#financialdataapi

[businessloankart]

Fintech has become the latest industry buzzword. Today, Fintech is helping lenders to access and use the most robust and real-time financial data of their customers/borrowers.

Source: https://cashflowconsultant.wordpress.com/2021/06/29/how-fintech-and-data-can-improve-your-loan-origination-process/

[businessloankart]

As a bank, credit union, or non-banking financial institution, you’re probably gathering an unprecedented amount of data about your borrowers or customers. After all, data has the ability to identify and analyze your most deserving customers to make better lending decisions.

Reference: https://peterthiel.livejournal.com/468.html

[businessloankart]

A New and Innovative Credit Scoring Model for Non-Traditional Business Lenders

  Applying old-school credit scoring methods and using out-of-date data where new market conditions prevail could restrict lending and hinder economic growth. For such lenders of this type, being shy away from technology and resistant to change could jeopardize opportunities to grow loan portfolios and boost profit.

Lenders traditionally rely on credit scoring based on historical financial data that don’t reveal a business’s ability to repay its loan amount. In this approach, lenders request a mile-long list of personal and business documents from potential borrowers. The financial data includes credit history, annual revenue, balance sheet, income tax returns, profit & loss statement, collateral, and other historical financial statements of the borrowers. 

In this credit scoring model, financial data has more weight in determining how stable and efficient the borrower is when it comes to funding their business. Lenders start by determining the ability of a borrower to repay its debt obligations with interest in a given period. For the most part, this typical credit scoring relies on the tenure of the existing loan, the amount and loan type a borrower already has, and current interest rates on the loan. 

Lenders use these reports to evaluate the risk profile of the borrower, which helps lenders determine whether to approve a loan or not. Obviously, a borrower with an excellent credit score tends to get a low-interest loan than those with a poor credit score, though the final decision is made by the lender, with FICO inputs used as guardrails. 

No doubt, the pandemic has eroded the credit scoring of many businesses who have closed or shut down or lost their biggest clients/customers, entailing innovative ways to assess borrower creditworthiness.

Low-Quality Data and The Unbanked

For example, an excellent credit score does not guarantee that a business will generate the same revenue and will be consistent for its payments in the future. Moreover, it won’t tell if a business has shut down or is struggling with cash flow issues. A new and innovative solution to this increasingly widespread problem is leveraging forward-looking data for determining creditworthiness. 

One of the most robust, accurate, and real-time data sources of information is cash flow predictive data. The perfect blend of accounting, banking, financial, and cash flow data help lenders see the past, present, and future financial health of a business and make data-informed intelligent decisions. 

Today, some futuristic financial technology companies empower non-traditional business lenders to examine borrowers’ banking, financial, accounting, and predictive cash flow data to take note of spending habits and monitor future income and expenses. 

Some advanced lending-tech firms enable lenders to access and analyze these data sets from the click of a button. With the help of artificial intelligence and machine learning, these FinTech firms are creating a single financial data APIs for lenders to collect, review and analyze the most accurate and efficient data of their borrowers. 

By leveraging this valuable data, lenders can accurately predict the future financial health of a business, and ultimately reduce loan bias, provide customized solutions, enhance customer experience, lessen credit risk, determine creditworthiness, and take their business forward. 

In the current lending scenario, non-traditional lenders must adopt new and innovative credit scoring methods for businesses that are unbanked or underbanked. 

Both Forward-Looking and Historical Data are Vital

New credit scoring is an augmentation and not a replacement of traditional credit scoring. Forward-looking data are more numerous and less organized than the data used in traditional credit scores. 

Fortunately, besides historical data, real-time financial data is now available for lenders, and state-of-the-art technologies are helping lenders to access, analyze and normalize this financial data. Using this data, lenders can understand their customers better, create new and innovative financial products, and build better-performing loan portfolios. 

Today, FinTechs can see a business’ past, present, and future data, enhanced by AI and ML, which means benefits for both customers and lenders. So, if you’re a non-traditional business lender who is struggling to determine the creditworthiness of your borrowers, this new credit scoring technology is your perfect solution. By utilizing a financial data API and using it for credit scoring, you can position yourself as an industry leader and become the financial expert of the future.

[cashvisionusa]

How Real-Time Financial Data Can Help Lenders Generate More Revenue

How Real-Time Financial Data Can Help Lenders Generate More Revenue In this highly competitive world, your customers’ real-time financial da