New fintech company launches first product

A new homegrown financial technology company has emerged in Wilmington.


Lumos Technologies Inc. provides data insights and analytics as a service, focused on improving small businesses’ access to financing, said Brett Caines, one of Lumos’ three founders.


The new company’s target customer base consists of financial institutions that lend to small businesses. The problem, according to Caines, is that many of these financial institutions have begun making multimillion-dollar 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 fair 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 is more dependent 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 on our model to make sure it’s fair across a lot of categories, that there’s no intended disfavor with different groups. We’ve tested it for bias and fairness.”


Lumos’s data analysis model can help lenders assess the risk of giving a small loan to a company with little or no borrowing.


“Maybe they’ve had boots 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 the early days and became CFO.


With an investment in April 2022, the founders brought in 10 additional employees to handle everything from managing the company to mathematical modeling and data analysis. As it happened, all of the hires came from Live Oak.


“Our backgrounds all involve using data to make better decisions,” Caines said. “Starting Lumos really filled a need in many industries for anyone who had robust datasets and had collected data but didn’t have a team to clean it and analyze it. Our background in financial services led us to focus on financial services, especially banking.


Despite its primary fintech emphasis, Lumos has some non-bank clients to whom it provides data analytics services that help them identify financial or other business risks.


Lumos team members learned more during their time at Live Oak Bank than just banking and applying 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 treasured our time there. It was a very positive influence, especially Chip [Mahan, Live Oak’s chairman and CEO].”


Lumo’s offices are in the Common Desk at 226 N. Front St.