Plaid is launching a second version of its Lend Score with AI models to give lenders more insight about potential borrowers. The company is doubling down on its credit-scoring business as it aims to chart its next era of growth beyond its core business. A year after releasing its first credit-risk tool, Plaid unveiled Lend Score 2 designed to better predict loan default risk. The product uses cashflow data to assess a borrower's ability to repay, serving as a supplement or replacement for traditional credit metrics like FICO. Michelle Young, Plaid's credit product lead, explained that traditional data looks at willingness to repay while cashflow data looks at ability to repay, giving lenders a more holistic view.
The company also debuted Lend Score Arc, an AI-powered credit risk model that learns from transaction order and timing to predict repayment ability and delinquency risk. New specialized models target auto, home, and short-term lending, including buy now, pay later providers. These tools are intended to attract new customers wary of credit technology and help people with little to no credit history secure loans.
So far, Plaid has seen the most traction among fintech lenders eager to try new technologies. Consumer lenders are particularly interested due to uncollateralized loans. The underwriting business follows a business-to-business model aimed at improving consumer financial experiences. Plaid's core service connects bank accounts with apps like Robinhood and Venmo. The finance chief earlier indicated plans to go public, with Perret announcing several new products coming this fall.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing