Lecture series
Cash-flow underwriting from bank and wallet statements
A bank or e-wallet statement shows the money a borrower actually receives and spends, month by month. This course explains what cash-flow underwriting is, how statement data is obtained with the borrower's consent and checked, how transactions are sorted into income, essentials and debts, how income stability and buffers are measured, which cash-flow signals predict repayment and how to test them, and how cash-flow measures are used in the lending decision. Six lessons.
6 of 6 lessons published. Lesson 1 is free to read.
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- 01What cash-flow underwriting is, and what a statement addsA credit report tells a lender how a person has handled credit in the past. A bank or e-wallet statement tells the lender something different: how much money comes in, where it goes, and how much is left, month by month. Cash-flow underwriting uses that record to judge whether a borrower can meet a new repayment.
- 02Getting statement data: routes, consent and checksBefore a lender can read a borrower's cash flow, it has to obtain the statements, with the borrower's permission, and make sure they are complete and genuine. This lesson sets out the routes, what good consent looks like, how much data to take, and the checks that come before any analysis.
- 03Sorting transactions: income, essentials, debts and transfersEvery cash-flow measure depends on how each line of a statement is labelled. A transfer from the borrower's own savings counted as income, or a loan repayment counted as shopping, changes the answer. This lesson sets out the categories, the statistical definition of income that tells which money in counts, and how to check that the sorting is right.
- 04Income stability, volatility and buffersTwo borrowers with the same average income can be very different risks. One is paid the same amount every month; the other has good months and bad ones, and a balance that runs close to zero before each payday. This lesson shows how to measure how much income varies, how the length of the statement affects the answer, and how to read the buffer a borrower keeps.
- 05Cash-flow signals that predict repayment, and how to test themLessons 1 to 4 turned a statement into measures: income, essential spending, debts, volatility and buffers. Not every measure predicts whether a loan will be repaid, and a measure that looks convincing can mislead. This lesson lists the signals lenders look at, what research has found about account data and default, and how to test a signal on a lender's own loans before using it.
- 06Using cash flow in the lending decision: amounts, fairness and monitoringThe measures and signals of the earlier lessons only matter once they change a decision. This lesson shows where cash flow can sit in the decision, how it sets the instalment and the amount, how to check it against what the applicant declared, how to explain a decline, which data to keep out, and how to watch loans and signals after the money is paid out.
Quiz and certificate 9 questions; those on lesson 1 are free to try. Read every published lesson and score 80% or more for a certificate of completion.
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