18 Dec We couldn’t get a bank credit ourselves
Holland FinTech spoke with Jeroen Batema, managing director of OSIS, an information service provider to the financial industry. OSIS provides data collection services and expert analysis on credit risk.
Game changing platform
Batema explains that isn’t always easy to let people understand how OSIS fits in the financial industry. “With the concept of FinTech gaining ground, we can label our company as being part of the FinTech industry. We are a game changing platform for credit risk analysis, challenging the traditional players in the financial industry.” The aim of the company is making the financial industry less depending on the three major credit rating agencies and/or market prices. OSIS provides investors and holders of credit risk, the tools and information to get a better understanding of bank credit risk. OSIS was one of the first FinTech companies to register as a member of Holland FinTech.
Improving credit risk analysis
Like many other founders of FinTech startups, Batema already had a firm background in the financial industry when he started with OSIS in 2010. “I have worked 18 years for respectively ING Bank, NIBC and BNP Paribas Fortis. I experienced that there is a lot of data available that can be used for an improved credit risk analysis within the financial institutions but they don’t know it or can not deal with it.” Batema explains that the idea behind OSIS is to develop tools and technologies, based on new scientific models, and so help financial institutions to do the credit risk analysis in a better way than is currently done. “I’m not saying that what credit rating agencies are doing is wrong – although they missed the Basel II revolution in the banking industry – the dependency is wrong.” The services of OSIS consist of data collecting, data quality analysis, risk modelling and the delivering reporting tools.
In 2004, when working for NIBC, Batema brought banks together to discuss the pooling of historical loss data. Basel II turned out to be a great catalyst to achieve better data. In six month the banks reached an agreement and Batema became the first chairman of the Pan-European Credit Data Consortium, now known as Global Credit Data (GCD). Currently GCD has the largest loan loss database in the world and OSIS performed many analyses on their data. Besides GCD the European Data Warehouse (ED) is also important for OSIS. In order to be repo eligible with the ECB, banks have to report loan level data of securitized loan portfolios. OSIS has a subscription on the ED database and performs quality checks and risk analysis. Each quarter OSIS performs 13 Billion checks on private mortgage loans and 1.5 Billion checks on loans to SME’s, using the computer cloud services of Amazon. The results of the EU-wide stress tests conducted by banks and published by the European Banking Authority was also very important.
Business opportunities
“In the end we want to be an alternative to the well known credit rating agencies, like Fitch & Moody. We now have the necessary core technology for it, but it is still a long way to get recognition in the market. We keep on working on our overall ambition, but in the meantime we are negotiating with Fitch & Moody about delivering analytics services to them. Their interest in us as a service provider supporting their business proves that we are really innovative.” Besides business opportunities in the traditional financial industry, Batema also thinks that OSIS will service new organizations in the alternative finance industry, like credit unions, P2P lending and crowdfunding platforms.”
Located in the Netherlands
Batema and his business partner were living respectively in Brussels and London when they started OSIS in Amsterdam. For Batema the Dutch well-developed financial sector was very important in choosing the Netherlands as location for their business. Also the existence of the so called WBSO allowance, that enables a company to reduces wage taxes for people involved in R&D is important for OSIS. They have ten highly skilled people working for them, five of them are freelance workers.
Connecting SME’s with the best lender
“Despite our outstanding debtors, like ING Bank, NIBC and foremost the triple rated German KfW we couldn’t get a bank credit ourselves. We were told that a credit based on foreign debtors was not possible. So we were forced to work as consultants in the industry and invested the money earned in our company and finally got an innovation credit from RVO. For the coming year it is important to show the outside world that with our tooling we can foster the securitisation market, connecting banks with i.e. pension funds and ultimately connecting the SME with the best lender.”
Interview by Carlien Roodink, partner Holland FinTech
