Cards Shift to Asset-Based Underwriting
Anthony Peculic, Head of Cards at Cross River Bank, on building a fintech one-stop shop
This points to cards and credit moving from income based underwriting to balance sheet based underwriting. Instead of asking whether a borrower earns enough every month, these programs ask whether the user already owns something that can absorb losses, like cash, crypto, home equity, or a car. For Cross River, that matters because a bank with lending, card issuance, and securitization under one roof can help fintechs launch these niche secured products faster than a card only processor can.
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The simplest version is the secured card, where a cash deposit sets the credit line. The newer version keeps the same structure but swaps cash for other assets. Rain uses self custodied stablecoins as collateral for a credit line, and Avian uses home equity behind a card spending product.
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What changes operationally is the collateral workflow. The lender needs a live way to value the asset, perfect a claim on it, and liquidate or net it if the borrower does not pay. That is easy with cash, workable with crypto, and much harder with homes or cars, which is why sponsor banks with lending and compliance infrastructure become more important.
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This also expands who can qualify. Credit builders and thin file consumers may not show enough income or FICO history for an unsecured card, but they may have a funded wallet, a paid down car, or tappable home equity. That creates a path from collateralized products into mainstream revolving credit over time.
The next wave of card programs will look more like collateral management products wrapped in consumer friendly spending experiences. Banks that can originate the line, issue the card, move money in real time, and eventually package the receivables into capital markets products will be the ones that capture the most value as asset backed consumer credit spreads beyond cash secured cards.