Experian and Plaid announced a strategic collaboration that will allow lenders to incorporate real-time cashflow insights alongside traditional credit data in their underwriting processes. The partnership combines Experian’s credit analytics capabilities with Plaid’s financial data network to provide lenders with additional tools for assessing borrower risk.
How it Works: Real-Time Data Integration Reshapes Underwriting Standards
Under the new arrangement, consumers can consent to share cashflow data from their bank accounts during loan applications. Plaid’s consumer reporting agency generates a Consumer Report containing up to two years of historical transaction data from over 12,000 financial institutions (FIs), which Experian then processes through direct integration.
Experian processes this cashflow data and returns either a Cashflow Score (ranging from 300 to 850) or detailed Cashflow Attributes to the lender. According to Experian, their Cashflow Score demonstrates up to 25% better predictive performance compared to conventional credit scores when used for targeted risk tiers—an improvement that could reshape competitive dynamics in lending markets.
The system leverages Plaid’s existing infrastructure, which currently serves one in two U.S. bank account holders. Machine learning and AI-powered categorization analyze and enrich transaction data specifically for lending applications, enabling near real-time decision-making.
Technical Infrastructure and Scale: Faster Decision-Making for Loan Approvals
Plaid leverages its existing large FI network (12,000+) across the U.S., Canada, U.K., and Europe. The Consumer Report provides access to recent cashflow data and historical patterns, giving lenders a broader view of applicants’ financial behavior beyond what traditional credit reports reveal.
With near real-time analysis, the integration provides faster decision-making in the loan approval process. Lenders can use the cashflow insights across various credit products, including credit cards, personal loans, and auto loans.
Industry Context and Applications
The collaboration addresses limitations in traditional credit scoring, particularly for consumers with thin credit files or non-traditional income patterns. By incorporating actual transaction data and income verification, lenders can assess risk more accurately for borrowers who might otherwise be difficult to evaluate using credit history alone.
Implementation for Lenders Redefines Underwriting and Customer Experience
Banks, credit unions, and consumer lenders can access this combined solution through their existing relationships with Experian. The integration is designed to fit into current underwriting workflows without requiring significant changes to lenders’ existing systems. It will be up to the individual lender to determine how to best incorporate the new information into their current underwriting process. It could be used as a second look for near miss declines for manual review or incorporated directly into the current underwriting process. The customer experience will differ based on how the lender integrates the new data.
Data Privacy and Consumer Control
The system operates on a consumer-permissioned basis, meaning borrowers must explicitly consent to share their financial data. This approach aligns with open banking principles that give consumers control over how their financial information is used and shared.
Plaid’s role as a consumer reporting agency means the data collection and sharing process follows established regulatory frameworks for consumer financial data protection.
Market Implications: Credit Accessibility Through Open Banking
This partnership represents a big step in adopting open banking data for credit decisions. As real-time financial data becomes more integrated into lending practices, it will influence how FIs approach risk assessment and credit accessibility.
The collaboration may particularly benefit consumers who have stable income and responsible financial management but limited traditional credit history, expanding access to credit products for underserved populations.
For the lending industry, the integration offers a way to incorporate more comprehensive financial data into existing decision-making processes, potentially improving both risk management and customer access to credit products. For more insights on how cash flow underwriting is transforming lending practices in consumer lending, please see our report, A New Age of Underwriting Ushered in by Cash Flow Data. To learn how our expert-driven research and proprietary data can help your organization make confident strategic decisions in this rapidly changing environment, please contact us here.
