A new home-grown financial technology company has sprung up in Wilmington.
 
Lumos Technologies Inc. provides data insights and analytics as a service, with a focus on improving small business access to financing, said Brett Caines, one of Lumos’ three founders.
 
The fledgling company’s target customer base is made up of financial institutions that lend to small businesses. The trouble is, according to Caines, that many of these financial institutions have gravitated to making multi-million small business loans, turning their attention – and their assets – away from very small businesses that need $500,000 or less.
 
Lumos’ newly launched Prime+ scoring model “improves underwriting efficiency and provides a more accurate and fairer risk assessment for small business loans of less than $500,000,” the Lumos website states. It predicts expected credit losses over an upcoming 12-month period.
 
Currently, most lenders typically rely on a potential borrower’s credit score, Caines said.
 
“Our Lumos Prime+ Score relies more on factors that actually predict how that business will perform, such as the economic factors in the region and how similar businesses in the region have historically performed,” he said. “We’ve done a lot of work with our model to make sure it’s fair across many categories, that there is no intended unfavorability with various groups. We have tested it for bias and fairness.”
 
Lumos’ data analysis model can help lenders assess the risk of making a small loan to a business with little or no borrowing track record.
 
“Maybe they have bootstrapped for a couple of years and now need a $100,000 loan to grow,” Caines said.  
 
Lumos was founded in October 2021 by three former Live Oak Bank employees: Brett Caines, Stephen Hayes and Youri Nelson. Caines joined Live Oak in its early days and became its CFO.
 
With an investment in April 2022, the founders brought on 10 additional staffers to handle everything from management of the company to mathematical modeling and data analysis. As it happened, all the hires came from Live Oak.
 
“Our backgrounds all involve using data to make better decisions,” Caines said. “Starting Lumos was really filling a need in a lot of industries for anybody who had robust data sets and had been collecting data but didn’t have a team that could clean it and analyze it. Our backgrounds in financial services led us to have a focus in financial services, specifically banking.”
 
Despite its primary fintech emphasis, Lumos has some non-banking clients to whom it offers data analytical services that help them identify financial or other business risks.
 
Lumos team members learned more in their time at Live Oak Bank than just banking and the application of financial technology to the industry.
 
“We all learned a lot about corporate culture and business culture in general: how to focus on customer needs and treat customers well,” Caines said. “We valued our time there. It was a very positive influence, especially Chip [Mahan, Live Oak’s chairman and CEO].”
 
Lumos offices are in Common Desk at 226 N. Front St.