Experian and Plaid form alliance to broaden credit opportunities with instant cash flow data analysis
In a groundbreaking move, Experian, a leading global information services company, and Plaid, a financial technology platform powering the digital financial system, have joined forces to revolutionize the way financial potential is assessed. This partnership, aimed at making credit more inclusive and accessible, leverages Open Banking to provide lenders with real-time access to consumers' cash flow data, thereby improving credit decision-making for those with limited or no traditional credit history.
The collaboration allows consumers to consent to share their bank account data during credit applications, with Plaid securely delivering this information to Experian. The data is then analysed to generate a Cashflow Score or predictive cash flow attributes, enhancing the predictive performance of up to 25% for lenders. This score offers lenders a clearer, more accurate picture of an applicant’s financial behaviour beyond the traditional credit report.
This approach has the potential to extend credit access to millions of consumers who are typically excluded from mainstream credit due to a lack of sufficient credit history. By demonstrating their creditworthiness, these consumers can now gain access to credit products such as credit cards, personal loans, and auto loans.
The partnership between Experian and Plaid also underscores consumer control, trust, and transparency around data use. Experian, following practices demonstrated through its Experian Boost service, ensures that consumers have control over their financial data sharing. Plaid’s secure infrastructure facilitates permissioned, scalable access directly with consumers' banks, supporting responsible and inclusive lending.
Plaid's platform is connected to one in two U.S. bank accounts, providing a vast network of financial data. The combination of Experian's core credit bureau data with Plaid's financial data network offers a richer, real-time view of an applicant's financial behaviour. The insights are delivered to lenders within seconds, transforming how credit risk is assessed.
This collaboration could also lead to debt consolidation loan offerings through a separate collaboration with Paylink. The integration allows applicants to opt in and share transaction-level data like rent, bills, and savings habits, offering a comprehensive view of an applicant's financial health.
In summary, through Open Banking, Experian and Plaid are expanding credit access by integrating real-time bank account data into credit evaluations, promoting financial inclusion and smarter risk assessments that benefit both underserved consumers and lenders alike. This partnership is set to redefine financial potential evaluation, placing consumer-permissioned data at the forefront of modern finance.
References: [1] Experian. (2021). Experian Boost. Retrieved from https://www.experian.co.uk/consumer/creditscore/boost.html [2] Plaid. (2021). Open Banking. Retrieved from https://plaid.com/open-banking/ [3] Experian. (2021). Experian and Plaid Partner to Revolutionize the Way Financial Potential is Assessed. Retrieved from https://www.experianplc.com/media-centre/press-releases/2021/experian-and-plaid-partner-to-revolutionise-the-way-financial-potential-is-assessed.html [4] Paylink. (2021). Debt Consolidation Loans. Retrieved from https://www.paylink.com/debt-consolidation-loans/
- The collaboration between Experian and Plaid allows consumers to share their bank account data during credit applications, enhancing the predictive performance of lenders by up to 25%.
- Plaid's secure platform, connected to one in two U.S. bank accounts, provides a vast network of financial data that, in combination with Experian's core credit bureau data, offers a richer, real-time view of an applicant's financial behavior.
- Through Open Banking, Experian and Plaid are revolutionizing the way financial potential is assessed, expanding credit access for underserved consumers and promoting financial inclusion and smarter risk assessments that benefit both parties.
- This partnership between Experian and Plaid could lead to debt consolidation loan offerings through a separate collaboration with Paylink, allowing applicants to share transaction-level data for a comprehensive view of their financial health.
