{ad_logo_primary}

Quick favor: Our records indicate that you aren’t opening this email. But records can be wrong. Please click here if you’d like to remain subscribed to Fintech Takes. 

Happy Wednesday, Fintech Listeners!

I hope March is off to a great start for you. It’s legitimately spring here in Montana, which is a truly bizarre thing to type on March 4th, but there you go. 

I’ll be on the road quite a bit this month (the Urban Institute next week, FDX the week after, and Fintech Meetup at the end of the month). If you’ll be in any of those places at those times, please let me know!

And if you’re interested in a conversation about cash flow data and lending (and let’s be honest, who isn’t?), make sure to sign up for our virtual event on March 25th with Nova Credit.

— Alex

Was this email forwarded to you?

3 BIG IDEAS FROM THE PODCAST

This week on Fintech Recap, Jason Mikula joined me from Mexico (safe and sound, which was worth noting at the time of recording).

We talked about a credit bureau that doesn't think it's a credit bureau, no-KYC cards, journalistic ethics in the era of prediction markets, and much more.

And read below for my three big ideas... 

Block has done something that (to the best of my knowledge) no lender has ever done before: built an internal underwriting model, exposed it directly to consumers as a score, and announced plans to sell it to other lenders. 

Almost all large, sophisticated lenders build their own proprietary underwriting models. However, most of those models are based on traditional credit bureau data. The data is a commodity, and the score is where the differentiation sits.

Block has inverted that logic. Their scoring model is, I’m sure, very sophisticated. But the real competitive advantage is the data — account and transaction data on everything that Cash App and Afterpay customers do within those ecosystems. That data, combined with Block’s scale (Cash App has 50+ million monthly active users), creates a unique and highly differentiated asset for lenders looking to assemble comprehensive profiles on all of their prospective customers (especially the 50% of 18-to-25-year-olds that Block claims use Cash App on a monthly basis).

But would lenders be willing to pay for such an asset? How might they integrate it into their existing digital lending workflows? Would offering such a score require Block to become a consumer reporting agency?

At the end of the day, can Block replace the FICO Score?

Jack Dorsey says yes. 

I’m … less sure.

Block doesn’t furnish data to the credit bureaus. And it’s not enabling this new credit score for lenders through a third-party data aggregator like Plaid or Finicity. Instead, it plans to manage the consumer permissioning process directly, enabling Cash App and Afterpay users to (if they choose) share their Block data and Cash App Score directly with lenders.

As Jason and I talk about in the podcast, this approach to data sharing *might* allow Block to avoid becoming a regulated consumer reporting agency (there’s a weird loophole for first-party data in the FCRA). 

However, the broader question is this: what would the lending ecosystem look like if every company that has first-party customer data relevant to making a credit decision decided to follow Block’s lead and sell that data (and perhaps an accompanying score) to lenders?  

It’s a fascinating thread to pull on because, for the first time, it’s not entirely inconceivable. For companies of a certain size, it could make more sense to sell their data and analytics directly rather than to furnish it to the credit bureaus for free.

Of course, the problem is that while this strategy may be in the best interests of individual firms like Block, it may not be the best answer for the ecosystem overall.

Substack has partnered with Polymarket to embed prediction markets into the platform. The pitch is that journalism is better when it's backed by live markets … which is a framing worth interrogating!

As Jason said on the podcast, prediction markets can be a useful source of information, a kind of wisdom of crowds, with demonstrable predictive power. 

However, in journalism, the accuracy of the information being reported is not the only thing that matters. There are also ethical questions about the value of disclosing information versus the harm caused by that disclosure.

In traditional newsrooms, even if and when information is true and compelling, if someone (often the government) can make a credible argument that publishing said information may lead to someone getting hurt, they may not publish it.

Polymarket doesn’t display this same type of ethical judgment.

To Polymarket (and to many prediction market advocates), the only goal is to create a perfectly efficient informational ecosystem … even if that requires enabling insider trading. This happens A LOT on Polymarket. Just last month, Israeli authorities arrested several people (including a civilian and military reservist) for using classified information about Israeli military plans to place bets on Polymarket.

This poses a lot of interesting questions for journalists publishing through Substack. Are economically-motivated insiders reliable sources of information? Where’s the line between insider trading and outright market manipulation? Can journalists tell the difference between the two? What deference (if any) should a journalist on Substack show to the wishes of governments telling them not to publish information gleaned through prediction markets?

SPONSORED BY TRUSTAGE

70% percent of consumers worry an unexpected event could affect their ability to make loan payments, up from 58% in 2023.¹

But there's a way to ease that anxiety.

TruStage Payment Guard Advantage Insurance is a stand-alone, consumer-paid protection product covering involuntary job loss and disability.

Borrowers see real-time pricing, enroll in a few clicks, and receive instant approval in most cases.

Coverage is owned by the borrower and independent of the loan (TruStage handles claims and administration).

For lenders, it means added borrower support and new non-interest income.

¹ TruStage 2025 Consumer Lending Preferences Research, March 2025
PGA-8790841.1-0226-0328

WHAT I'M LISTENING TO

I was delighted to join Carlos on his podcast to talk about MrBeast buying Step. 

Look for part 2 of our conversation, running in the Fintech Takes feed, soon!

Kiah digs into Fed Now with the deputy head of product management for the Federal Reserve System’s FedNow Service. Enough said!

Your board wants AI deployed; your risk team wants guardrails. In last week's webinar, Jason and I mapped exactly where those two things can coexist (and where they can't). Grab the recording.

Thanks for the read! Let me know what you thought by replying back to this email. 

— Alex  

Join 2,444 other finance and fintech leaders in the Fintech Takes Network

The conversation doesn't have to stop here
Keep learning and connecting in the Fintech Takes Network

EVENTS  |  FEED  |  LIBRARY  |  DIRECTORY

Get your brand in front of 60,900+ fintech and banking executives.

Workweek Media Inc. 
1023 Springdale Road, STE 9E
Austin, TX 78721

Want to ruin my day? Unsubscribe.