Prism Knowledge, an open banking analytics platform, at present launched CashScore v3, a robust new model of its CashScore credit score scoring mannequin that leverages anonymized, consumer-permissioned open banking information to totally illuminate a client’s true credit score threat.
Conventional credit score information gives a restricted view right into a client’s monetary standing and creditworthiness. Prism’s market-leading CashScore harnesses the facility of open banking to drastically develop that view, incorporating hundreds of economic insights which can be very important to evaluating credit score threat however lacking from conventional credit score scores—from revenue and financial savings to rental funds and use of rising types of borrowing like Purchase Now, Pay Later (BNPL) loans.
Measuring a client’s revenue, spending, and financial savings to find out creditworthiness—a course of generally known as “money movement underwriting”—has beforehand been a time-consuming and largely handbook activity. Prism’s CashScore automates the method, simplifying client money movement underwriting to a three-digit rating that’s dependable, correct and compliant with lending rules.
Prism’s infrastructure makes it simpler for monetary establishments and fintechs to research and interpret open banking information to allow them to perceive—with unparalleled readability—a client’s full monetary image. With an expanded universe of recent, actionable information, shoppers can proactively enhance underwriting methods, reduce first-party fraud, and higher handle servicing of their portfolios.
CashScore v3 is the first-ever consortium-based money movement underwriting mannequin, constructed utilizing tens of millions of anonymized, consumer-permissioned data from quite a lot of completely different banks, credit score merchandise and buyer segments. Much like conventional fashions like FICO or VantageScore, Prism’s consortium-based CashScore v3 presents lenders a extremely predictive software they’ll use off-the-shelf to extra exactly assess credit score threat in any client context—from bank cards and private loans to mortgages and auto loans, amongst others.
“The perfect fashions are based mostly on many observations and numerous information units,” mentioned Brian Duke, Prism Knowledge’s Vice President of Knowledge Science. “Prism has seen extra monetary transaction information, over an extended time period, than every other money movement underwriting supplier. In consequence, we’re capable of present a scoring and analytics platform with category-leading reliability and predictive energy.”
Since its introduction, Prism’s CashScore has been used to tell a couple of billion {dollars} in real-world credit score originations for a whole bunch of hundreds of shoppers.
The CashScore is very predictive, reliably and persistently outperforming conventional credit score scores and customized bureau fashions on a standalone foundation, and gives even better predictability when mixed with conventional scores and fashions. Prism’s CashScore has been proven to cut back anticipated credit score losses by as a lot as 30%, and improve approval charges by as much as 10% with out impacting loss charges. The mannequin’s predictive energy extends throughout the whole credit score spectrum, from higher-risk shoppers with skinny credit score information and/or subprime bureau scores to lower-risk/prime shoppers with thick credit score information.
With this new CashScore, shoppers can:
• Achieve new insights and precisely predict credit score conduct. The brand new CashScore permits lenders to extra exactly assess a client’s present monetary situation and talent to repay, incorporating revenue, financial savings and spending information that aren’t out there in conventional credit score stories. This gives Prism shoppers with an analytical edge over rivals counting on data that’s extra restricted, stale, and sometimes much less correct. With the CashScore, this complete money movement underwriting is out there in a three-digit rating that shoppers can simply implement into current mortgage functions and credit score insurance policies.
• Serve new and traditionally marginalized populations with out rising credit score losses. Shoppers can make the most of the CashScore to attain tens of millions of shoppers who at present haven’t any credit score rating or have skinny or stale credit score information that don’t precisely replicate their true monetary well being. Prism shoppers can precisely assess the creditworthiness of non-traditional debtors and develop entry to credit score amongst traditionally underserved populations and low-risk “Invisible Prime™” shoppers – who lack a conventional bureau rating, however whose money flows exhibit underlying monetary power and talent to repay.
• Exactly establish chance of overdraft or default. The brand new CashScore delivers a holistic understanding of every client’s present capability to repay, enabling shoppers to detect refined modifications in a client’s funds that might sign impending monetary misery and extra precisely predict the chance of overdraft or default.
• Scale back threat from first-party fraud. Prism’s CashScore helps shoppers detect alerts and patterns in transaction information which can be extremely predictive of first-party fraud, which is usually tough to establish.
• Detect hidden monetary obligations. The CashScore can floor non-obvious monetary obligations—like BNPL, payday and title loans—which can be vital to understanding a client’s leverage and debt-to-income ratio however which don’t present up in conventional credit score bureau information.
• Rapidly react to modifications in current portfolios. The brand new CashScore gives a number one indicator that helps corporations extra rapidly detect—and proactively reply to—modifications in a client’s revenue or capability to repay. Shoppers can use the CashScore in tandem with Prism’s Insights product to detect modifications in revenue, financial savings, and spending which can be indicative of threat nicely earlier than these modifications are mirrored on a client’s credit score report.
The brand new CashScore is an element of a bigger suite of Prism Knowledge merchandise that present the infrastructure shoppers want to learn from open banking. These embody:
• Classes, which permits shoppers to categorize client checking account transactions into greater than 30 classes, together with BNPL and lease;
• Insights, which permits shoppers to take categorized checking account transactions and distill them into greater than 15,000 several types of client monetary insights, together with BNPL, title and payday loans); and
• Earnings, which can be utilized to confirm revenue and assist shoppers perceive current revenue developments vs. long-term developments.
Shoppers can use the CashScore off the shelf or, for a extra custom-made resolution, together with Classes, Insights and Earnings. Shoppers also can use Prism’s merchandise together with conventional credit score bureau information and their very own proprietary fashions, enabling them to lend with a lot better confidence and far much less surprising threat.
Prism’s CashScore permits regulated monetary establishments to make credit score extra accessible and inclusive with out sacrificing transparency or equity. Prism has purpose-built its merchandise to adjust to the FCRA, truthful lending and all different relevant legal guidelines and rules. Much like conventional credit score scores, the CashScore rank-orders a client’s threat of default, returning not solely a rating however an inventory of explainable Motive Codes for potential use in shoppers’ Opposed Motion Notices.
The early mannequin underlying the CashScore was developed by Prism’s sister firm Petal, which pioneered the usage of money movement underwriting in client credit score. Final yr, Petal spun Prism Knowledge right into a standalone firm targeted on the B2B market.