During the 1997 Asian Financial Crisis, the first signs of the crisis were large capital outflows from Malaysia in the first quarter of the year.
Spending in the highly leveraged corporate sector collapsed, while the negative outlook curtailed consumption. Trade plummeted and banks soon found their clients in the export sector having trouble servicing their debt.
As a result, the value of bank assets, loans to businesses and consumers, dropped because borrowers become unable or unwilling to service their debt.
With non-performing loans rising from 6% at the end 1997 to 22% by the end of 1998, two special-purpose agencies, Danaharta and Danamodal, were formed in June 1998 to address the issue. Danaharta was tasked with buying non-performing loans at a discount from banks. By June 1999, Danaharta was managing RM39.3bil in non-performing loans.
Against that backdrop, See Wai Hun, co-founder and CEO of Juris Technologies Sdn Bhd, was looking into how the company could help banks to generate sales through data mining.
“When we founded the company in 1997, we were doing research on artificial intelligence (AI) and online analytical tools and thought that would be the product that we would market, but with the financial crisis, no one was interested in data mining. Everyone was still reeling from the shock of the economy and bad debt was rising,” she tells Metrobiz.
Seeing an opportunity, her team then created software for bad debt recovery.
Approaching a foreign bank, she proposed building a system to help manage the workflow of the bank’s litigation lawyers.
“To our surprise, the bank jumped at the opportunity as its volume of bad debt was rising and it was becoming difficult to manage,” she said.
After some research, she found that debt collection software at that time did not have a collaborative component involving the lawyers. As such instructions to lawyers, updates, and billing matters had to be updated manually and was laborious.
“This then became our niche market. After our work for the first bank, the lawyers started introducing us to other banks and they too, said they needed the system,” she said.
Since then, the banking solutions company based in Bangsar South has expanded its offerings. From just a component of the debt recovery software, they expanded to creating software for debt collection systems, then loan origination systems, credit scoring systems, conveyancing and loan documentation systems.
“Our vision is to become the best creator of credit management software in the world. We offer everything that a bank needs to give out loans — from evaluating their customers, to approvals and collections of the loans, including litigation,” she said.
The MSC status company, which started with a staff of 10, has grown to a team of 80 today. It creates software solutions and sells the software licences. Other revenue comes from implementation fees and subscriptions.
The subscription model is targeted at smaller companies, such as law firms and collection agencies, which subscribe for the software and pay on a per server, per transaction or monthly basis.
“Also, because we have a wide range of software solutions for credit management, we continually upsell to our clients. It is not easy to get a new customer, so when we get one, we try to sell to the customer more than once,” she said, adding that revenue has been growing 40% consistently every year since 2010.
It is not uncommon that banks are saddled with tonnes of paper work. See says the company’s products enable clients to configure their work processes quickly.
“It is workflow driven and users can switch easily to look at what stage a loan application is at without additional programming work,” she said.
Currently, the software, which is installed in a bank client’s core banking system, is able to link other parties related to a loan, from conveyancing lawyers to property valuers. To date, 11 banks, 900 lawyers, 200 collection agencies and 100 property valuers are using the system.
Forecasting the future
Apart from loan origination and loan recovery software, one of the company’s products is also able to predict the behaviour of bank customers using expert rules, statistics and artificial intelligence .
Foreign banks are already using AI for credit card risk modelling using decision trees and regression, scorecards and also data from fraudulent transactions.
“For debt collection, this helps to determine what actions to take to contact their customer — the best time to call, the number to call, who to call, who not to call, and so on,” she said.
Apart from that, AI is also used in the early detection of non-performing loans.
She said the software is linked to the various platforms that provide background checks, including the Central Credit Reference Information System (CCRIS)and Credit Tip Off System (CTOS) which help to gauge a banking customer’s creditworthiness.
Apart from that, they are currently working on an AI that can look at the probabilities of companies listed on the Bursa going NPL.
In general, a loan is classified as non-performing when the principal or interest is due and unpaid for three months or more from the first day of default.
Some of their notable projects include providing debt collection software to Bank Rakyat.
The government cooperative bank, which started using the debt collection software, subsequently procured the credit scoring and loan originations software.
They had also implemented a debt collection system for SME Bank in three months and was subsequently awarded a project to build for a commercial financing originations system.
“This is a testament to the quality of our products when our clients started to expand their use of our products into different business areas,” she said.
And the company’s products are not just being used by local banks. One of the oldest foreign banks in Malaysia also uses its latest conveyancing software designed to help disburse housing loans more quickly.
“This is done by managing the instructions to their solicitors and valuers thus transforming the landscape for credit administration,” she said.
The company’s software is also used by non-banking clients such as Telekom Malaysia.
“TM is our biggest customer thus far, with thousands of users. It is extended to their sales teams, debt collection agencies, TM Points and credit management units,” she said.
The national electricity provider Tenaga Nasional Bhd also uses the company’s customer relationship management solution to manage calls and communicate outage incidents to engineers for rectification.
Cracking the code
Set up with the backing of an angel investor, See said the company eventually bought back its shares within a few years of incorporation.
As in any entrepreneurial pursuit, she was discouraged by her family who thought she would have done better in the corporate world, being a former information technology professional.
“The company has been self-funded from year one while we drew small salaries and travel on humble wheels and economy class in the early days. In the midst of the financial crisis, we found a niche that was recession proof,” she said.
Focused in the domestic market, she said they began looking at foreign opportunities last year and appointed a reseller in Indonesia for their credit management solutions, and have plans to go to Thailand to look for resellers this year.
The company also developed a web-based application server that is used worldwide by customers that include Sony USA, Software Engineering Institute (Carnegie Mellon) and Danish Civil Aviation Authority.
See, the mother of one girl still goes to the office enthusiastically every morning, thinking of product ideas and how they can still change the world.
“After 16 years in the business, that is what keeps me going everyday,” she said.
Projecting a revenue of RM30mil this year, she said RM20mil would come from the maintenance and on-going implementation projects while about RM10mil from new deals.