Lenders Spot Borrower Distress Late, Method CEO Says

An eight-week pilot with a major mortgage provider produced a 40% increase in borrowers qualifying for debt consolidation and a 27% increase in HELOC-eligible borrowers, the company said. Those were customers the lender had already paid to acquire and had already classified as ineligible. Falling utilization, declining balances and improving payment behavior turned them back into prospects.

Webster called the two sides of that proposition "grow and protect." Bethancourt acknowledged that demand today leans toward grow. Lenders are buying a pipeline before they buy an alarm. The same information supports the other case. When a borrower deteriorates, the lender has an opening to offer a payment plan or another response to financial distress.

The timing is the entire point. A lender that learns a borrower is straining while the account is still current has a conversation available to it. A lender that learns it from a missed payment has a collections problem. The distance between those two outcomes is a few weeks of signal.

Acquisition lift is a good quarter. Loss avoidance is what a portfolio manager gets asked about when the cycle turns.

None of it works without the underlying data plumbing, and that plumbing came from a much smaller problem. Bethancourt and co-founder Marco Segura left college with roughly $100,000 each in student loans, he said, and no clear sense of who serviced them, what the rates were or how to manage them. They built an app for themselves and found that displaying the debt was the easy part. Connecting reliably to the information underneath it was not. That connectivity became Method's B2B business.

Method can identify liabilities without asking a consumer to hand over individual account passwords. It works with mobile network operators to confirm that a phone number belongs to the consumer and that the consumer is physically holding the device. The company layers in Touch ID, Face ID and mobile-network signals alongside KYC and CIP procedures.

"We had to figure out a way where we could still keep that high security and high fidelity that we need" in an era of AI and cyberattacks, Bethancourt said.

That architecture also intersects with the unsettled Section 1033 debate on consumer financial data rights. Bethancourt said Method considers access to financial data a consumer right while accepting that the institutions supplying it incur costs, and noted the company already compensates some data providers, including credit bureaus.

Consumers want better terms on debt they already carry. Lenders want performing customers, and a second chance at the ones they lost. Knowing what changed after the loan was made is what tells either side it's time to talk. Knowing it early is what determines whether the conversation is an offer or a workout.