The news: Plaid launched new AI models built on cash-flow data to help lenders in its network make credit, fraud and, payment decisions, per a press release. 

• Plaid said its new LendScore 2 predicts a borrower's ability to repay with 42% greater accuracy than traditional credit data alone.
• LendScore Arc, a transformer-based model, learns from the timing and sequence of a borrower's transactions. 
• Instant Link lets consumers share cash- flow insights with lenders in seconds. 
• Plaid also introduced a fraud model and an upgraded ACH risk model trained on its network data.

Zooming out: Fintechs are using cash flow and transaction data to approve borrowers that traditional credit scores exclude.

• Block's Cash App Borrow originations spiked 134% year over year in the third quarter of 2025, as the company leaned on its own cash flow-based scoring model rather than FICO.
• And PayPal partnered with Nova Credit in September 2025 to fold cash-flow history into its underwriting, targeting consumers with thin or no credit files.

Why it matters: Fintechs are gaining ground on traditional banks, including in lending. Fintech’s share of combined revenues from the top 1,000 fintechs and top 1,000 banks rose from 10% in 2021 to 17% in 2025, per McKinsey's 2026 Global Banking Annual Review—in part from pushes into lending.

Plaid's models turn cash-flow underwriting from a proprietary advantage held by a handful of fintechs into shared infrastructure available to more lenders. 

Banks leaning on FICO-based models now face competition from FIs in Plaid’s network that can license the AI-powered cash flow and transformer-based tools without building them in-house.

Implications for banks: Lenders that adopt cash-flow underwriting can approve creditworthy applicants that score-based models might reject, including people with thin files, recent immigrants, and gig workers with irregular income. That's a real path to new deposit and loan customers, though it isn’t risk-free.

But as providers like Plaid make these capabilities more widely accessible, alternative underwriting technology will become less of a competitive differentiator. The advantage will instead come from how effectively lenders integrate these insights into credit decisions, expand approvals responsibly, and improve customers’ overall experience.

This content is part of EMARKETER’s subscription Briefings, where we pair daily updates with data and analysis from forecasts and research reports. Our Briefings prepare you to start your day informed, to provide critical insights in an important meeting, and to understand the context of what’s happening in your industry. Non-clients can click here to get a demo of our full platform and coverage.