Publications

The Use Of Cash-Flow Data In Underwriting Credit: Policy Overview


Report Summary


This overview highlights key themes from our longer market context and policy analysis, including outlining options for action by industry, regulators, and Congress.

Acknowledgments


This Policy Overview and FinRegLab’s underlying Report, The Use of Cash-Flow Data in Underwriting Credit: Market Context & Policy Analysis, were made possible through founding support from Flourish/Omidyar Network. Additional support was provided by the Milken Institute, which enabled FinRegLab to evaluate cash-flow data in small business credit underwriting. Detailed information on our funders can be found on the inside back cover.

We would like to extend a special note of appreciation for their leadership and facilitation of FinRegLab’s policy working groups to Melanie Brody, Mayer Brown; Mark Schultz, Capital One; P-R Stark, Oliver Wyman; and Corey Stone, Financial Health Network. Thanks also to the Fintech Team at the Federal Reserve Bank of San Francisco for co-hosting a symposium entitled “The Role of Consumers in the Data Ecosystem.”

FinRegLab would also like to recognize the individuals and organizations who participated in the policy working groups as listed in Appendix A in the Market Context & Policy Analysis report, the participants of the Data Ecosystem symposium, and stakeholders who participated in interviews.

We are particularly grateful to Marsha Courchane and Arthur Baines, Charles River Associates, for the role they played in designing and executing the empirical research analysis. We are also grateful to Thomas P. Brown and Stephen J. Bandrowsky, Paul Hastings, for legal assistance throughout the course of the research process.

We would also like to thank the following individuals who provided feedback on this report. They include:

Alex Acree

Chief Legal Officer
Unit

Melanie Brody

Partner
Mayer Brown

Tori Shinohara

Mayer Brown

Thomas P. Brown

Paul Hastings

Jonah Crane

Klaros Group

Eric Goldberg

Akerman

David Medine

Consultative Group to Assist the Poor

Karen Mills

Harvard Business School

Annie V. Dand

Harvard Business School

Chuck Muckenfuss

Partner
Gibson Dunn

David Silberman

Advisor

David Stein

Covington & Burling

Corey Stone

Senior Advisor
Oliver Wyman, Financial Health Network (FHN)

Chi Chi Wu

Attorney
National Consumer Law Center

We would also like to acknowledge the FinRegLab team who worked on the research, convenings, and reports. They include:

Kelly Thompson Cochran

Deputy Director and Chief Program Officer
FinRegLab

Kerrigan Molland

Senior Finance & Business Operations Manager
FinRegLab

Michelle Wu

FinRegLab

With Support From


Flourish Ventures

Flourish, a venture of the Omidyar Group, has provided operating support to FinRegLab since its inception. Flourish is an evergreen fund investing in entrepreneurs whose innovations help people achieve financial health and prosperity. Established in 2019, Flourish is funded by Pam and Pierre Omidyar. Pierre is the founder of eBay. Managed by a global team, Flourish makes impact-oriented investments in challenger banks, personal finance, insurtech, regtech, and other technologies that empower people and foster a fairer, more inclusive economy.

Milken Institute

The Milken Institute is a nonprofit, nonpartisan think tank that helps people build meaningful lives, in which they can experience health and well-being, pursue effective education and gainful employment, and access the resources required to create ever-expanding opportunities for themselves and their broader communities.

Related Publications

  • Consumer Financial Data: Legal and Regulatory Landscape

    FinRegLab partnered with the Financial Health Network, Flourish Ventures, and Mitchell Sandler to provide a working paper summarizing the current U.S. federal legal framework governing consumer financial data with the goal of laying a foundation for future policy analyses and discussions.


  • Data diversification in Credit Underwriting

    This update catalogues recent initiatives involving the use of non-traditional credit data, including cash-flow information. It considers how dramatic shifts in economic conditions due to the Covid-19 pandemic and mass movements for racial justice have increased incentives to adopt new data sources and models, but also created new market and policy challenges.


  • The Use of Cash-Flow Data in Underwriting Credit: Market Context & Policy Analysis

    This report provides a detailed snapshot of the use of cash-flow data in U.S. consumer lending and the development of the system for transferring data between firms, in addition to analyzing policy and regulatory issues raised by cash-flow underwriting in both consumer and small business credit markets.


  • The Use Of Cash-Flow Data In Underwriting Credit: Policy Overview

    This overview highlights key themes from our longer market context and policy analysis, including outlining options for action by industry, regulators, and Congress.


  • The Use Of Cash-Flow Data In Underwriting Credit: Small Business Spotlight

    This report details the evolution of the use of cash-flow data in small business lending. It explains the reasons why electronic cash-flow data may be particularly useful in the small business context, presents evidence of its increasing use by a diverse range of incumbents and new entrants, and notes market and policy issues that may…


  • The Use of Cash-Flow Data in Underwriting Credit

    Records from consumers’ deposit and card accounts and from small businesses’ accounting software can provide a relatively detailed and comprehensive picture of how applicants manage their finances on an ongoing basis. FinRegLab conducted an empirical assessment of the data’s benefits and risks, as well as market and policy analyses of the challenges to its wider… Learn More


About FinregLab

FinRegLab is an independent, nonprofit organization that conducts research and experiments with new technologies and data to drive the financial sector toward a responsible and inclusive marketplace. The organization also facilitates discourse across the financial ecosystem to inform public policy and market practices. To receive periodic updates on the latest research, subscribe to FRL’s newsletter and visit www.finreglab.org. Follow FinRegLab on LinkedIn and Twitter (X).

FinRegLab.org | 1701 K Street Northwest, Suite 1150, Washington, DC 20006