FinRegLab Report Finds Non-Conventional Data Sources Are Critical to Expanding Credit Access and Growth Among Kenyan Micro and Small Enterprises
A new report by FinRegLab details strategies for improving data sources for credit scoring and underwriting of Kenyan micro and small enterprises (MSEs), finding that tapping multiple non-conventional (or alternative) data sources is particularly important to expanding credit access and growth among women-owned MSEs.
March 28, 2024
FinRegLab Responds to Treasury Request for Information on Financial Inclusion Strategy
We therefore urge that a national inclusion strategy reflect the importance of data and technology in impacting financial inclusion, fairness, and equity in
today’s rapidly changing environment.
February 20, 2024
FinRegLab Responds to the CFPB’s Proposed Rule on Personal Financial Data Rights
Over the past three decades, customer-permissioned data flows have become critical to a growing range of consumer financial products and services as well as to public research focusing on household financial health, markets for consumer financial products and services, and the role of consumer financial activity in the nation’s economy.
December 29, 2023
FinRegLab Report and Webinar Examine the Policy Implications of AI in Financial Services as Adoption Continues to Accelerate in Credit Underwriting and Other Use Cases
FinRegLab is extending its investigation of the adoption of artificial intelligence in financial services through a policy analysis focused on the growing use of machine learning models for underwriting credit and a January 17 webinar with senior federal financial regulators to discuss generative AI and other recent developments.
December 7, 2023
FinRegLab Testimony: Senate Committee on Banking, Housing, and Urban Affairs “Artificial Intelligence in Financial Services”
FinRegLab’s testimony provides a general overview of the state of ML/AI adoption across various financial services use cases; potential benefits and risks to customers, providers, and the broader economy; and the ways that federal financial regulatory frameworks are shaping ML/AI adoption in this sector.
September 19, 2023
FinRegLab to Evaluate Data to Increase Credit Access for Minority Business Enterprises and to Scale Lending by Mission-based Lenders
FinRegLab is launching an initiative with support from the U.S. Department of Commerce Minority Business Development Agency (MBDA) to improve credit access for minority-owned companies and other underserved small businesses through the use of non-traditional data sources and mission-based lenders.
September 7, 2023
Study Highlights Benefits of Combining Short Term Payment Relief with Longer Term Assistance Plans
A new research paper underscores the importance of evaluating whether the most vulnerable and distressed borrowers need longer term repayment plans soon after they first enroll in natural disaster or other emergency relief programs with credit card lenders.
August 28, 2023
FinRegLab Finds Machine Learning Tools Have Potential to Usher in Fairer Credit Decisions
FinRegLab has issued two papers that examine lenders’ ability to build, understand, and manage machine learning models to ensure that they can be trusted to underwrite applications for credit by millions of consumers and small businesses.
July 13, 2023
FinRegLab Identifies Urgent Needs in Preparing for Federal Student Loan Payment Resumption
FinRegLab today issued a research brief entitled “The Countdown Clock for Student Loan Forbearances” that highlights the need for quick action by consumers, federal agencies, servicers, and counselors to prepare for the August 2023 end of pandemic-era forbearances on federal student loans.
May 10, 2023
NIST Releases AI Risk Management Framework
The National Institute for Standards and Technology has released the first version of a voluntary framework to help incorporate trustworthiness considerations into the design, development, use, and evaluation of AI products, systems, and services. The framework and various supplemental materials were developed after more than 18 months of public engagement. Comments are due February 27, 2023.
January 26, 2023
FinRegLab Responds to the CFPB’s Outline on Personal Financial Data Rights Rulemaking
These data flows are critical to a growing range of consumer financial products and services. Modernizing the regulatory frameworks governing these flows is important both to mitigate current risks and frictions and to encourage future applications that produce greater inclusion, competition, and customer-friendly innovation, particularly for historically underserved consumers.
January 25, 2023
FinRegLab’s New Study Traces Unprecedented Use of Short-Term Payment Relief During the Pandemic to Assist Consumers Struggling with Credit Card Debts
A new study finds that more consumers obtained short-term payment relief on their credit cards during the first 18 months of the pandemic than on any other type of loan except student debt, where forbearances were mandated by federal law. The study also finds evidence that pandemic relief initiatives may have reduced damage to the credit reports of consumers who sought long-term assistance through credit counseling and debt management programs.
January 19, 2023
FinRegLab Will Evaluate Innovations to Help Distressed Borrowers Recover from Pandemic and Other Financial Shocks
FinRegLab has launched a new research project using data from the National Foundation for Credit Counseling (NFCC) to evaluate ways to help consumers recover more quickly from personal and economic crises such as COVID-19. The project will analyze pilot initiatives by nonprofit counseling agencies and other data sources as a springboard for considering broader market and policy changes.
October 20, 2022
Summary of Disparate Impact Usability Results
FinRegLab attended ICML’s Responsible Decision Making in Dynamic Environments workshop and presented our work on a subsection of our white paper. The workshop poster and presentation focused on how model diagnostic tools affect lenders’ ability to manage fairness concerns related to identifying less discriminatory alternative models used to extend credit.
July 23, 2022
FinRegLab and Researchers from the Stanford Graduate School of Business Release New Empirical Research on Explainability and Fairness of Machine Learning in Consumer Lending
FinRegLab and Professors Laura Blattner and Jann Spiess of the Stanford Graduate School of Business have released new research on “Machine Learning Explainability and Fairness: Insights from Consumer Lending.”
April 27, 2022
Symposium: Artificial Intelligence and the Economy: Charting a Path for Responsible and Inclusive AI
FinRegLab, in partnership with the U.S. Department of Commerce, the National Institute of Standards and Technology (NIST), and the Stanford Institute for Human-Centered Artificial Intelligence (HAI), are hosting a symposium, bringing together leaders from government, industry, civil society, and academia to explore potential opportunities and challenges posed by artificial intelligence and machine learning deployment across different economic sectors, with a particular focus on financial services and healthcare.
April 22, 2022
Report: Utility, Telecommunications, and Rental Data in Underwriting Credit
FinRegLab partnered with the Urban Institute to detail twenty years of research and efforts to access utility, telecom, and rental payment history for credit scoring and underwriting. The paper describes recent initiatives and key challenges going forward.
December 21, 2021
FinRegLab Responds to Comments on Proposed Third-Party Relationships Guidance
Coordinated action is critical between federal regulators to continue moving the growing ecosystem for customer-directed transfers toward adoption of safer technologies and practices without undermining consumers’ § 1033 rights or frustrating the law’s potential benefits for competition and innovation.
October 18, 2021
FinRegLab’s Testimony to the House Financial Services Fintech Task Force
FinRegLab Deputy Director Kelly Thompson Cochran testified in the Task Force’s hearing on “Preserving the Right of Consumers to Access Personal Financial Data.”
September 21, 2021
FinRegLab: Adoption of Machine Learning Underwriting Models in U.S. Credit Markets Is Intensifying Focus on Explainability, Fairness, and Inclusion
Machine learning models are being used to evaluate the creditworthiness of tens of thousands of consumers and small business owners each week in the U.S., increasing the urgency of answering key questions about their performance, governance, and regulation.
September 16, 2021
Prudential Regulators Release Guide for Community Banks on Conducting Diligence on Financial Technology Companies
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency released a guide for community banks on conducting diligence of financial technology companies. Drawing on existing guidance that articulates risk management expectations for third-party relationships, the guide highlights areas where required diligence processes can be adapted to reflect constraints related to doing business with early or expansion stage companies.
August 27, 2021
The Next Frontier: Expanding Credit Inclusion with New Data and Analytical Techniques
As recent developments have renewed interest in harnessing new data and analytical techniques for credit underwriting, stakeholders are asking questions about potential benefits and risks particularly for addressing racial equity issues. FinRegLab Deputy Director Kelly Thompson Cochran wrote an article summarizing recent initiatives and issues for an edition of the Community Development Innovation Review titled “Fintech, Racial Equity, and an Inclusive Financial System” that has been published by the Federal Reserve Bank of San Francisco and the Aspen Institute.
August 19, 2021
FinRegLab Responds to Interagency Request for Information and Comment on Financial Institutions’ Use of Artificial Intelligence, including Machine Learning
FinRegLab’s forthcoming research will help to inform the extent to which current laws and regulations are able to be satisfied in light of the emergence of more complex underwriting models, how well tools to develop and monitor those models perform in identifying effective ways to pursue greater inclusion and fairness, and considerations for policy and market developments that can support the safe, inclusive, and nondiscriminatory adoption of machine learning.
July 1, 2021
FinRegLab’s Testimony to the Housing Financial Services Committee’s AI Task Force
FinRegLab CEO Melissa Koide testified in the Task Force’s hearing on “Equitable Algorithms: How Human-Centered AI Can Address Systemic Racism and Racial Justice in Housing and Financial Services.”
May 7, 2021
FinRegLab to Evaluate the Explainability and Fairness of Machine Learning in Credit Underwriting
FinRegLab is working with researchers from Stanford Graduate School of Business to launch a ground-breaking evaluation of emerging market practices to improve the transparency and fairness of machine learning underwriting models in consumer credit.
April 14, 2021
Op-Ed: Data Needs to be Wider-Sourced and More Inclusive
America’s credit system is under serious pressure as it faces the most sudden and severe downturn since the Great Depression. Our CEO Melissa Koide and former President and CEO of FICO Larry Rosenberger released an op-ed titled “Data needs to be wider-sourced and more inclusive” discussing using more financial data for lending, enhancing public policy guidance, and financial exclusion and the COVID-19 effect.
March 22, 2021
FinRegLab Responds to the CFPB’s Advanced Notice of Proposed Rulemaking on Consumer Access to Financial Records.
We recognize the breadth of urgent issues facing the Consumer Financial Protection Bureau and the nation at this time, but believe that resolving critical questions about access to financial data would substantially benefit consumers, small businesses, and financial services providers in helping to recover from the Covid-19 pandemic, address longstanding racial wealth gaps, and make U.S. financial systems more generally inclusive, competitive, and responsive to customer needs.
February 4, 2021
CFPB Issues Guidance on Special Purpose Credit Programs
The Consumer Financial Protection Bureau has issued an advisory opinion concerning the establishment of special purpose credit programs to meet the needs of underserved groups consistent with the Equal Credit Opportunity Act. It is the Bureau’s first action following on a Request for Information about ECOA issues earlier in 2020.
December 21, 2020
Op-Ed: Can Nontraditional Credit Analysis Be Community Banks’ Path to Profit?
In many smaller American towns banks and credit unions are finding usual sources of loan demand dwindling — and that was before the COVID-19 recession. Community banking institutions may find trouble if they market their credit services further afield. The solution may be to dig deeper for loans in the communities they already know, marketing loans to be evaluated with new alternative data sources (like some fintechs do).
August 19, 2020
CFPB Innovation Spotlight: Providing Adverse Action Notices When Using AI/ML Models
The CFPB issued a blog post noting the potential inclusion benefits of using AI and machine learning models for credit underwriting, as well as risks and compliance challenges with respect to the delivery of “adverse action” disclosures. The agency emphasized the “built-in flexibility” in the regulatory framework and recognized emerging work by lenders and technology companies to enhance the explainability of AI underwriting models.
July 7, 2020
CFPB Guidance on Disaster-Related Credit Reporting
The CFPB has issued FAQs on implementation of CARES Act requirements concerning pandemic-related credit reporting, as well as the use of special comment codes for disaster effects and forbearances.
June 16, 2020
No-Action Letter Template to the Bank Policy Institute
The CFPB issued a no-action letter template to the Bank Policy Institute recognizing terms for a standardized, small-dollar credit product, including those designed to function as “guardrails.” The template is intended to ease approval of plans by individual regulated entities to offer a product based on these standardized terms, subject to submission and approval of further information specific to each lender. Underwriting based on the applicant’s cash-flow data is specified among the essential terms set forth for the standardized product.
May 22, 2020
Interagency Lending Principles for Offering Responsible Small-Dollar Loans
U.S. prudential regulators recognize the roles that both innovative technologies and data sources such as deposit account activity can play in providing responsible small-
dollar loans to consumers and small businesses who do not meet supervised institutions’ traditional underwriting standards.
May 20, 2020
FinRegLab: Market and Policy Challenges Are Slowing Use of Cash-Flow Data in U.S. Credit Underwriting
Resolving data transfer issues could facilitate use of cash-flow data, with particular opportunity to expand access to credit for millions of underserved consumers and small businesses
February 26, 2020
Joint Statement by U.S. Regulators on the Use of Alternative Data in Credit Underwriting
U.S. regulatory agencies recognize alternative data – and in particular cash flow data – can expand access to credit and produce benefits for consumers
December 3, 2019
FinRegLab: Cash-flow Data is Increasing Access to Credit in Small Business Loan Markets
Data is being used by both new entrants and traditional lenders to extend smaller loans to smaller businesses and increase credit to underserved communities.
September 6, 2019
FinRegLab: Six-Lender Study Finds Cash-Flow Data Useful for Extending Credit to Consumers and Small Businesses
Data both helps to underwrite applicants who lack traditional credit history and improves risk sorting among borrowers who are ranked similarly by traditional scoring systems.
July 25, 2019
FinRegLab responds to Senate Banking Committee invitation for feedback on data privacy, protection, and collection
The growth and use of data is increasing exponentially in the American economy and specifically within its financial systems. This data has the potential to benefit consumers and the broader economy in myriad ways.
March 4, 2019
Events & Conferences
We are planning on attending or speaking at the following upcoming webinars, events and conferences:
NeurIPS – 37th Anniversary Conference
December 16, 2023 The Neural Information Processing Systems Foundation
APPAM Fall Research Conference
November 9-11, 2023 Association for Public Policy Analysis & Management
11th Annual 2023 Canadian Risk Forum
November 9, 2023 Professional Risk Managers’ International Association
Lending and Credit Risk in the Digital Age: Navigating Policy Changes
October 26, 2023 Bipartisan Policy Center
National Bankers Association Annual Conference
October 19-20, 2023 National Bankers Association
The Fourth New York Fed Conference on Fintech: Artificial Intelligence and Digital Assets
September 29, 2023 Federal Reserve Bank of New York
NCRC Just Economy Conference
March 29-30, 2023 National Community Reinvestment Coalition (NCRC)
2023 Credit Union National Association (CUNA) Governmental Affairs Conference (GAC)
March 1, 2023 Global Women’s Leadership Network
The Latest on Credit Reporting
and Credit Scores
January 19, 2023 National Housing Resource Center
Demystifying Artificial Intelligence: Its Impact on Finance and Regulation
December 7, 2022 Mercatus Center at George Mason University and Financial Technology & Cybersecurity Center
The Future of Minority Depository Institutions: MDI ConnectTech Initiative
November 30, 2022 Alliance for Innovative Regulation
Criminal Justice Contact and Economic Well-Being
November 18, 2022 Association for Public Policy Analysis and Management (APPAM) Fall 2022 Conference
Shaping the Future of Fair and Inclusive Credit
November 16, 2022 Financial Technology Association (FTA) Inaugural Summit
What the CFPB’s Section 1033 SBREFA Outline Foreshadows for the Proposed Rule
November 16, 2022 Consumer Bankers Association (CBA) Washington Forum 2022
Emerging ML/AI Topics in Consumer Credit
October 27, 2022 Federal Reserve Bank of Philadelphia
2022 Annual Research Gathering
October 12, 2022 Innovations for Poverty Action and the Global Poverty Research Lab at Northwestern University
The Role of FinTech in Unsecured Consumer Lending to Low- and Moderate-Income Individuals
September 29, 2022 Federal Reserve Bank of New York
Exploring the Frontiers of ML Fairness: Insights from Consumer Lending
August 31, 2022 National Institute of Standards and Technology (NIST)
How non-traditional data sources are transforming financial services
August 24, 2022 Fintech Summit Latam 2022
Technology as the New Frontier for an Inclusive Economy
July 18, 2022 National Fair Housing Alliance 2022 National Conference
Project REACh Financial Inclusion Symposium 2022
July 12, 2022 Office of the Comptroller of the Currency (OCC)
Artificial intelligence: Are black boxes necessarily brick walls?
June 13, 2022 National Community Reinvestment Coalition
Solving AI’s Trustworthiness Problem to Accelerate Bank Adoption
April 28, 2022 American Banker
Machine Learning Explained: Evidence on the Explainability and Fairness of ML Credit Models
April 28, 2022 FinRegLab
Artificial Intelligence and the Economy: Charting a Path for Responsible and Inclusive AI
April 27, 2022 The U.S. Department of Commerce and National Institute of Standards and Technology, FinRegLab, and the Stanford Institute for Human-Centered Artificial Intelligence (HAI)
Unlocking Doors: The Promise and Peril of Using Alternative Data in Mortgage Underwriting
April 14, 2022 FinRegLab and The Urban Institute
‘Buy Now Pay Later’ and the Consumer Experience
March 16, 2022 Consumers International Fair Digital Finance Forum 2022
How To Be A More Ethical And Responsible AI Org
December 14, 2021 US Treasury/ACT-IAC Emerging Tech Day
26th Annual Consumer Financial Services Institute
December 7, 2021 Practicing Law Institute
The Future of Consumer Financial Data Access: Implementing Section 1033 of the Dodd-Frank Act
December 3, 2021 Bank Policy Institute and The Clearing House
De-Risking Alternative Data
October 21, 2021 Bank for International Settlements, Georgetown University Law Center, and The Institute for Financial Markets, DC Fintech Week
The Power of Data to Drive Change
October 12, 2021 National Foundation for Credit Counseling Connect Series
Financial Technology and Its Implications for Financial Inclusion
September 29, 2021 FINRA Diversity Leadership Summit
Preserving the Right of Consumers to Access Personal Financial Data
September 21, 2021 House Financial Services Committee’s Task Force on Financial Technology
Fintech, Racial Equity, and an Inclusive Financial System
August 25, 2021 Federal Reserve Bank of San Francisco
Innovation, Opportunity & Investment Summit
August 17, 2021 National Association of Realtors
AI and Machine Learning: Key Issues for Financial Services Industry
July 27, 2021 Women in Housing and Finance, Inc.
Expanding the Credit Box – Safely, Accurately and by Putting the Consumer First
June 29, 2021 Aire
Leveraging Customer Data Ethically to Advance Diversity, Equity, and Inclusion
June 9, 2021 Financial Health Network, EMERGE
Equitable Algorithms: How Human-Centered AI Can Address Systemic Racism and Racial Justice in Housing and Financial Services
May 7, 2021
House Financial Services Committee
Task Force on Aritificial Intelligence
The Use of Artificial Intelligence and Alternative Data in Financial Services: Force for Inclusion?
May 7, 2021 National Community Reinvestment Coalition
Tipping the SCALE: Will Alternative Data in Credit Scoring Promote or Impede Fair Lending Goals?
April 8, 2021 National Association of Realtors
Robots and Machine Learning and Artificial Intelligence
February 23-26, 2021
NMLS 2021 Annual Conference & Training
Financial Inclusion: Lessons Learned and What’s Next for Innovations in Alternative Credit Data
February 23, 2021
Urban Instiute
Financial Markets Quality Conference
November 16-20, 2020
Georgetown Center for Financial Markets and Policy
Central Bank of the Future Conference
November 16-18, 2020
University of Michigan’s Center on Finance, Law & Policy and the Federal Reserve Bank of San Francisco
The Color of Money: Racial Equity & Inclusion in Fintech
November 12, 2020
Stanford Center for Comparative Studies in Race and Ethnicity & Stanford Center for Philanthropy and Civil Society’s Digital Society Lab
How Lenders Can Enable Consumer Resilience During Uncertain Times
October 1, 2020
Credit Builders Alliance and Nova Credit
The Second New York Fed Research
Conference on FinTech
September 29 & October 1, 2020
Federal Reserve Bank of New York
Developing the Credit System for Greater
Fairness and Inclusion
September 30, 2020
FinRegLab
It’s Time For an Infrastructure ‘Boost’: Confronting Utility Bill Affordability During the COVID-19 Recession
Tuesday, September 15, 2020
The Brookings Institution
A Look at COVID-19’s Impact on Credit Reporting, Credit Scoring, and underwriting
Thursday, September 3, 2020
Podcast
Ballard Spahr LLP
Virtual Town Hall: How Can Fintech
Help Small Businesses and Work
Wednesday, April 15, 2020 Washington, DC
Insititute of International Economic Law
CFPB Symposium: Consumer Access to Financial Records
Wednesday, February 26, 2020
Washington, DC
Consumer Financial Protection Bureau
FDATA Global Open Finance Summit & Awards
Wednesday, December 4 – Thursday, December 5, 2019
Edinburgh, UK
Financial Data and Technology Association
Data Symposium: “The Role of Consumers in the Data Ecosystem”
November 4-5, 2019
Los Angeles, CA
FinRegLab and The San Francisco Fintech Team
Reimagining Housing: Closing the Equity and Supply Gaps
October 23, 2019
Washington, DC
Urban Institute
Innovation for Shared Prosperity Conference
October 11-12, 2019
Stanford, CA
Stanford GSB
Annual ETA FinTech Policy Forum
September 12, 2019
Washington, DC
Electronic Transactions Association
Data Privacy and Portability in Fintech Symposium
February 23, 2019
Ann Arbor, MI
University of Michigan
Consumer Protection in an Age of Uncertainty
March 21, 2019
Ann Arbor, MI
University of Michigan
RegTech Enable
November 6-7, 2018
San Francisco, CA
Temerity Capital, QED Investors, Fenway Summer Ventures
FDIC Forum: The Use of Technology in the Business of Banking
May 7, 2018
Washington, DC
FDIC
2023 APPAM Fall Research Conference
November 9-11, 2023 Association for Public Policy Analysis & Management
FinRegLab in the News
Don’t take our word for it – here’s what people are saying:
Consumer AI Underwriting and Explainability with Melissa Koide
Orrick Herrington & Sutcliffe LLP
October 4, 2023
Jerry Buckley and Caroline Stapleton
“Melissa discusses her organization’s work in evaluating the explainability of complex machine learning algorithms in credit underwriting, model governance and adverse action notices. The conversation covers the CFPB’s recent guidance on credit denial by lenders using artificial intelligence as well as the role explainability plays in promoting fairness and inclusion in lending, methods and tools emerging for lenders to explain credit-related decisions based on AI models, and the ongoing work required to adapt to the digital economy and evolving regulatory landscape.”
Consumer Reports Launches Video Series in Partnership with Kapor
Foundation Highlighting Racial Bias in Algorithms
Consumer Reports
May 2, 2023
Consumer Reports released a video series exploring biases in machine learning algorithms and data sets and the resulting unfair practices faced by communities of color. The series is designed to educate consumers on the risks hidden in seemingly “neutral” technologies. FinRegLab CEO Melissa Koide is featured in the Mortgage Lending episode of the series.
The Credit Scoring System has its Downsides — Here’s What a New Credit Scoring and Reporting System Could Look Like
CNBC
Jan 31, 2023
Trina Paul
“Credit underwriting with cash-flow data involves using financial data insights from a bank account or other types of transaction accounts to evaluate consumers and small businesses for credit,”
Tackle the ‘credit invisibles’ to help close the racial wealth gap
Financial Times
November 28, 2022
Patti Waldmeir
“Some fintechs think including more data and analyzing it with more advanced algorithms could solve the problem. Others say it’s time to build whole new systems.”
New Treasury Report Shows Fintech Industry Requires Additional Oversight to Close Gaps, Prevent Abuses and Protect Consumers
U.S. Department of the Treasury November 16, 2022
“The report finds that, while concentration among federally insured banks is growing, new entrant non-bank firms, in particular ‘fintech’ firms, are adding significantly to the number of firms and business models competing in core consumer finance markets and appear to be contributing to competitive pressure. While these fintech firms are enabling new capabilities, they are also creating new risks to consumer protection and market integrity, such as risks related to data privacy and regulatory arbitrage.”
Should we trust the credit decisions provided by machine learning models?
SUERF
September 2022
Andrés Alonso and José Manuel Carbó
“The use of Machine Learning (ML) models is gaining traction in finance due to their better predictive capacity compared to traditional statistical techniques…One of the use cases with greater potential is its application to credit underwriting and scoring, since by having better predictive capacity, ML models allow better estimates of the probability of default and therefore could result in more accurate credit scores. But this improvement in predictive performance does not come without risk.”
Credit scores are broken. Fixing them is an alluring but elusive opportunity.
protocol
September 12, 2022
Veronica Irwin
“Some fintechs think including more data and analyzing it with more advanced algorithms could solve the problem. Others say it’s time to build whole new systems.”
AI for good: Research insights from financial services
Brookings Center on Regulation and Markets
August 4, 2022
Melissa Koide
“Artificial intelligence and machine learning analyses are driving critical decisions impacting our lives and the economic structure of our society. These complex analytical techniques—powered by sophisticated math, computational power, and often vast amounts of data—are deployed in a variety of critical applications, from making healthcare decisions to evaluating job applications to informing parole and probation decisions to determining eligibility and pricing for insurance and other financial services.”
World Development Report 2022: Finance for an Equitable Recovery
World Bank May 14, 2022
“The report “examines the central role of finance in the economic recovery from COVID-19. Based on an in-depth look at the consequences of the crisis most likely to affect low- and middle-income economies, it advocates a set of policies and measures to mitigate the interconnected economic risks stemming from the pandemic—risks that may become more acute as stimulus measures are withdrawn at both the domestic and global levels.”
Stars Align For Fintech, But Regulators Are Wary of Dangerous Risks
Roll Call
April 19, 2022
Steven Harras
“Careful, use-case specific research to understand how AI/ML with new data may affect consumers is essential to getting the rules of the road right in terms of how we regulate to protect people while making sure the benefits of the more complex analytics are trustworthy, inclusive, and beneficial.”
Lack of Credit Has Been A Huge Obstacle to Black Home Buyers. Now Some Lenders are Trying to Fix That.
The Washington Post
February 17, 2022
Amanda Abrams
“Prospective borrowers with less wealth and little credit history are now deemed riskier by the automated underwriting systems that dominate mortgage lending these days. As a result, they tend to be denied more often or given higher interest rates … despite the fact that they might well be capable of responsibly making mortgage payments.”
Structured Finance: A Tool to Address Inequality
Structured Finance Association
February 16, 2022
Steven Harras
“Income and wealth inequality are multi-faceted problems that have expanded over the past 40 years. Structured finance, through securitizations, can be an effective tool to improve financial inclusion by channeling private capital to disadvantaged communities.”
No Credit Score? No Problem! Just Hand Over More Data.
The New York Times
November 29, 2021
Tara Siegel Bernard
“But with tens of millions of consumers left out of traditional credit scoring and the pandemic exposing potential problems in the current system, [lenders] are collecting and crunching all manner of other data to determine who ought to get a loan and how much they should pay.”
What We’ve Learned About Fintech, Racial Equity, and Financial Inclusion
Federal Reserve Bank of San Francisco
November 10, 2021
SF FED Blog
“We’re seeing the need to be smart and effective in this moment to make sure that the recovery is stronger and broader than after the last financial crisis.”
What Is Alternative and Non-Traditional Data?
Experian
October 20, 2021
Business Information Services
“Non-traditional data is an important way to give consumers access to better rates and open up borrowing to more consumers and businesses. This data can include things like rent and cell phone payments, giving lenders a broader range of information to consider.”
How Technology Can Reduce Government Fraud
THEGOVLAB
October 5, 2021
Frederico Levy
“Use of AI in government is still a burgeoning field, with promising potential in detecting fraud, increasing efficiency and responsiveness, and generally improving service to citizens. To reach these goals and avoid missteps, governments have a series of lessons to learn: they must adopt policies that protect privacy, train public officials to understand the technologies being implemented, including the risks, and implement guardrails to prevent biases in the data from further disenfranchising disadvantaged groups.”
Insights On Recent Developments In The Data Sharing Fintech Ecosystem
ComplianceSavvy
September 27, 2021
Marina Tuveson
“Today, roughly 50% of U.S. consumers are estimated to have signed up for financial apps or other products that frequently rely on data aggregators to collect information via customer-authorized transfers, with substantial growth in the first months of the COVID-19 pandemic.”
4 Consumer Risk Modeling Innovations That Could Change Credit Scoring Forever
Finovate Blog
August 18, 2021
Julie Muhn
“‘[T]he predictiveness of the cash flow scores and attributes was generally at least as strong as the traditional credit scores and credit bureau attributes,’ suggesting it’s a reliable complement to or replacement for traditional scoring.”
Empirical Policymaking: FinRegLab CEO Melissa Koide
Barefoot Innovation Podcast
August 26, 2021
Jo Ann Barefoot
“I believe we’ve reached a crossroads in consumer finance, where things will probably get either much better, or much worse, due to the technological transformation of products, providers, cost structures, business and market models, and infrastructure.”
As Banks Push AI, Worry About Worsening Inequality Follows
Roll Call
August 3, 2021
Steven Harras
“Policymakers are actively building their understanding of the implications of AI/ML on model governance, fairness, explainability, and financial inclusion”
Federated Learning: The Next Big Step Ahead for Data Sharing
BCG GAMMA
June 7, 2021
Arun Ravindran, Aparna Kapoor, Piyush Mishra and John Gomez
“AI adoption and data maturity within enterprises have seen significant growth in the past decade. With each passing day, new enterprise AI use cases come to life in more organizations and more industries.”
EU Proposes Restrictions on AI in Credit Scoring, Authentication
American Banker
April 21, 2021
Penny Crosman
“Research suggests artificial intelligence and machine learning can create measurable benefits including financial inclusion, yet we also know it can bake in and even exacerbate historical bias and exclusion.”
When Incorporating Alternative Credit Data, Put Fairness Before Speed
American Banker
April 5, 2021
Sally Taylor
“As we begin to emerge from the coronavirus pandemic, it will be more important than ever for lenders to have a more comprehensive and inclusive picture of how Americans have been managing their financial health — even in extraordinary circumstances — beyond what’s seen in the traditional credit bureau file alone.”
Adopting Alternative Data in Credit Scoring Would Allow Millions of Consumers to Access Credit
Urban Institute
March 15, 2021
Karan Kaul
“Even though credit scores play a key role in determining who gets a mortgage and at what terms, the current credit system disadvantages a disproportionate share of low-income consumers who don’t have enough information in their credit files.”
Expectations For CFPB’s Fair Lending Agenda Under Biden
JDSupra
March 3, 2021
David Ogden, Karin Dryhurst & Franca Harris Gutierrez
“It is clear just a few weeks into the Biden administration that fair lending and racial equity will return as a central focus of regulators under President Joe Biden.”
CFPB’S Open Banking Rulemaking Muddled by Dated Finance Laws
Bloomberg Law
February 17, 2021
Evan Weinberger
“A growing consensus that the CFPB should create regulations on ensuring consumers’ safe sharing of their bank data with finance apps, such as Venmo and Mint, isn’t making the agency’s job any easier.”
America’s Consumer Credit Reporting System Desperately Needs Reform
Forbes
December 12, 2020
Mayra Rodriguez Valladares
“For decades, numerous academics, consumer advocates, and legislators have pointed out the importance of consumer credit scores on individuals’ ability not only to obtain credit, but also on housing and loan affordability.”
Twitter Veteran Launches Credit Score that Digs Deep into Cash Flow
American Banker
October 1, 2020
Penny Crosman
“The New York fintech startup Harvest began offering a new credit score Thursday that uses artificial intelligence to take into account cash flow, spending habits and financial discipline alongside traditional scoring data to help lenders determine if a potential borrower is creditworthy.”
Microfinance and COVID-19: Principles for Regulatory Response
CGAP
September, 2020
“How should financial regulators shape their response to the COVID-19 pandemic in overseeing microfinance institutions (MFIs)? What factors should they consider to help poor people and micro- and small enterprises survive the crisis?”
New York Bolsters Fintech Leadership Role Amid Pandemic
Roll Call
July 21, 2020
Steven Harras
“New York, long the hub of the financial world and an early epicenter of the COVID-19 outbreak, is looking to innovative financial technologies as one source to help its pandemic-battered economy.”
Pandemic Lending Pushes Community Banks Toward Fintech Fixes
Bloomberg Law
July 8, 2020
Lydia Beyoud
“A federal stimulus program to combat the recent economic downturn is pushing more community banks to embrace financial technology partnerships.”
Study Suggests Cash Flow Data Does Not Discriminate in Lending Decisions
S&P Global
July 5, 2020
Rachel Stone
“Cash flow data can predict the credit risk that individual borrowers pose without discriminating against protected groups, according to recent research.”
Helping Customers When They Need It Most
Bank Director
June 26, 2020
Emily McCormick
“Roughly a fifth of U.S. consumers lack credit history data, she says, which focuses on certain types of credit and expenses. The data is also a lagging indicator since it’s focused on the customer’s financial history.”
Fair Lending and the Use of Alternative Underwriting
Law360
June 9, 2020
Tom Brown and Molly Swartz
“cash-flow data – such as records of transactions in and out of consumers’ deposit and card accounts – can improve risk prediction because it evidences how applicants manage their finances.”
How to Protect Your Credit Score During the Coronavirus Pandemic
Consumer Reports
June 02, 2020
Scott Medintz
“Many companies report to credit bureaus in batches, she says, and accounts that are 30 days delinquent typically get reported about a month after the bills were due. That means that many payments missed in the early phases of the COVID-19 crisis are likely to hit the credit agencies very soon.”
Visa’s Plaid Buy May Move Needle on Bank-Fintech Data
Bloomberg Law
January 14, 2020
Lydia Beyoud
“A shift in people’s creditworthiness ranking has been happening all over the world. We need to make sure the change’s innovative impact is a financially inclusive and anti-discriminatory one.”
Can Regulators Catch up to Tech Changes?
American Banker December, 2019
Joe Adley
“Does the financial sector stay distinct? Does financial data stay distinct? If so, how does that happen when all this line-blurring is going on? I’m not exactly sure how it will play out. But I strongly suggest that’s going to be the central question over the next five years…
Social Credit: Much More Than Your Traditional Financial Credit Score Data
Forbes
December 13, 2019
By Nizan Geslevich Packin
“A shift in people’s creditworthiness ranking has been happening all over the world. We need to make sure the change’s innovative impact is a financially inclusive and anti-discriminatory one.”
‘Out of the Shadows’: Use of Alternative Data in Lending Gains Ground
American Banker
December 16, 2019
By Penny Crosman
“Regulators are trying to send an important signal that they are aware that there are certain data that can be quite useful, especially in assessing credit risk for an underserved population.”
Use of Alternative Data in Underwriting Receives ‘OK’ from Federal Regulators
JDSUPRA
December 6, 2019
By Ross Handler, Benjamin Saul, Bryan Cave, Leighton Pasiner
“U.S. federal banking regulators issued an interagency statement supporting the evaluation of alternative data when assessing consumers’ creditworthiness.
Regulators Support Alternatives to Assess Creditworthiness
Pymnts.com December 4, 2019
“Using Income and spending data can open up access to credit, a September FinRegLab study indicated. The study analyzed information from FinTechs like LendUp Global and Petal Card that extend loans based on alternative data.
Bad Credit? Regulators Back Ways for Risky Borrowers to Get Loans
Wall Street Journal
December 3, 2019
By Yuka Hayashi
“Consumers with spotty or no credit histories might find it easier to get loans after federal banking regulators endorsed alternatives to traditional methods of assessing creditworthiness.
AI Bias Question Hinges on Trust, Fintech Panelists Say
BankingDive
October 24, 2019
By Dan Ennis
“One hundred definitions” of fairness can make algorithms difficult “onions to unpeel.”
Duo seeks to bridge information divide in fintech industry
Roll Call
October 22, 2019
By Steven Harras
“When a diverse coalition, including big banks and a civil rights group, this summer called for speedier deployment of cash-flow data to widen Americans’ access to credit, it was a little-known startup research organization that brought them together.”
The banks warming to AI-based lending
American Banker
October 22, 2019
By Penny Crosman
“Through Alternative lenders like LendingClub, Kabbage, and Upstart, and auto lenders like Ford Motor Credit use artificial intelligence every day in loan decisions…”
How Entrepreneurs Can Fight 3 Financial Sources of Inequality
Inc.com
October 3, 2019
By Rhett Power
“Every entrepreneur deserves a chance — and access to resources — but that’s not exactly how it works without some smart strategizing.”
Can Freddie Mac’s embrace of AI pull the industry along?
American Banker
October 2, 2019
By Penny Crosman
“Freddie Mac’s foray into artificial intelligence may be a significant turning point in broadening the use of the technology
Thursday September 19 2019, Weekly News Digest
Lending Times
September 19, 2019
By Allen Taylor
“Melissa Koide, co-founder and CEO of FinRegLab, analyzed loan data from six lenders that use cash-flow data in their underwriting. She share what she found.
Podcast Cash-flow data shows promise as predictor of credit risk
American Banker
September 17, 2019
By Penny Crossman
“Melissa Koide, co-founder and CEO of FinRegLab, analyzed loan data from six lenders that use cash-flow data in their underwriting.”
Online Lenders make case for cash-flow data while acknowledging pitfalls
American Banker
August 5, 2019
By Penny Crosman
“A Growing number of fintechs are becoming increasingly reliant on using alternative data like cash-flow analysis as a key underwriting tool.
Podcast 208: Melissa Koide of FinRegLab
Lendacademy
July 29, 2019
By Peter Renton
“The CEO and founder of FinRegLab discusses their research project on the use of cash flow data in underwriting.”
Creditworthiness Can Be Predicted by Cash-Flow Data, New Study Shows
PaymentsJournal
July 26, 2019
By Steve Murphy
“Increasingly, we see utilization of non-traditional means of assesssing credit worthiness, which is generally concentrated in the non-bank lending space.
Case-Flow data can predict creditworthiness, new study shows
American Banker
July 25, 2019
By Penny Crosman
“FinRegLab, a nonprofit that tests new technologies to foster an “inclusive financial marketplace” analyzed the data of six nonbank lender that use cash-flow data in their underwriting: Accion, Brigit, Kabbage, LendUp, Oportun, and Petal