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Happy Monday, Followers of Fintech News!
I hope you had a great weekend!
Mine got off to a lovely start. My wife and I enjoyed a date night on Friday, thanks to my parents selflessly hosting all of the kids for a sleepover. We don’t get to go on many dates these days, but it was a lovely reminder of how lucky I am to have married my best friend.
Anyway, there was a ton of news last week and over the weekend, so let’s get into it!
#1: Experian Wants To Be The FICO of Cash Flow Underwriting
What happened?
Experian launched a new credit score, built on consumer-permissioned cash flow data:
Experian’s new Cashflow Score leverages consumer-permissioned transaction data provided by its clients. From there, Experian, acting as a technical service provider on behalf of its clients, categorizes the transaction data and calculates attributes that are used to derive the score, which is delivered back to the lender.
The score ranges from 300 to 850 and can be used to make decisions across credit cards, personal loans, auto loans, and more.
Lenders leveraging the new score can benefit from Experian’s long track record of delivering predictive scores and financial insights to the industry. The debut of Cashflow Score is the latest in a string of innovative tools that support more inclusive lending practices, including Cashflow Attributes and its newly launched Cashflow Dashboards for immediate insights into cashflow and traditional credit data.
So what?
In the world of cash flow-based credit scoring, there are three basic things that you can build.
You can build attributes, which are the foundation of all credit scoring models and decisioning strategies. You can build product-specific scores (as Pave does). Or you can build a general-purpose, industry-wide score (Prism Data is one of the better-known examples here).
Each approach has its merits. Attributes (and attribute development tools) are what large, sophisticated lenders want. Product-specific scores are what monoline lenders (particularly fintechs) are looking for. And general-purpose scores are what smaller banks and credit unions need.
However, the other benefit of building a general-purpose score is that it can, if everything breaks right, become a standard. This, more than anything, is why the FICO Score has remained so durably valuable, even as individual lenders have become much more sophisticated at applying analytics to credit data. The value of the FICO Score isn’t analytic (even though it's highly predictive). The value of the FICO Score is that it’s the single number that everyone — consumers, lenders, investors, and regulators — uses to measure the general creditworthiness (and overall financial health) of consumers.
The FICO Score’s status as THE NUMBER won’t last forever, even though it will likely last longer than most folks think (I wrote more about this here). Whatever eventually replaces it will, undoubtedly, be based (at least partially) on consumer-permissioned cash flow data.
If we read between the lines of the press release, I think it’s obvious that Experian is trying to be the FICO of cash flow underwriting, rather than the Experian of cash flow underwriting.
I mean, check out this part of the quote (emphasis mine):
Experian’s new Cashflow Score leverages consumer-permissioned transaction data provided by its clients. From there, Experian, acting as a technical service provider on behalf of its clients, categorizes the transaction data and calculates attributes that are used to derive the score, which is delivered back to the lender.
“Transaction data provided by its clients” (Translation: We have nothing to do with the aggregation of this data. Any FCRA issues fall on the data aggregator the lender is using.) “Acting as a technical service provider on behalf of its clients” (Translation: We’re summarizing the data and calculating the score per our clients’ instructions. We are not the responsible party.)
This is exactly how companies in the credit decisioning space that are not consumer reporting agencies (like FICO) talk. What’s fascinating to me is that Experian is a CRA! If they wanted to, they could take more FCRA responsibility over the “assembling and evaluating” portions of the cash flow scoring process, but that quote tells me they don’t want to.
Instead, they appear to want to compete with Prism Data (which has been striking FICO-like partnership deals with CRAs and data aggregators like Equifax, LexisNexis, and Plaid), and replace (rather than partner with, as they did before) FICO.
The round was led by Team8, a global venture creation firm that helped build Charm with its founders cyber intelligence expert Roy Zur and former Microsoft data scientist Avichai Ben.
Charm says that fraud tactics have evolved from system exploitation to sophisticated social engineering, making individuals the weakest link in security.
To tackle this, the startup uses AI, data analysis and psychological insights to assess human vulnerability exposure, analyse customer risk patterns, and deliver tailored mitigation strategies.
So what?
Team8 picked a good area for its next company. Scams are absolutely rampant these days, and the financial impact is much greater than most realize ($105 billion in scam-related financial losses were reported to authorities in 2023, but the Global Anti-Scam Alliance estimates the real number was over $1 trillion).
Charm is aimed at stopping scams, not traditional account takeover fraud. That’s an important distinction, as Team8 makes clear:
Traditional fraud detection systems focus heavily on identity verification, ensuring that the person making a transaction is who they claim to be. But when it comes to scams, that’s not the right question to ask. In most fraud cases today, the victim is the legitimate account holder, but they’ve been manipulated into unknowingly transferring money to a scammer or actively enabling access to their account. Charm’s approach is different. Instead of relying on post-transaction analysis or traditional fraud detection tools, Charm operates at the human layer – before fraudsters get their hooks in.
Fraudsters, scammers and cyber criminals have shifted their main focus from breaking into systems to tricking people into opening the door – and offering them snacks. They impersonate loved ones, spoof emails from CEOs, and create deepfake videos to manipulate victims into willingly handing over money, data, or account access. That’s why Charm doesn’t just detect fraud, it provides organizations with comprehensive scam mitigation strategies, mapping Human Vulnerabilities and Exposures (HVEs) to assess each and every customer’s risk and to reduce that risk with personalized AI-driven awareness, tools and insights. Beyond awareness programs and AI-powered defenses, Charm can intervene in real-time to disrupt and prevent social engineering attacks before money is transferred.
I like this a lot. Specific banks and fintech companies have been focusing, in recent years, on building programmatic ways to intervene earlier in the scam lifecycle and “break the spell” between the customer and the scammer. But all of that work is proprietary to the specific companies. What’s been missing is the infrastructure to enable these types of interventions at scale.
Combine that with the work that is quietly happening behind the scenes to share more information on scams across institutions (and even industries), and we might be on the cusp of a major step forward on scam prevention, which would be, well, charming.
#3: Way Over The EDGE
What happened?
EDGE Markets, which has built a neobank for gamblers called EDGE Boost, just raised a $17 million seed round:
EDGE Boost offers betting-specific bank accounts and debit cards, which have been used to process $300M in transactions since quietly going live three months ago. The products are intended to provide bettors a financial management platform that’s independent from both sportsbooks and their own everyday finances. EDGE Boost bank accounts have no usage fees, are held by Cross River Bank and insured to up to $250,000 by the FDIC.
So what?
This is the most 2025 shit ever. A $17 million seed round (no, that’s not a typo) for a neobank for gamblers.
The way that EDGE Boost is positioned, you could almost believe that it’s just another vertical-specific small business banking product. After all, professional gamblers deserve a bank account tuned to their specific needs, right? Professional gamblers want to keep their personal banking and business banking separate. They want to be able to transfer large amounts of money quickly, with no risk of bank-initiated delays or holds. All of this sounds very reasonable.
Here’s the problem — professional gamblers are too small of a market (maybe a few hundred thousand total in the U.S.?) to justify a $17 million seed round. That math doesn’t math.
Fortunately, there is an adjacent market that is considerably bigger and, based on its growth trajectory, far more attractive. A market that EDGE’s lead investor, Bullpen Capital, knows very well, having invested in FanDuel in 2012 — amateur gamblers!
And if you look more closely at EDGE Boost, you’ll notice that many of its features are a terrible fit for professional gamblers, but a great fit for amateur gamblers.
For example, EDGE Boost offers a set of responsible gaming features, including the ability to set cool-down periods, send transactions to friends for accountability, and set universal betting limits across all accounts.
Professional gamblers are professional gamblers precisely because they don’t need outside help to enable them to gamble responsibly. They place bets without emotion and have no problem walking away from a bad hand.
Amateur gamblers, on the other hand, desperately need to be protected from themselves. That’s who EDGE Boost is built for, whether EDGE is willing to admit it or not.
One last thing.
After I expressed my dislike of this product on Twitter, I received this lovely reply from the Managing Partner at one of the VC firms that invested in EDGE:
His firm describes itself as an “early stage VC firm investing in founders building software that makes work, life, and wealth-building easier and more accessible.”
As I already covered, this isn’t a product for professional gamblers, so work is out. And gambling is a terrible way to build wealth (especially if you’re not a professional), so that’s out. And if Geoff truly believes that EDGE Boost will make life easier and more accessible for its customers, then I invite him to consider this academic study, which found that when sports gambling is legalized, the effect of NFL home team upset losses on intimate partner violence increases by around 10 percentage points, and those effects are more pronounced in states where mobile betting is legalized.
Bottom line — it’s deeply irresponsible to build financial services products that encourage gambling. If saying that makes me the fun police, so be it.
This rule had been in the works for a long time (initially proposed in 2016) and had been through numerous revisions, across multiple administrations.
Now, Russell Vought’s CFPB (which will now be better staffed!) has said, via a 115-word blog post, that it will not be prioritizing supervision or enforcement concerning this rule.
Jason Mikula (who also had a great write-up on this news) correctly pointed out that this behavior (regulation by blog post) is exactly what the industry hated about the Chopra CFPB.
I’m not holding my breath, waiting for the industry (particularly small-dollar fintech lenders) to complain about how this is bad process.
This one is for the super bank nerds. You’re welcome.
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— Alex
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