Making underwriting simpler: Introducing the Financial Insights Report

Chris Corbett
Lending Product Manager, Plaid

Chris has spent his career in fintech and payments, helping consumers and businesses to understand, adopt, and interact with new ways to pay and access credit.

In April, Plaid published New frontiers in lending: Transforming the borrowing experience in Europe. In it, we made the case that—for today’s lenders—using open banking data was no longer a “nice to have”, but a necessity, while promising more lending announcements to come. 

Today, we’re proud to deliver on that promise with the announcement of the Financial Insights Report—the latest solution in our growing product suite designed to help lenders streamline the lending journey from onboarding and verification to risk and affordability assessments to repayments. 

Below, we’ll show you how you can use the Financial Insights Report to level up your existing borrower experiences and workflows, as well as key considerations to keep in mind as you enter the world of open finance.

The promise (and challenge) of open banking for lenders 

Applying for a loan can be a complicated process for both the borrower and lender, with the average borrower spending 2.5 hours on loan application paperwork alone. It’s little wonder that 60% of borrowers never finish the application at all. 

For lenders, it can also be challenging and time consuming to extract the required information—not to mention carry out the constant maintenance required—due to lack of insights and inaccurate categorisation. This means lenders are missing out on good borrowers due to inefficient, yet necessary checks and manual underwriting processes, as well as complicated workflows prone to human error. 

Finally, there’s the disjointed picture that traditional credit information sources provide, making it even more challenging for lenders to understand a borrower’s true financial picture. Traditional Credit Reference Agencies (CRAs), for example, only hold consistent information on the number of defaults for around 30% of accounts—and only update that data once a month. This inaccuracy, inconsistency, and invisibility are a major reason why over 20 million people in the UK are deemed to be financially unserved. 

Open banking helps to solve these issues by filling in the gaps to create a 360-degree view of a customer’s financial circumstances. Historically, however, lenders have had to manage many of these challenges alone, relying on poor user experiences designed for other purposes or building out their own categorisation engines to extract income and expenditure insights from raw transactional data. In other words: critical time and resources devoted to work that shouldn’t be at the core of a lender’s business.

Unlocking the potential of open banking data 

These key challenges are why we’re excited to launch the Financial Insights Report. It makes it possible for lenders to gain a comprehensive financial picture of potential borrowers through the use of open banking data. It also provides a best-in-class front-end experience for borrowers and affordability insights that enable lenders to make more confident decisions, faster. 

The Financial Insights Report features several critical features to help lenders embed open banking data into their underwriting workflows, such as: 

• Specific credit categories 

• Affordability insights that break down essential and non-essential expenditures

• Risk indicators

• Account holder name(s) and detailed historical transactions 

• Aggregated insights across all connected accounts

Lenders can utilise Plaid’s customisable out-of-the-box front end to ensure a smooth borrower experience that optimises for conversion. They can also receive the report in JSON and PDF formats that support automated and manual decisioning processes. 

Open banking has improved the lending process by bringing in additional, high-quality data points for lenders. To stay competitive, it’s now essential for them to improve the borrower experience, increase conversion and approval rates, and reduce risk for themselves and borrowers alike by looking across the credit lifecycle.

Transforming the borrower experience  

Every step in the lending lifecycle is important. A single misstep or failure can disrupt the entire process. From onboarding and verifying the applicant, to understanding affordability and connecting borrowers with the right financial product, to enabling easy repayments while avoiding defaults, Plaid’s suite of lending products powers leading companies like YouLend, Canopy, and Metamo—helping them better serve borrowers across each of these borrower touch points. 

The Financial Insights Report is currently available only in the UK.

To find out more, contact our team and learn about our full suite of lending solutions here.