that fall into the "risky" category
• A 300 percent increase in the total lending portfolio of those same financial institutions
• A 1,000 percent increase in the level of bad debt "coverage" capacity for commercial banks. From an economic environment where 2 percent of assets held in reserve to cover bad debts only covered about 12 percent of overdue accounts, things have progressed to where the same 2 percent reserve covers more than 135 percent of overdue account totals.
Looking to the Future
The move to e-business is undeniably a success, but poses some new challenges. CICLA now projects that additional contracts will shortly increase information requests to more than 200,000 per month – or 15 requests per minute. Based on the successful track record of its CACHÉ technology infrastructure, the IT staff has no qualms about scaling to handle this massive growth – more than 1,000 percent in data volumes since 1997 – without any perceptible problems in performance or responsiveness.
Although many customers are still using dial-up access – about 55 percent of credit reports are currently delivered via the Web – CICLA’s plan is to upgrade all customers to Web access by second quarter of 2000. The company’s success in the Dominican Republic will serve as a springboard for growth. The initial concentration is on establishing a new market in Haiti with eventual expansion into other Caribbean Island Nations and Central America.
Those plans may be viewed as aggressive, but CICLA has developed a sound business strategy based on leveraging innovative information technology to give customers what they want and need as quickly as possible. It’s a strategy that’s proven successful so far. By leveraging Web-oriented database technology, CICLA has become a market leader, processing tens of thousands of credit reports a month, and is poised for even more rapid growth. Building on that success in a compressed time period is essential for international business expansion in today’s global economy.
The Dominican Republic’s economic scenario has changed significantly during the last few years. In 1997, for example, consumers were expected to provide a minimum of a 50 percent down payment on a major purchase, such as a car. Today, those same consumers typically pay 10 percent or less of the purchase price as a vehicle’s down payment. The growing reliance on credit facilities means that there is a need for credit reporting in every developing country; CICLA is confident that the Web will enable them to corner the market in neighboring states.
About the Author: Igor Cabrera is the Information Systems Manager and heads up the IT operations at the Credit Information Center for the Americas in Santo Domingo, Dominican Republic.