Advancing Financial Inclusion: Connecting Industry, Innovators, and Policymakers

1. Advancing the safe and smart use of technology and data in the financial system to drive financial inclusion Connecting industry, innovators, advocates, and policymakers to advance actionable market solutions and fact-based public policy

2. Meet Maria, Sarah, and Thomas

3. Maria

4. Sarah

5. Thomas

6. Their stories are common

7. 45mm 25mm sole proprietors thin & no-file Americans

8. An unsecured credit card for thin and no-file consumers Short-term loans as a payday alternative that focuses on the lower end of the credit spectrum. Cash flow data in underwriting An automatic short-term product that serves as a safety net to bridge cash flow gaps and avoid overdraft fees • We evaluated anonymized loan level data comparing borrower outcomes with the inclusion of cash flow against borrower outcomes wheretraditional credit risk scores were used. Installment loans for thin and no-file consumers On-line marketplace small business lender Small business lender with loans of varying lengths

9. Findings Among the sample populations and products: • Cash flow based metrics and scores are predictive of credit risk • These relationships are robust across the credit spectrum, including among borrowers with no, or very low, traditional credit scores and those with ‘thin-files.’ • When compared to traditional credit attributes and scores, the cash flow based metrics work at least as well, and in some cases better, at rank ordering the credit risk of the sample populations. • The evidence suggests these borrowers have lower incomes, on average, than the median incomes of the geographies in which they reside and frequently reside in majority minority and predominantly minority geographies (minority population exceeds 50% and 80% of total population of the geography, respectively)

10. Core Legal and Regulatory Questions • 3.How can public policy evolve to support the flow of consumer financial data, in light of privacy, accuracy, and transparency needs? • 2. How does the use of cash flow data affect our fair and inclusive policy objectives? 1.Does the use of cash flow data create Fair Credit Reporting Act compliance challenges?

11. Title *All Government agencies participated as observers

12. Advancing the safe and smart use of technology and data in the financial system to drive financial inclusion Connecting industry, innovators, advocates, and policymakers to advance actionable market solutions and fact-based public policy

13. How we catalyze change Changes in Policy, Markets, and Systems Our work helps to inform and evolve public policy and market practices • Experiments • We collaborate with experts and researchers to design and perform policy-relevant tech and data experiments Policy Working Groups We convene regulators, Congressional offices, industry and fintech experts to facilitate dialogue and inform public policy

14. …and there are big opportunities in addition to access to credit Identity Leveraging data and technology to better identify customers, reduce fraud, and improve financial inclusion locally and globally Ai Explainability Assessing how ML outcomes in credit decisions can be understood by regulators and explained to consumers Meaningful and Actionable Consumer Consent Utilizing data, Ai, and devices to deliver effective disclosures and secure meaningful consumer consent Financial Security Leveraging technology and data to deliver affordable and accessible savings and wealth building products Emergence of Big Data Determining how data can be used to help people and small businesses meet their immediate, near, and long term financial needs and goals

15. Your role… • Sign-up at FinRegLab.orgto receive the full report when it is published next month • Provide input! Go to FinRegLab.org and provide your perspective on technology and data areas for experimentation and policy evaluation • Engage with us through our policy working groups on future experiments • Join us with your time, expertise, and support

16. Remember Maria, Sarah, and Thomas

17. Advancing the safe and smart use of technology and data in the financial system to drive financial inclusion Connecting industry, innovators, advocates, and policymakers to advance actionable market solutions and fact-based public policy