Financial inclusion matters not only because it promotes growth, but because it helps ensure prosperity ~ Sri Mulyani Indrawati

How arbitrary are the words ‘financial inclusion’; who’s in, who’s out and why is it so unfair? If a consumer is ‘in,’ there are financial opportunities for building a better life. If a person is ‘out,’ good luck with climbing out of a deep money pit. Today’s financial institutions think they are building a more inclusive process. However, many are still using information reflective of historical bias so if it didn’t work then, it ‘ain’t gonna work now’. Race, gender, and ethnicity are all areas where people are marginalized. Unfortunately, biased algorithms, obsolete machine learning processes, incorrect information, and one-dimensional bureaus unintentionally participate in the ‘financial exclusion’ model.

RIBBIT’s data scientists have created a new lending code that examines and assesses the way people manage funds in their bank accounts. Thousands of personal expenditure attributes can be generated from the transactional behavior of a single bank account. No longer will a missed bill or late payment exclude a person from a loan. The RIBBIT data scientists combine artificial intelligence with their expertise to analyze and interpret the collected bank data, intersecting it with massive amounts of personal attributes to predict a consumer’s ability-to-pay. RIBBIT’s inclusive and interpretive analysis creates an encompassing holistic picture rather than an isolating single frame of money management.

The Millennials and Z generations, unlike their parents, are fearful of going into debt, so a majority pay for goods and services with their debit cards. A current survey analyzed by Bankrate found that sixty-three percent of millennials don’t have credit cards while a paltry 23% have a single card. In the short run, paying with available funds contributes to a realistic budget and reduces financial stress, but it doesn’t build a reliable credit score; No information = No credit scores = No loans = Higher Interest Rates. However, debit card transactions are displayed in bank accounts offering a fresh and active look at a consumer’s existing buying patterns. RIBBIT’s bank behavior analysis will generate relevant insights, unleashing financial opportunities never offered to these generations and other excluded groups.

• According to the Consumer Financial Protection Bureau (CFPB), 26 million Americans have zero credit history putting them at a huge disadvantage for getting hired, borrowing money, qualifying for housing, and living a financially stable life.

A recent Morning Consult analysis reports 10% of U.S. adults are unbanked and 24% are underbanked. The unbanked households don’t use banking services for lack of money generally paying in cash, prepaid debit cards or money orders. The underbanked households have either a checking or savings account, but for lack of money don’t necessarily use them. Both groups often have no access to bank branches in their low-income areas plus the extreme interest rates offered would be prohibitive. Financial institutions need to cast a much broader net into the disadvantaged segment, encouraging and educating people on the financial value of a functioning bank account.

RIBBIT recently announced a strategic partnership with Lendistry, a minority-led fintech committed to providing economic opportunities to small businesses owned by women, minorities, veterans, and those located in low-income areas. Lendistry was founded to fill the gaps that leave the fastest-growing group of small business owners underserved in the financial industry. The fintech partnered with RIBBIT to provide adaptive behavioral analytics and increase the speed and accuracy of its decisioning processes. RIBBIT empowers users to make decisions quickly and confidently, providing insights on 99% of all bank accounts and more than 8,000 decisioning attributes. 

• “We’re excited for this new improvement to our fintech solution,” says Clark Huang, Head of Consumer Lending at Lendistry. “With help from RIBBIT, Lendistry will be able to provide an even better customer experience for underserved business owners.”  

Small businesses are still struggling from the pandemic and traditional credit scores alone do not tell the complete story. This is where RIBBIT enters the narrative, providing analytics from traditional and non-traditional sources. This is integral to providing the contextual insights necessary to make better lending decisions. Partnering with RIBBIT will improve Lendistry’s ability to assess their core demographic by providing deeper intelligence, enhanced insights and ultimately extending the reach of their platform.

Stay tuned . . .