How lenders already build internal models

Welcome back to Fintech Recap. I'm Alex Johnson, joined as always by my partner in recapping, Jason Mikula.

We kick things off with Block’s move into credit scoring. Block stitched together data across Cash App and Afterpay into a proprietary score it’s now surfacing to consumers and selling to other lenders, claiming auto lenders could approve 30% more borrowers at identical loss rates using the Cash App score. We dig into adverse selection when consumers choose what to share, where this fits in lender workflows, and the FCRA wrinkle that “transactions and experiences” data can fall outside the definition of a consumer report…

Then, we dive into stablecoins. Jason walks through the rebirth of “no KYC” crypto-funded spending cards, including testing several of these services himself (tune in to discover the pattern!). The core mechanic Jason flags is a corporate card loophole: KYB the company, then issue incremental “employee” cards with no legal or regulatory requirement to verify the person behind each card.

From there, we zoom out to Bridge, Stripe’s stablecoin infrastructure subsidiary. Bridge got conditional OCC approval to form a national trust bank and moved jurisdictions (which include Russia, Belarus, Gaza, South Sudan, and Venezuela) from “controlled” to “prohibited,” while still defining “prohibited” with an “extraordinary situations” carveout.

Plus, in our Can’t Let It Go corner: prediction markets. 

CFTC Chair Mike Sig told the Senate during his nomination hearing that he’d defer to the courts on sports betting and prediction markets. But early this year, he reversed course, asserting the CFTC’s exclusive jurisdiction and filing amicus briefs against state prohibitions aimed at sports betting. Kalshi and Polymarket loved it, and I’m sure that’s unrelated to the fact that Sig’s boss’s son is an advisor to both.

We close with Substack’s new partnership with Polymarket to embed prediction markets into journalism, set against a real-world example of the incentive problem: Israeli authorities investigated and arrested military reservists and a civilian for allegedly using classified information to place bets on Polymarket.

This episode is brought to you by Plaid. 

Most lenders see the value of cash flow data. The hard part is getting started—and knowing what to do with it once you have it. Plaid makes it easy to access real-time cash flow and behavioral insights in seconds, through a familiar experience borrowers already trust. No heavy lift. No added friction. Learn more at www.plaid.com/ftt

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