Plaid creates a new entity for better lending with cash flow data

This new entity will operate as a consumer reporting agency and help Plaid's customers make risk decisions throughout the lending process.

Plaid has created a new entity that will build solutions for customers who want ready-made credit risk insights from consumer-permissioned cash flow data.

For lenders, the challenge is getting cash flow data and making it useful. As a result, lenders and consumers are both impacted. Lenders feel blind to potential risks in their underwriting strategy. They want to offer more competitive products to grow their business but can’t without a more holistic view of the borrower that cash flow data can provide. For consumers, a subprime credit score or 'thin file' credit history can obscure responsible financial behaviour in other aspects of their lives. This can disqualify them from products they can actually afford, limiting credit options for those who may need them most. Plaid has built the infrastructure that makes data sharing possible.

Opportunities where Plaid can help

Availability: Plaid has spent time building the infrastructure that makes data sharing possible and safe for both lenders and consumers. Today, hundreds of lenders like Oportun and Mission Lane and property management firms like Mynd and Funnel Leasing use Plaid to modernise their application and verification workflows by sourcing cleansed income and assets data on their borrowers.
Usability: at scale, cash flow data is hard to make sense of. Many lenders simply don’t have the time, money, or technical resources to develop insights on top of this detailed, transaction-level data by themselves.

Plaid has formed this new entity to tackle the usability problem. It enables a future where customers can get actionable and differentiated cash flow insights from Open Banking transaction data to better predict a borrower’s ability to pay. However far along its customers are in their digital journeys, Plaid will have a full suite of credit solutions to meet their needs. This is aimed at allowing customers to focus on what they do best, whether that’s making a loan, servicing borrowers, or screening a potential tenant.

As stated by officials, Plaid is currently offering these new solutions in a limited release through the consumer reporting company. It will continue to offer current Plaid credit solutions as well.