Stepping Stone makes better credit decisions, faster, using Prism Data’s CashScore®
Offering a competitive and profitable online loan product requires both speed and analytical horsepower. Stepping Stone found both with Prism Data.
The problem
Stepping Stone was seeking ways to approve more borrowers and improve credit performance, beyond what was possible using traditional credit report data and alternative data-driven scores provided by large credit bureaus. Stepping Stone began accessing bank account transaction data for cash flow underwriting but wanted to extract more insights from the underlying data. Further, they recognized that accumulating the dataset and expertise required to build a robust, predictive score based on bank account transaction data would take years and significant R&D.
The solution
Using Prism Data’s CashScore, Stepping Stone was able to increase its loan approval rate by 14% while lowering credit losses at the same time. And it was able to do so on demand, leveraging Prism Data’s extensive experience in cash flow underwriting and data accumulated from millions of historical credit decisions. Rather than investing years and significant capital and people resources into building its own solutions, Stepping Stone is in-market with cutting edge cash flow underwriting today via the Prism Data platform.
Company overview
Stepping Stone Loans provides flexible, tailored loan solutions designed to meet various financial needs. They offer a quick and transparent online application process with competitive rates and no hidden fees. Their loan specialists work closely with customers to identify the best loan product, including options for home improvement. Approved applicants can receive funds as soon as the next business day. Stepping Stone Loans emphasizes a streamlined, hassle-free experience and also provides financial expertise to empower borrowers beyond just lending.
Stepping Stone’s underwriting evolution
Stepping Stone uses a variety of analytical tools to make underwriting decisions, including leading solutions from major credit bureaus and Plaid.
While the bank account data was clearly rich in detail, Stepping Stone found it difficult and time consuming to parse. Further, Stepping Stone recognized that accumulating the dataset and expertise required to build a robust score based on bank account transaction data would take years and significant R&D. The company was seeking a way to expand approvals and improve loan performance now.
Stepping Stone discovered Prism Data by evaluating offerings in Plaid’s partner ecosystem. Plaid’s credit solution, Plaid Check, offers access to Prism Data’s CashScore and Insights attributes directly through Plaid’s API to help lenders improve credit decisions with cash flow underwriting.
Prism’s impact
Stepping Stone found Prism Data’s CashScore to be more predictive of credit default risk than other commercially available scores from major credit bureaus. In addition, the CashScore is significantly orthogonal to those cores, such that its inclusion beyond the preexisting underwriting process resulted in greatly improved results.
Using CashScore, Stepping Stone was able to find 14% of applications it was previously declining that are actually low risk can be safely approved.
CashScore also identified a material number of high risk applicants that Stepping Stone was able to swap out. Finally, using the CashScore resulted in more automated decisions, less manual work, and lower operational costs.
“With Prism Data, we’re booking more loans and taking less risk than we were previously. We’re faster, and more competitive as a result,” says Sean O’Leary, Founder & CEO of Stepping Stone.
Why Prism’s cash flow underwriting solutions are better than alternatives
Greater Predictive Power
As a result of its proprietary data categorization, advanced attributes, and large consortium training data, Prism delivers industry-leading predictive power. Prism can prove it with a backtest or POC!
Real World Use at Scale
Prism pioneered modern cash flow underwriting (formerly as part of Petal) and its solutions have been used extensively since 2018, including by large financial institutions and leading fintech lenders.
Larger Attribute Library
Prism offers more comprehensive cash flow attributes than peers, including thousands of trended variables covering income, expenses, savings, financial obligations (like BNPL) and proprietary behavioral features.
Integrations and Bring-Your-Own-Data
Prism is integrated with leading credit bureaus, decision engines, and Plaid, the industry’s largest consumer-permissioned data network. Prism’s platform is compatible with deposit data from any source, including “on-us” data from depository institutions.
More Training Data
Large and growing repository of 10M+ de-identified cash flow records covering the entire credit and income spectrum and many loan products, resulting in robust cash flow-based risk scores.
Unique Expertise
Prism brings a consultative approach, hands-on experience, and industry best-practices in implementing cash flow underwriting from start to finish.