Introducing Plaid Cash Advance Index for smarter decisioning

Plaid has introduced the Cash Advance Index, a new tool designed to improve decision-making for cash advance and earned wage access providers by providing a comprehensive assessment of a user's financial behavior. Traditionally, cash advance decisions have relied on limited data from single bank accounts, leading to an incomplete picture of users' financial habits. The Cash Advance Index addresses this gap by leveraging insights from Plaid's extensive network, which processes 800 million transactions daily, to evaluate repayment risk across a user's entire financial ecosystem. It predicts repayment likelihood within 30 days, using scores from 1 to 99, and adjusts approval and advance sizing based on a mix of cash flow data and proprietary insights from account connections. The tool includes models for both first-time and returning users, allowing for nuanced risk assessment and optimized repayment strategies. In production testing, the Cash Advance Index demonstrated an 8% reduction in delinquency rates without altering approval rates and showed a 17% improvement in distinguishing between low- and high-risk users, making it more effective than other existing models. This innovation aims to help providers maximize revenue by accurately assessing risk and ensuring that consumers in need receive adequate financial support.