Unlock Smarter Lending with Open Banking

Highlights: 

• Open banking provides lenders with a more comprehensive, real-time view of a consumer's financial health by allowing access to bank transaction data, enabling more accurate and inclusive lending decisions.

• Equifax offers solutions like Cashflow Insights for lenders without an existing aggregator and CashScore® by Prism Data (which can be combined with OneScore) for those with an aggregator, both designed to leverage open banking data to increase approvals and improve delinquency prediction without taking on additional risk.

The lending environment is constantly changing, presenting both challenges and opportunities. Lenders are always looking for innovative methods to manage risk, approve more applicants, and serve a wider array of consumers. Open banking is an innovative capability that is transforming how lenders use consumer data and make credit decisions.

So, What is Open Banking Anyway? 

Open banking changes how lenders assess financial behavior by allowing third-party providers – with explicit consumer permission –  to access bank transaction data. This secure process goes beyond traditional credit reports, offering a rich, granular understanding of how borrowers manage their finances—their income, savings, and spending habits over time.

The key advantage lies in accessing meaningful rather than just additional data. Bank transaction data provides a dynamic, real-time view of a consumer's financial health, revealing insights into cash flow, income stability, recurring expenses (both credit and non-credit related, like rent, utilities, or Buy Now Pay Later), and discretionary spending.

The Equifax Open Banking Solutions

For lenders without an aggregator, Cashflow Insights provides a robust entry point into bank transaction data. For those with an aggregator, choose CashScore® by Prism to automate cash flow underwriting—or combine CashScore® and OneScore for even greater predictive power.

1. Cashflow Insights

For lenders seeking to harness the power of open banking, solutions like Cashflow Insights from Equifax, through the power of the Equifax Cloud™, offer a robust and comprehensive approach. Designed for lenders who may not have an existing aggregator but are looking for attributes fueled by bank transaction data, Cashflow Insights leverages a vast network of financial data. Cashflow Insights accesses 24 months of account balances, spending/payment history, and income data from approximately 99% of bank account transactions across over 21,000 global providers, including over 7,700 financial institutions.

Here’s how it works: During the application process, lenders can provide consumers with the option to register and consent to share their bank account data. Equifax then provides lenders with a detailed report containing over 1,400 FCRA compliant attributes related to cash flow, income, expenses, and assets. This comprehensive financial picture enables enhanced lending decisioning and can also support adverse action requirements. Reports are conveniently available via JSON data package or PDF.

The impact of Cashflow Insights is tangible:

• Increased Card Approvals: Lenders have seen significant increases in credit card approvals without a corresponding rise in delinquency rates. For example, with bank data on 40% of credit card applicants, a lender could increase approvals by 8.2% without taking on additional risk of default.

• Improved Delinquency Prediction: Lenders can gain a substantial lift in predicting accounts that will go 90 days past due, with an average lift of 13.2% among thin-file consumers and 8.3% among non-prime/subprime consumers.

Open banking is more than just a trend; it's a fundamental shift in how credit decisions are made. By providing lenders with unprecedented access to consumer-permissioned bank transaction data, it empowers them to make more accurate, inclusive, and profitable lending decisions, ultimately expanding access to credit for millions of consumers.

2. CashScore® and Insights by Prism Data

In addition to solutions like Cashflow Insights, another powerful tool in the open banking arsenal is CashScore® by Prism Data. CashScore v4 is a score-based assessment that empowers lenders to automate cash flow underwriting and gain a superior understanding of credit risk using near real-time financial transaction history.

CashScore measures the relative probability of default across the full credit spectrum and offers flexibility with three distinct score options for different use-cases. In addition, Prism provides access to tens of thousands of transaction data attributes ready-made for strategy and custom model development. Prism solutions are particularly well-suited for lenders who already have a bank transaction data aggregator in place and are looking to leverage advanced scores or attributes for enhanced decisioning. Prism Data works seamlessly with both first-party sources (on-us transaction data held directly by the lender) and aggregated open banking feeds, providing a flexible path to harness cash flow data from a wide range of sources. 

The impact of CashScore v4 is significant:

• Enhanced Predictive Performance: CashScore has demonstrated an average of 30% lift in predictive performance above traditional credit scores alone.

• Increased Approval Rates: Lenders adopting CashScore v4 could see an increase in loan approvals by 28% without taking on additional risk, or reduce the number of defaults in their portfolio by 16%, compared to the prior version of the CashScore.

3. OneScore from Equifax + CashScore from Prism Data

To truly strengthen a view of a consumer's ability to pay, lenders can supercharge their decisioning with the combined power of multiple scores. By utilizing bank account transaction data through CashScore, plus the history of payments for everyday bills and alternative finance accounts that fuel OneScore, lenders can achieve even higher performance in capturing new qualified customers while effectively maintaining risk.

Detailed cash flow analysis provides lenders with a deeper understanding of an applicant's capacity for new credit and debt repayment. This insight moves beyond historical payments, revealing a consumer's true ability to pay, financial stability, and resilience to economic changes. Such power allows lenders to approve more qualified applicants who might otherwise be missed by conventional methods, all while mitigating risk.

Learn more about our Open Banking Solutions and the Equifax partnership with Prism Data.