Prism Data, an open banking analytics platform, introduced CashScore v3, a powerful new version of its CashScore credit scoring model that leverages anonymized, consumer-permissioned open banking data “to fully illuminate a consumer’s true credit risk.”
That deeper understanding “enables lenders to build more resilient businesses while reining in the risks of future losses.”
Traditional credit data “provides a limited view into a consumer’s financial status and creditworthiness.”
Prism’s CashScore harnesses the power of open banking “to drastically expand that view, incorporating thousands of financial insights that are vital to evaluating credit risk but missing from traditional credit scores—from income and savings to rental payments and use of emerging forms of borrowing like Buy Now, Pay Later (BNPL) loans.”
Measuring a consumer’s income, spending, and savings to determine creditworthiness—a process commonly referred to as “cash flow underwriting”—has previously “been a time-consuming and largely manual task.”
Prism’s CashScore “automates the process, simplifying consumer cash flow underwriting to a three-digit score that is reliable, accurate and compliant with lending regulations.”
Prism’s infrastructure “makes it easier for financial institutions and fintechs to analyze and interpret open banking data so they can understand—with unparalleled clarity—a consumer’s full financial picture.”
With an expanded universe of fresh, actionable data, clients “can proactively improve underwriting strategies, minimize first-party fraud, and better manage servicing of their portfolios.”
CashScore v3 is “the first-ever consortium-based cash flow underwriting model, built using millions of anonymized, consumer-permissioned records from a variety of different banks, credit products and customer segments.”
Similar to traditional models like FICO or VantageScore, Prism’s consortium-based CashScore v3 “offers lenders a highly predictive tool they can use off-the-shelf to more precisely assess credit risk in any consumer context—from credit cards and personal loans to mortgages and auto loans, among others.”
Brian Duke, Prism Data’s Vice President of Data Science, said:
“The best models are based on many observations and diverse data sets. Prism has seen more financial transaction data, over a longer period of time, than any other cash flow underwriting provider. As a result, we’re able to provide a scoring and analytics platform with category-leading reliability and predictive power.”
Since its introduction, Prism’s CashScore has “been used to inform more than one billion dollars in real-world credit originations for hundreds of thousands of consumers.”
The CashScore is “highly predictive, reliably and consistently outperforming traditional credit scores and custom bureau models on a standalone basis, and provides even greater predictability when combined with traditional scores and models.”
Prism’s CashScore has been “shown to reduce expected credit losses by as much as 30%, and increase approval rates by up to 10% without impacting loss rates.”
The model’s predictive power “extends across the entire credit spectrum, from higher-risk consumers with thin credit files and/or subprime bureau scores to lower-risk/prime consumers with thick credit files.”
Prism’s CashScore “enables regulated financial institutions to make credit more accessible and inclusive without sacrificing transparency or fairness.”
Prism has purpose-built its products “to comply with the FCRA, fair lending and all other applicable laws and regulations.”
Similar to traditional credit scores, the CashScore “rank-orders a consumer’s risk of default, returning not only a score but a list of explainable Reason Codes for potential use in clients’ Adverse Action Notices.”
As noted in the update, Prism Data “provides essential open banking infrastructure powering the next generation of credit scoring.”
Prism’s suite of products “use cash flow underwriting to enable financial institutions, fintechs and other companies to derive powerful new insights from consumer-permissioned open banking data.”
Prism clients can “use those insights to serve new customers, create new products and better manage credit risk.”
For more details, check here.
