Challenge

Magnolia FCU serves a diverse membership base, including gig workers, part-time earners, and borrowers with limited or nontraditional credit histories. Traditional underwriting tools failed to capture the nuance of these members’ financial lives, often leading to inaccurate assessments and unnecessary declines.

As a mission-driven Community Development Financial Institutions (CDFI), Magnolia sought to lend inclusively while maintaining acceptable levels of risk. But their process created several operational and risk challenges:

1. Incomplete financial visibility due to reliance on tax returns, static credit data, and limited external account insight.
2. Manual verification requirements that slowed underwriting and added friction for members and staff.
3. Difficulty evaluating subprime borrowers, despite strong willingness to lend deeper into the credit spectrum
4. Rising fraud risk, especially from increasingly sophisticated AI-generated paystubs.
5. Inability to detect hidden liabilities that aren't reported to credit bureaus, such as BNPL payments, high interest loans, and recurring digital transactions.

These constraints limited Magnolia’s ability to approve qualified borrowers efficiently while maintaining fair, consistent decisioning.

Despite these challenges, Magnolia believed that better data—not more restrictive rules—was the key to lending deeper without increasing losses.

Approach

Magnolia adopted Edge’s cashflow analytics platform and fully integrated it into their underwriting workflow. Instead of relying on documents, Magnolia began analyzing verified real-time transaction data, giving underwriters a clearer understanding of each member’s true financial behavior.

The credit union focused on three primary enhancements:

1. Instant income verification using direct deposit and cashflow patterns, replacing manual paystub checks and tax returns.
2. Full visibility into obligations and spending, including BNPL, microtransactions, and accounts held outside Magnolia.
3. Fraud-resistant decisioning by bypassing documents entirely and validating income directly from financial accounts.

This approach enabled Magnolia to lend deeper with confidence while reducing friction for members. Loan officers gained a more accurate and holistic view of borrower stability, empowering them to approve applicants others typically declined.

Results

Magnolia realized meaningful operational, risk, and member-experience gains:

Operational Efficiency

• Time-to-decision reduced by 1–2 business days for borrowers with multiple income streams, complex cashflows, or tax-return-dependent verification (depending on borrower responsiveness).
• Reduced underwriter workload by eliminating manual income calculations and document review.
• Centralized income verification improved consistency and reduced pre- and post-close confusion.

Expanded Access

1. 6% year-over-year increase in funded deals for self-employed borrowers.
2. Higher approval thresholds for subprime and nontraditional borrowers, supported by clearer insight into real financial behavior.
3. Positive borrower feedback from self-employed members citing a smoother, more transparent application experience compared to other lenders.

Fraud Reduction

• Multiple fraud attempts prevented through direct verification of payroll deposits.
• Reduced exposure to document manipulation and AI-generated fraud.

Improved Member Experience

1. Simplified application process—a secure login replaces stacks of paperwork.
2. Increased transparency and trust during the lending process.

EDGE helped Magnolia transform both underwriting quality and borrower engagement.

Conclusion

By shifting from traditional documents to real-time cashflow analytics, Magnolia FCU modernized its lending process and aligned it more closely with its community-driven mission. The credit union now approves more deserving borrowers, reduces fraud exposure, and operates with greater efficiency—all while maintaining strong portfolio performance.

EDGE’s platform enables Magnolia to make faster, fairer, data-driven decisions and continue expanding financial access to members who need it most.

“EDGE’s cashflow approach lets us dig deeper and personalize the experience for people who would have been turned away otherwise. We’ve approved members others declined—and those loans are performing. EDGE moved fast, integrated seamlessly, and helped us protect our members from fraud. It’s changed the way we lend.” — Dylan Mawhinney, VP of Lending, Magnolia Federal Credit Union