Experian has introduced Experian Cashflow Data Bureau, a new consumer reporting agency (CRA) operating under the Fair Credit Reporting Act (FCRA). The entity allows financial institutions to use consumer-permissioned cash flow data at scale in underwriting. Its stated aim is to support more informed lending decisions and widen access to credit. The bureau was presented at Experian's annual Vision conference in the US.
Placing cash flow reporting within an FCRA-regulated CRA structure gives the data a regulatory status similar to traditional credit reports. That matters for lenders seeking to bring bank transaction data into formal credit decisions.
Addressing gaps in traditional credit data
The launch follows figures cited by Experian showing that nearly one in five consumers lacks access to credit or has damaged credit. The company's own research found that 60% of consumers who had been declined credit, or offered less favourable terms than expected, believe the outcome would have differed if lenders had considered their recent income and banking activity alongside their credit history.
Experian's analysis indicates that combining cash flow insights with credit data can raise predictive performance by up to 40%. The same insights can help lenders increase approvals by up to 25% without changing their risk tolerance, according to the company.
Consolidating the cash flow value chain
Financial institutions have shown interest in using banking information to build a fuller view of consumer financial health. Lenders have also pointed to the need for a single provider to simplify how these insights are put into operation. Experian positions the bureau as the foundation for an end-to-end offering covering data aggregation, report generation, analytics, scoring and decision-ready outputs. The company states that it is the only provider delivering such an ecosystem.
A company official said the bureau applies Experian's experience in data, analytics and technology to cash flow, to make it easier for clients to adopt these insights at scale.
The bureau underpins several connected services. Consumers can connect and grant permission to access their bank accounts through Experian when applying for credit. The resulting transaction and balance data is organised into a standardised, FCRA-regulated cash flow consumer report. Cashflow Categories converts this data into structured intelligence using machine learning models that process tens of millions of transactions each day. Cashflow Attributes and Cashflow Score turn categorised data into predictive indicators of a consumer's financial capacity. Through Experian Activate, Cashflow Attributes can also help participating lenders connect consumers with new financial offers.
Experian also plans a Credit and Cashflow Score, which it describes as the first score to combine consumer-permissioned cash flow insights with traditional credit data, trended data from Experian Information Services, and Clarity Services information. Lenders can integrate cash flow insights into existing underwriting strategies through the Ascend Analytical Sandbox and Experian Decisioning. For commercial lending, Cashflow Attributes converts business bank transaction data into predictive attributes.
Implications for lenders
According to an analyst at Celent, the use of cash flow data, aggregation and scores has been growing steadily and is contributing to higher credit approvals. However, lenders' cash flow underwriting operations are still scaling, and integrating solutions from multiple vendors can increase implementation time and costs. The analyst noted that an end-to-end approach could shorten implementation and improve returns on investment in cash flow underwriting.
