Last Week in Lending: Wednesday, 22 May 2024

From cash flow-based underwriting strategies to private credit’s growing momentum – here’s my summary of top credit news from the last couple of weeks??

1. Silvr ’s innovative cash flow-based underwriting strategy

Bank transactions continue to play a key role in underwriting decisions, especially for short and medium-term loans – helping lenders to make highly accurate underwriting decisions in several new segments.?

I recently came across this article that discusses how fintech lender and Taktile customer Silvr uses real-time data from open banking and bank transactions to go beyond traditional methods and offer tailored financing solutions to SMEs in Europe. What’s great about this article is that it talks about the “how”—from leveraging automation to reach an underwriting decision to categorizing financial data with the help of AI.

Check out Silvr’s approach ??

2. Goldman Sachs seeks up to $17bn for private credit

Goldman Sachs’ latest announcement that it’s seeking up to $17 billion for private credit investments highlights the growing role of private credit in today's volatile market.

Reuters mentioned that this push for private credit is happening in a highly competitive market, with 486 funds currently active—the highest number in nearly six years. Nearly 300 of these funds are focused on raising capital for direct lending. As lenders still battle to obtain affordable credit lines, this could open many new opportunities in the next 12 months.

Check out the announcement ??

3. Credit bureaus race to boost alternative data insights for lenders

Last week, I saw some big announcements from major bureaus and credit score providers about new products that incorporate cash flow data.

It’s interesting to see the next wave of innovation happening here: First, we had the aggregators that opened up access to open banking data, and now we are seeing them, plus the bureaus add additional layers on top, such as pre-packaged attributes to deliver even more “out-of-the-box” value for lenders.?

Check out these announcements from the last weeks ??

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4. Alex Johnson on the servicing imperative

I came across another great essay by Alex Johnson recently, discussing the importance of loan servicing, which encompasses all interactions between a lender and customer after account creation, from basic customer service to managing delinquencies.?

The article highlights that fintech innovations like debt consolidation apps and customer-centric collections agencies have revolutionized late-stage servicing, yet early and pre-delinquency stages remain largely untouched by such advancements. I completely agree with Alex's prediction that trends like embedded lending, open banking, and AI will drive lenders to focus more on excellent servicing, building trust, and improving long-term customer relationships.

Check out Alex’s article ??

5. The average credit score in each US state

In case you missed it, Nasdaq published some insights on the average credit score in each US state - some interesting findings for those operating there!

Check out the summary here??