As the director of the Consumer Financial Protection Bureau urges lenders to look beyond three-digit credit scores, Prism Data says that its cashflow-tracking tech can help incumbents serve more customers, with less risk.

There’s a new startup on the market to help FinServs make better lending decisions through cashflow-based underwriting.  

Prism Data – which uses bank transaction data to form a more complete picture of someone’s financial health and creditworthiness – just spun out of fintech Petal. The firms raised $35 million in fresh funding to be divided between them. 

“People’s bank account data captures many vital data points that don’t ever show up in traditional credit bureau data,” Prism’s head of communications, Matt Graves, told Insights Distilled, including monthly bills and BNPL loans. “Those data points are incredibly important to understanding whether a consumer can afford to take on a loan or a line of credit. But they’re not captured in a credit score.” 

The firm says that its API-driven solution is launching just as lenders are tightening standards and the Consumer Financial Protection Bureau (CFPB) is pushing open banking, with regulation proposals expected later this year.  

“Big banks and other lenders will need partners like Prism Data who can help them analyze consumer-authorized open banking data and use it to make better decisions and minimize credit risk,” Graves said.

Prism says that some of the largest banks in the US are already its partners or are currently conducting pilots with its technology, though it declined to name names. There are a handful of other firms working with FinServs to improve lending by combining more data and better modeling, including Insight Partners’ portfolio company Zest AI, which targets credit unions, Truist Ventures-backed Stratyfy, and Conductiv.