The following post is part of a series of blogs written by MeridianLink® Partners who will be attending MeridianLink LIVE! To learn more about AI in lending and the event, click here.
The lending landscape is undergoing a fundamental shift. Traditional credit models remain essential for underwriting, but lenders are increasingly turning to cash flow data such as income, recurring expenses, discretionary spending, account balances, bill payments, and savings to evaluate a borrowers’ ability to repay. For credit unions and banks, cash flow underwriting presents a significant opportunity to modernize risk assessment, expand access to credit, and strengthen fraud detection—while improving overall borrower experiences.
Plaid recently partnered with Datos Insights to dive into the state of cash flow underwriting and its impact on the lending landscape. Here are some of the top trends we uncovered based on research with US consumer lending executives:
1. Traditional credit models do not capture a borrowers’ complete financial picture
Historically lenders have relied heavily on credit scores and bureau data to assess borrower risk. However, today’s financial landscape is more complex than ever. The rise of gig work and new lending models, such as buy-now-pay-later (BNPL) loans, has made it increasingly difficult to gauge credit worthiness based on credit scores alone. In fact, 60% of U.S. consumer lenders report feeling somewhat or far less confident in making lending decisions based solely on traditional credit files and scores compared to a year ago. This shift reflects a fundamental change in how creditworthiness is being assessed. Traditional credit data no longer provides a complete picture of a borrower’s financial health.
2. Adoption of cash flow underwriting accelerating
Cash flow underwriting is no longer used only for edge cases. It is now becoming a mainstay for modern underwriting. A key driver behind this rise is the adoption of open banking, which enables secure, consumer-permissioned access to financial data. Because of this, lenders can now access real-time transaction data and insights with greater ease.
Consumers are equally embracing this shift. Our research shows 74% of consumers are comfortable sharing their financial data with lenders to improve their chances of loan approval and access to better financial products.
3. Cash flow insights can strengthen fraud protection
The benefits of cash flow data and insights go beyond credit risk assessment. Fraud protection is an increasing concern for many lenders and cash flow data can play a meaningful role here in mitigating risk. As fraud becomes increasingly sophisticated, access to real-time cash flow data can help monitor for erratic spending behaviors or sudden, unexplained deposits that may indicate bad actors or fraudulent activity.
4. Opportunities for banks and credit unions
Cash flow underwriting presents a significant opportunity for banks and credit unions to expand their borrower pool, offer customized financial products, and deliver more inclusive financial services. Some use cases include incorporating real-time cash flow data to automate credit limit increases, enhance fraud detection efforts, and improve existing credit decisioning workflows.
Build the future of lending together
Plaid is proud to partner with MeridianLink® to bring consumer-permissioned financial data and insights to help banks and credit unions drive growth, improve efficiency and manage risk.
Consumer Report, powered by Plaid’s Consumer Reporting Agency, brings financial institutions real-time, actionable cash flow data along with credit risk insights built on top of the leading open banking network.
You can connect with Plaid at MeridianLink LIVE! in Orlando, Florida from May 5-8, 2025. Plaid leaders will be on site, including John He, Credit Partnerships, for a session on the power of cash flow underwriting. Join the session and stop by the Plaid booth to meet the team.
