When Envestnet gave an outline of how it plans to generate a return on the $590 million investment it made to acquire data aggregator Yodlee, the Chicago-based wealth management technology company said one strategy would be to sell Envestnet’s tools to Yodlee’s customers in banks and other financial services firms.
On Monday, Envestnet announced Risk Insight, a new product for lenders that uses Yodlee’s aggregation technology to bring a potential borrower’s spending activity from bank accounts into a lender’s underwriting decision. According to an Envestnet spokesperson, brokerage account information and transaction data will also be included.
The information is collected electronically, if the borrower permits, and transmitted directly to the lender. For lenders, the information of ongoing spending habits and current transactions could be a more valuable metric on which to base loan decisions than broader and more backward-looking information, like a credit history.
“We believe there is more to understanding a person’s risk profile than simply accessing a credit score and looking at debt history,” the spokesperson said. “This additional account and transaction data used in our Risk Insight solution allows lenders and other financial institutions the ability to glean critical consumer and business insights to better inform and evaluate each borrower’s credit risk.”
The company said Risk Insight will help reduce fraud and improve lending ratios. Using Yodlee’s aggregation technology will also save both lenders and borrowers time and effort, Envestnet said.
“Our solution is fast, comprehensive and precise,” said Terry McKeown, the practice manager of credit analytics at Envestnet Yodlee. “We’re looking forward to seeing the results for financial institutions on our platform as they begin to use the data provided by the Risk Insight API.”
More than 950 companies subscribe to Yodlee, including 12 of the 20 largest U.S. banks.