Japan's Number Two Card Issuer Speeds Decisions

\Looking to smooth its credit card issuing process, Sumitomo Mitsui Card Company (SMCC), the second-largest issuer in Japan, has turned to Fair, Isaac, a San Rafael, Calif., software company, to help automate account origination.

SMCC is implementing Fair, Isaac's StrategyWare decision strategy management system, which gives business users a sophisticated ability to design, test and execute complex decision campaigns without relying on programming support. The product processes decision requests by applying user defined strategies and generates responses including decisions and actions.

SMCC was formed this year as a result of the merger between Sumitomo Bank and Sakura Bank, which created Sumitomo Mitsui Bank, a powerhouse with over $960 billion in assets. Drawing upon the combined customer base from the two banks' independent card subsidiaries, SMCC has moved closer to challenging Japan Credit Bureau (JCB), the leading card issuer in Japan. Japanese consumers currently hold approximately 205 million credit cards, according to industry statistics.

Prior to the merger, Sumitomo Card Company had already achieved significant workflow efficiencies in processing applications. But decisions on whether to accept or reject credit card applications were still largely done by hand. "They used a scoring model, but the decision itself was very manual," said Shigeto Omori, director of the Tokyo office of Fair, Isaac.

Japan poses a particular challenge for creditors, as consumer information is more difficult both to verify and obtain than in the United States.

It's relatively tricky even to ascertain that customer information is correct. As a result, bank personnel have to follow approximately 900 rules to check each application. "In Japan we don't have a social security number, like in the U.S.," said Omori. "When the credit grantor goes to the credit bureaus for information, it's very hard to identify an individual just by using name, address and telephone."

Although there's a legislative push underway to create personal ID numbers for Japanese citizens, that's far from settled. Furthermore, there are essentially four separate credit bureaus, each serving a different slice of the financial services market: banking; credit card and installment loans; consumer finance; and the Credit Information Network, or CRIN, an inter-bureau clearinghouse.---

Consumer Credit Reporting Agencies in JAPAN

Japan Information Center (JIC)

Consumer finance

Personal Credit Information Center (KSC)

Banking

Credit Information Center (CIC)

Installment loans and credit cards

Credit Information Network (CRIN)

Clearinghouse for negative information between credit bureaus

Source: Associated Credit Bureaus, Inc.