• U.S. Bank is using technology from Pagaya to help underwrite unsecured personal loans.
• Pagaya’s AI model generates underwriting recommendations and completes a secondary credit decisioning review of borrowers who were originally rejected.
• The partnership, which has the potential to expand U.S. Bank’s borrower pool, has already led to the approval of more than 2,000 personal loans over the past few months.

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U.S. Bank announced today it has tapped alternative underwriting solutions company Pagaya to help more borrowers qualify for loans.

U.S. Bank initiated the partnership to help more clients access personal loans, which often pose more risk for lenders because they are unsecured. Pagaya leverages AI to complete a secondary credit decisioning review of borrowers who are initially rejected. If Pagaya approves the borrower, U.S. Bank will originate and service the loan.

Key to the solution is Pagaya’s AI model that analyzes thousands of data points to generate tailored underwriting recommendations. Because the model uses more data than a traditional regression model, U.S. Bank can more efficiently find applicants who are responsible borrowers, but who don’t fit into the bank’s FICO score cutoff.

As interest rates remain high, banks will continue to face challenges in managing their lending operations. When higher interest rates lead to increased borrowing costs, some customers are unable to afford previously attainable loans. Also contributing to the smaller borrower pool, banks have become more selective in their lending practices by focusing on borrowers with strong credit profiles and stable financial histories.

“We know that we have many clients who don’t fall within our traditional credit parameters,” said U.S. Bank Head of Consumer Lending Partnerships Mike Shepard. “By expanding access to responsible credit solutions, we are giving clients access to funds when they need it the most, through their existing and trusted banking relationship with us.”

Ultimately, using Pagaya helps U.S. Bank extend loans to more clients by delivering credit to individuals who would otherwise be rejected. Since U.S. Bank began working with Pagaya for underwriting a few months ago, the bank has been able to approve more than 2,000 clients for personal loans.

New York-based Pagaya was founded in 2016 and has raised $1.6 billion in combined debt and equity across ten funding rounds. The company went public via a SPAC merger in 2021 and currently trades on the NASDAQ under the ticker PGY with a market capitalization of $8.95 million.

“We share U.S. Bank’s commitment to increasing access to life-changing financial products and services,” said Pagaya Chief Growth Officer Leslie Gillin. “With Pagaya’s integrated and seamlessly embedded lending technology, our lending partners can expand and deepen their client relationships to a more diverse group of borrowers.”

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Photo by Ketut Subiyanto

• U.S. Bank launched a new suite of embedded payments solutions within Microsoft Dynamics 365.
• The collaboration embeds U.S. Bank payment capabilities across Microsoft platforms.
• U.S. Bank said it plans to embed additional payment capabilities within platforms such as Microsoft Teams and Microsoft Power Platform.

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U.S. Bank’s collaboration with Microsoft announced earlier this year has borne fruit: the bank has introduced a new suite of embedded payments solutions within Microsoft Dynamics 365. The integration embeds U.S. Bank payment capabilities across Microsoft platforms. It also makes U.S. Bank among the first financial institutions to take advantage of the opportunity of directly integrating into the popular enterprise resource planning (ERP) and finance solution.

Among the solutions available to businesses using Microsoft Dynamics 365 is the U.S. Bank AP Optimizer. Available directly from their business application, the technology gives treasury management teams the ability to automate invoice processing for both business and consumer payment disbursement within Microsoft Dynamics 365. This will facilitate automated accounts payable workflows, including matching and reconciliation.

“We are committed to meeting clients wherever they are in their digital journey, bringing payments to businesses in a way that’s instant, embedded and connected to the technology they use every day,” U.S. Bank vice chair and head of Payment Services Shailesh Kotwal said. “Our integration with Microsoft – which businesses rely on daily to serve their customers – opens new possibilities for U.S. Bank clients to improve efficiencies and enable faster payments.”

According to U.S. Bank, this week’s news is only the beginning. The bank announced that it has plans to embed additional payment tools within Microsoft platforms such as Microsoft Teams and Microsoft Power Platform.

“Embedded payments can deliver powerful, new ways for businesses to streamline processes, enhance visibility, deliver better experiences, and reduce risk,” Microsoft Corporate Vice President for Worldwide Financial Services Bill Borden said. “We are excited to build on our work with U.S. Bank, delivering integrated, easy-to-use digital payments capabilities to our customers through Microsoft Dynamics 365 with additional embedded solutions to come.”

The two companies have been working together closely since February, when U.S. Bank announced a “substantial investment” in the modernization of its technology by choosing Microsoft Azure at its primary cloud provider for applications. The move will give customers more tools and more options when it comes to accessing banking services and provides U.S. Bank with opportunities to grow via new partnerships and what the bank sees as an “ever-evolving financial services marketplace.”

U.S. Bank’s collaboration news comes just one month after the bank introduced a new cash flow prediction tool for small businesses. The solution gives SME owners a 90-day forecast of cash flow and enables them to factor in external client data along with data from their own U.S. Bank accounts to provide more comprehensive cash flow insights.

U.S. Bank most recently demoed its technology last September at FinovateFall 2021. At the conference, the Minneapolis, Minnesota-based bank demoed its Card-as-a-Service (CaaS) solution. The offering enables fintechs, partners, and clients to digitally extend corporate credit, and to leverage API integration to create a custom virtual payment experience in their own ecosystem. Spending limits, tokenization, and encryption are all features of U.S. Bank’s CaaS solution.

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Photo by Karolina Grabowska

• U.S. Bank introduced a new tool to give small business owners the ability to see a 90-day forecast of their cash flow.
• The new offering is the latest innovation from U.S. Bank’s Business Essential suite of banking and payments solutions.
• U.S. Bank made its Finovate debut last year at FinovateFall 2021. At the conference, the bank demoed its Cards-as-a-Service (CaaS) technology.

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U.S. Bank unveiled a new solution to enable small business owners to see a 90-day forecast of their cash flow. The tool allows users to leverage external data from their clients along with their own U.S. Bank accounts to provide more comprehensive insights. The offering is designed to address what U.S. Bank Chief Digital Officer Irv Henderson called “a top concern for today’s business owners.”

“Giving our clients the ability to forecast their cash flow outlook, including, in the future, the capability to consider various scenarios, will provide them with vital information to make smart decisions for today and the future,” Henderson said.

U.S. Bank’s new cash flow tool gives users a 90-day historical view along with its forecast of account balances up to 90 days ahead. The bank plans to introduce additional functionality to enable users to build “what if” scenarios and observe the impact of those scenarios on future cash flow.

The tool is currently available to clients of U.S. Bank from their online dashboard. Part of U.S. Bank’s Business Essentials suite of banking and payments solutions, the cash flow tool is the bank’s latest effort to “bring together digital capabilities and the power of data” to provide small businesses with actionable insights, according to Henderson.

U.S. Bank made its Finovate debut a year ago at our all-digital FinovateFall 2021 conference. At the event, the Minneapolis, Minnesota-based bank demonstrated its Card-as-a-Service (CaaS) technology that enables companies to extend corporate credit digitally. With the touch of a button, virtual cards -with precise spend limits, tokenization, and encryption – can be pushed to users’ mobile wallets in real time. The Card-as-a-Service solution also gives businesses the ability, via API integration, to build custom virtual payment experiences in their ecosystem.

The parent company of U.S. Bank National Association, U.S. Bancorp serves millions of customers through a range of businesses including consumer and business banking, payment services, corporate and commercial banking, wealth management, and investment services. The institution has $591 billion in assets as of June 2022.

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Photo by Karolina Grabowska