Brian Reshefsky - CEO
The CFPB’s Personal Financial Data Rights Rule (1033) is a huge step forward for open banking and cashflow underwriting.
The rule promises to give consumers more transparency, safeguards, and control of their financial information. The CFPB says that another big benefit is that it gives better access to transaction data for lenders’ underwriting models.
The CFPB has previously promoted cashflow underwriting, and in this new rule it says that “Industry research has shown that cash flow is predictive of serious delinquency, and that models including cash flow can distinguish between the repayment risks of consumers with similar traditional credit profiles.”
Like CFPB Director Rohit Chopra recently said on Squawk Box (https://hubs.la/Q02V-_JV0) , “Those who don't necessarily have a credit score or long credit history can now use their payments and transaction information to show their creditworthiness."
We agree! Open banking at the end of the day will be a win-win for lenders and consumers.
The rule even says that “lenders will be able to identify and reach more consumers with low repayment risk … and may therefore experience an increase in profits.”
Cashflow underwriting is clearly gaining traction in the marketplace, and it’s great to see the CFPB advance it even further forward.