Finicity is part of the Mastercard family. Our open banking platform provides the financial data you need.

According to a recent study from Mastercard, consumers say obtaining a mortgage is a serious pain point in an already painful homebuying process. The survey shows that 89% of homebuyers find the mortgage process to be equally or more stressful than the homebuying experience. 

Borrowers whose lenders used digital mortgage verifications were less likely to say the loan process was the most stressful part of buying or refinancing a home, and 83% of respondents using digital verifications said their loan processing time was shorter than expected or met their expectations. 

As a designated third-party service provider of Freddie Mac, Finicity, a wholly owned subsidiary of Mastercard, offers an integration of its open banking data and Mortgage Verification Services (MVS) with AIM that allows clients to automate the capacity assessment using consumer-permissioned data, direct deposit account data and work history. In the case of income, lenders can now look at direct deposit history to verify income. 

Click here to read the MReport article by Andy Sheehan, EVP Open Banking about how Mastercard’s open banking platform (provided by Mastercard’s wholly-owned subsidiary, Finicity) is moving the mortgage process into the digital future.

Offering fast, secure payment choices to consumers is absolutely essential to the success of any small-to-mid-sized business (SMB). The digitization of every business, large or small, has been underway for decades, but recent studies show that the pandemic accelerated that process by five years. 

Consumers are looking for fast, convenient, contactless ways to shop and pay bills, driving businesses to adopt open banking-powered card and non-card technologies and platforms to service them. 

Payments are the Entry Point to Open Banking for Small Businesses

Nearly nine in 10 business owners utilize digital payments and open banking-backed payments, speeding up cash flow. Owners are also leaning into open banking to verify, secure and personalize payment transactions. 

SMBs are projected to spend more than $100 billion on payment services by 2025. It’s no surprise that payments are the open banking entry point for small businesses, according to Mastercard’s Rise of Open Banking small business report. 

As emerging payment methods like cryptocurrency and digital wallets gain widespread adoption, SMBs rely on open banking to create streamlined customer journeys. 

Ninety percent of SMBs utilize services that link accounts, enabling the speed, convenience and confidence of open banking payments. Owners cite a few core payment-related benefits for linking accounts:

Small Businesses are Quickly Migrating to Digital

The pandemic-driven fast-forwarding of digital adoption by SMBs has raised owners’ financial IQ, as 95% consider themselves heavy fintech users. The top driver for fintech use is the desire to make their businesses more digital. Permissioned data and the payment innovations it enables are primary needs for the SMB, as 92% are currently using or want to use digital payment systems. With a 50.5% increase in online sales from 2019 to 2020, the trend toward digital is evident, and businesses are embracing open banking to stay ahead of the curve.

SMBs are looking for solutions for agility and resilience, powered by technology. They’re facing challenges that are mostly digital, and they’re looking for digital solutions. Owner-permissioned data, insights and analytics from open banking platforms is creating new payment experiences for SMBs to offer consumers. To the SMB owner, open banking is an opportunity to partner with an innovator and grow. 

Accelerating adoption of digital channels means that a small business needs a partner that can handle real-time bank account verification, account data snapshots and predictive analytics. These core services can mitigate payment failures and fees, enable onboarding, maintain compliance and power next-gen payment apps and services.

Mastercard’s complementary account-based payments business leverages best-in-class capabilities across infrastructure, applications and services. By converging capabilities, Mastercard provides one trusted platform that empowers businesses to pay and get paid with confidence, using a card, bank account, or cryptocurrency. SMB owners can use a device or no device, and send or receive payments in real time or later. This kind of empowerment is what today’s innovators can offer the SMB, by leveraging open banking solutions. Maximum choice in payment types and methods, powered by open banking, providing effective tools for small business. 

Open Banking Payment Innovations are Gaining Momentum

Account-based payments are an emerging area ripe for targeted fintech development. Open banking technology allows you to integrate consumer-permissioned technology to your fintech innovation that offers more ways to pay with greater speed, convenience and confidence. With better quality data and insights about the small business, the non-card payments journey can be smoother.

Account-based payments are a new way for consumers to pay small businesses with convenience, security and control. Instead of entering payment card information, the customer can view their bank and the account they want to use, authenticate themselves, and pay immediately. Customers can: 

Mastercard is delivering the platform for innovation in the payments sector, giving fintechs the ability to scale up confidently. The recent release of Mastercard’s Smart Payment Decisioning Tools uses real-time bank data permissioned by a consumer to show payment indicators that can raise successful payment completion rates and reduce transaction costs. With Payment Success Indicator, payment failure risk can be mitigated by scoring the likelihood of a success before initiating it. Then with Payment Routing Optimizer, payment originators are given a recommendation for the most optimal day and rail to choose for the highest likelihood of successful settlement at the best cost and speed. These next-gen tools can give the SMB the advantage they need to best compete in a growing digital economy. 

In the next installment of the Rise of Open Banking series, we look at how open banking is driving innovation in SMB Financial Management. Click here to download the full study.

Mastercard’s open banking platform takes the uncertainty out of digital payments with Smart Payment Decisioning Tools, using data analytics and machine learning make payments faster, more convenient, and safe. We risk in ACH payments and optimize cost and speed through open banking. Watch the video here: https://www.youtube.com/watch?v=k4zZg7of9nU

To learn more about our payment solutions, visit https://www.finicity.com/pay To request a demo, visit https://www.finicity.com/ach-demo.

The United States is home to 32.5 million small businesses, which amounts to 99.9% of all businesses in the country. They employ just under half of the workforce, and are responsible for 44% of total GDP. Clearly, supporting the growth of small-to-midsize businesses is essential to the lifeblood of the economy. 

The important role of the small business in the economy isn’t always reflected by lending guidelines that work for the small business owner, however. Thirty percent of businesses that apply for credit through traditional lenders are denied, or only qualify for a portion of the funds they need. These numbers drop even further for minorities looking for the operating capital they need to grow their businesses. 

In an increasingly data-driven, digital economy, there’s room for additional choice. Innovative lending solutions can give every owner an equal opportunity to make their business dreams a reality. 

Open Banking is Giving Lenders and Small Business Owners More Choice

According to Mastercard’s Rise of Open Banking study, 74% of small-to-midsize business (SMB) owners would share business performance data if it meant that they could better demonstrate their ability to pay back a loan and have more choice in lending options. Black, hispanic and millennial owners are even more enthusiastic about sharing financial data, if sharing it means being presented with better loan terms and options. Over 80% responded positively to data sharing in each of those demographic categories. 

Owner-permissioned data through Mastercard’s open banking platform can power apps and services with up to 24 months of rich cash flow attributes. This can inform better, more accurate insights which lenders can use to make financial decisions. Approvals, credit increases, leases and other small business needs can be granted with reduced risk of bad debt. 

Data can be used to develop new lending models and underwrite new lending products. This opens up access to capital with terms and options that can be crafted to fit unique SMB needs. Funding is an ongoing issue for small business owners. Eighty-five percent are looking for faster, easier access to capital, and 62% have received a business loan. 

Whether it comes from public-facing consumer retail, ecommerce, professional services or seasonal businesses, owner-permissioned open banking data is the launchpad for a fast-growing ecosystem of effective financial tools that simply didn’t exist in the pre-digital era. 

Rather than basing lending decisions on metrics like personal credit scores, business credit scores and time in business, lenders are using open banking data points and analytics to unlock capital. Businesses that may have been impeded by traditional guidelines that aren’t aligned with the modern economy now have new options for funding. They’re benefiting from advances in open banking data technology, and they’re asking for the financial opportunities and insights that data can provide.

Small Business Owners Want to Grow With Tools and Allies

Despite the challenges of rising costs, talent acquisition, supply chain issues, cybersecurity and a host of other concerns, owners are optimistic and ready to grow. Forty-seven percent say they’re in growth mode, and looking for allies to help them scale up. 

Over 80% of owners say they want a partner to help them find access to capital and to loans that fit the needs of their specific business. This is where open banking solutions stand out, and where innovators are expanding the lending ecosystem with data-driven loan products, like:

In just a three-month period at the beginning of 2020, U.S.-based fintech Lendio helped over 100,000 small businesses connect to over $8 billion in U.S. Paycheck Protection Program loans, using owner-permissioned open banking data to analyze cash flow and other alternative lending metrics.

Small business specialists like Lendio have been a badly-needed lifeline during the pandemic and beyond. An open banking platform makes it possible to close the smaller loans that financial institutions don’t typically originate, and to do it more quickly. The manpower needed to run open banking-powered apps and services is less intensive than what is required to handle the traditional underwriting process at larger institutions. The amount of work that it takes to underwrite smaller loans has made them less appealing to some lenders in the past. 

This has caused some business owners to be left behind, particularly women and minorities seeking less capital to fund their enterprises. 

Open banking provides real-time data that helps lenders understand a small to mid-sized business’ creditworthiness, letting them more quickly and easily approve loans, no matter the size. With small business loans ranging from $5,000 to $1.2 million, it’s clear there is a wide range of opportunities to ally with owners by offering specialized lending products. 

Addressing a Growing Need in the Small Business Sector

There’s a growing list of lenders covering every need and every niche that the market is asking for, and demand has never been higher. According to the Mastercard study, eighty-seven percent of owners already use or would like to use open banking-powered fintech apps and services to secure funding for their businesses. 

Small businesses are still recovering from the effects of the pandemic, with the percentage of cash-strapped enterprises moving up slightly, from 15% to 18%. Innovators have an opportunity to create solutions that help owners who need reserves and operating capital, but who may have a short tenure in business, a thin credit file or low FICO scores. 

Owners want to secure and refinance loans. They want allies to help them make informed decisions. Ninety-six percent of them are linking their accounts and sharing their data. Alongside the desire for funding, 85% are looking for the customized financial recommendations that can come from sharing data with open banking apps and services. They want access to capital, and they want it quicker and smarter, to keep pace with an unpredictable consumer marketplace. 

In the next installment of the Rise of Open Banking series, we look at how open banking is transforming the payments experience for the SMB. Click here to download the full study.

Mastercard’s open banking platform (provided by Mastercard’s wholly-owned subsidiary, Finicity) offers pre-close reports that provide just the right data that GSEs need for 10-day verification of employment. Today, Freddie Mac announced the acceptance of our Verification of Employment (VOE) Reports. 

In adding the VOE Payroll and Transactions reports to our Mortgage Verification Services (MVS) product, we have enabled lenders to receive only the data GSEs require for the 10-day verification. Lenders can use these reports to view only your borrower’s employment status, rather than refreshing the full reports that contain more data than required for an employment verification. This minimizes the introduction of new income data or other redundant and unnecessary underwriting changes that could delay the loan closing or cause additional work.

The two available reports provide different types of information. The VOE Transactions report contains 120 days of refreshed transactions with dates and description, but no amounts or totals so income is not reassessed. It shows the latest direct deposits in the income streams, to confirm the  borrower is still being paid on their regular cadence.

Another option is the VOE Payroll report. This contains only employment status and details—no income or other data—so lenders can see that the individual is still employed according to their payroll provider.

These two reports are part of MVS at no extra charge and are currently available for lenders connecting directly to Mastercard and through Ice Mortgage Technology.

The VOE Transaction and Payroll reports can help lenders improve accuracy and simplify the process of verifying employment within ten days of closing, removing more friction from the loan origination process without increasing risk. With one click, a GSE-accepted VOE report is available in moments, avoiding the lost time and the uncertainty of tracking down verbal verifications from employers.

How can you access these 10-day pre-closing reports?

To pull the VOE reports today, your team will need to code directly to the endpoints or add this functionality through Encompass LOS from Ice Technology. You can find documentation here. To see Mastercard’s Mortgage Verification Services in action, request a demo here.

Want to learn what borrowers want from a digitized mortgage process powered by open banking solutions? Click here.

Welcome to the first installment of We Are Mastercard, a series of blog posts highlighting the fintech innovators behind our platform. Mastercard’s open banking solutions are powered by thousands of connections to financial institutions, layers upon layers of security and groundbreaking artificial intelligence-driven analytics.

However, what truly sets our technology apart is the people who create it, like Rachel Burnett. She’s a software engineer at Finicity, a Mastercard company, and a 2020 graduate of the University of Utah.

What’s your position at Finicity? And what are your responsibilities?

I’m a software engineer on the Connect services team. We support Finicity Connect, an application that allows users to connect to their bank and pull their financial data.

My team manages a service that maintains and serves financial institution data. Everything from the physical location of the institution to the routing number, branding files and a lot more. We store that information and then serve that up to Connect.

One of the major challenges is how to make the users’ flow in Connect as efficient and successful as possible. Another challenge is market expansion, looking at how we’re moving our products and services into different countries.

How does Finicity give you the resources to solve those problems?

Teddy frequently reviews Rachel’s code while she’s working from home.

As an early career software engineer, I have a passion for technology and am always looking to learn and grow as much as possible by reading about new technologies or practicing coding languages I might not use regularly.

Every other Friday afternoon, we have “innovation time,” where we have the freedom to research or play around with side projects to grow and practice our skills as software engineers. It’s awesome that we can have that freedom and flexibility to work on those skills and learn more. I feel like I’ve grown a lot since I’ve been here.

What’s the culture like on your team?

I have really great teammates who have a lot more experience than me. They’re incredibly knowledgeable. And they’ve been incredibly patient and generous in sharing their expertise and helping me with problems along the way. They are such a valuable resource. Just being able to Slack them questions or ask them to pair-program with me has been incredibly helpful.

On our team, you’re not expected to have everything perfect the first time. Teammates offer to do code reviews, help you test across environments, and genuinely want you to succeed because that’s what will make the team succeed.

How does your team exemplify Mastercard values?

Ownership is really important and something that our team really values—making sure that our code is thoroughly tested and that we hold each other accountable with code reviews as a team, together. We make sure that we ask the right questions to verify that there aren’t any gaps and that we’ve thought about the different use cases and scenarios.

Even if something seems trivial, we take accountability so that we can see it all the way through to how it might affect the end user.

What does working at Finicity enable you to do in your spare time?

One of Rachel’s hobbies is hiking with Hazel on mountain trails just minutes away from Mastercard’s offices in Murray, Utah.

My dog loves hiking, so that’s always fun. Just spending time with friends and family, camping, that kind of stuff.

We have a good work-life balance for sure. If we ever need to take time off to recharge or go see family outside of Utah or anything like that, we’re definitely supported and encouraged to do so.

Why should someone consider joining the Mastercard open banking team?

I think it’s really exciting to be working in an industry that is so important. I mean, it’s awesome to see the impact of the work you do because banking has a place in all of our lives. That’s exciting.

Also, Mastercard has awesome values and we have great benefits. We have 5 paid volunteer days per year, “work from anywhere” days and the Mastercard Cares program. It’s a great company that really cares about the employee and the individual. You know, they want to see us succeed and be happy. And then, on top of that, I think it’s fun and engaging work.

Interested in joining our team?

We’re growing! Search for and apply to our open positions here. Also, stay informed about news, events, and opportunities at Mastercard by joining our talent community.

Freddie Mac has unveiled new automated underwriting capabilities that allow lenders to verify assets, income and employment using borrower-approved bank account data. On June 1, 2022, this functionality will be available to mortgage lenders nationwide through the asset and income modeler (AIM) in Freddie Mac Loan Product Advisor® (LPASM), the company’s automated underwriting system.

Mastercard’s open banking platform (provided by Mastercard’s wholly-owned subsidiary, Finicity) is a service provider for this capability. The VOE Transaction and Payroll reports can help lenders improve accuracy and simplify the process of verifying employment within ten days of closing, removing more friction from the loan origination process without increasing risk.

Read more here.

Today’s small-to-mid-sized business (SMB) is evolving alongside the wider changes sweeping across finance, society and the workforce. While it’s still possible to run a successful business using traditional methods of capital access, customer acquisition, cost management and a myriad of other considerations, digital apps and services give business owners the greatest advantage. More and more, consumers are adopting open banking tools to spend, save and manage. SMBs are increasingly embracing digital platforms, apps and services in order to create the experiences that today’s consumers expect, and to thrive in a fast-paced competitive environment. 

The supply chain and pandemic-related inflationary pressures of the last two years have caused a host of issues for business owners. According to Mastercard’s new Rise of Open Banking Small Business study, rising costs and new methods of customer acquisition, talent acquisition and capital access are all front-of-mind for the SMB. 

This has led to an encouraging trend: SMB owners have been quick to adopt digital tools to fund, manage and promote their businesses. Nine in 10 owners consider themselves heavy fintech users for both personal and business needs. Some other key findings from the research:

These digital adoption numbers are higher than consumer numbers. SMB owners are forward-thinking. They’re quicker to adopt better solutions, and they’re accustomed to adapting to market conditions. 

Digital Transformation is Meeting Small Business Challenges Head-On

The pandemic of 2020 changed how businesses operate, accelerating a trend toward digitization that was already gaining steam. Banking, finance, investing, saving and spending have all gone more digital, enhancing the convenience and functionality of mobile and online apps and services. Doing business from home and “on the go” is becoming the norm, and open banking is the foundation for the next-gen innovative financial tools that both consumers and businesses use every day. Small business owners are taking advantage of this transition, leveraging heavy use of fintech innovations to raise their financial IQ.

While business owners are learning as they adapt and adjust to uncertain and ever-changing norms, the Rise of Open Banking study shows that there are a few concerns at the top of their minds on a daily basis.

Open Banking Innovations add Speed, Efficiency and Personalization to Banking and Financial Services

A full 85% of business owners are looking for faster, easier access to capital, creating a clear opportunity to partner with them for customized, agile funding solutions. The number one financial tool that SMBs rely on is business credit cards, but 81% are more interested in a loan that’s tailored to their business’s specific needs. Sixty-two percent of small businesses rely on loans as a lifeline. 

Payments are at the heart of SMB digital use cases. To streamline the customer journey, owners rely on open banking, embracing digital wallets, cryptocurrency and other new fintech tools. 

Connecting accounts to manage business finances provides the opportunity to give personalized insights. It also adds convenience for SMB owners looking for a streamlined way to tackle critical business tasks like banking, invoicing, paying bills and managing cash flow.

SMB Open Banking Adoption is Strong

Owners are using open banking innovations to improve their financial fitness. They are creating more seamless operations within their businesses by using intelligent open banking tools that manage the complexities of daily data flow for them. Linking accounts, making payments, getting paid, banking and accounting are just a few of the crucial tasks that are becoming quicker, smarter and more secure through digitization. 

Owners are linking their financial accounts to take advantage of new apps and services. Eighty-eight percent are using open banking data to better manage their operations. Eighty-five percent are looking for the customized recommendations that can come from the analytics and machine learning that can be applied to owner-permissioned data. 

Feeding intelligent, rich data into financial management tools is giving businesses the edge they need to grow and adapt, in this era of rapid change. They’re improving their financial health and decision making, while automating tasks and saving precious time. 

Paying and getting paid is quicker and more efficient. 

The evolution of banking and financial services is here, and SMB owners are embracing it. This is the first in a Rise of Open Banking series of blogs, where we’ll take a deep dive into some of the solutions powered by open banking for the SMB that is going digital.

If you want to read ahead, click here to download the full report.

Synctera, a leading FinTech banking provider helping innovators build their own FinTechs more efficiently, is expanding its partnership with Mastercard by integrating Mastercard’s open banking platform (provided by Mastercard’s wholly owned subsidiary, Finicity) to provide account verification solutions for Synctera-powered FinTechs. The addition of consumer-permissioned data from an open banking platform allows early-stage FinTechs access to the data they need to mitigate fraud, maximize confidence, and provide more choice in payment transactions to improve user experiences.

“Mastercard’s open banking platform provides consumer-permissioned data that is critical to enabling all ecosystem players, opening the door for the future of financial experiences, and can help streamline account verification to reduce friction between apps and consumers,” said Andy Sheehan, Executive Vice President, U.S. Open Banking at Mastercard. “Mastercard and Synctera’s partnership enhances the support and collaboration that is critical to FinTech innovators and will allow entrepreneurs and developers the ability to go to market quickly and ultimately deliver more consumer choice.”

Read more here.

In traditional banking, to get a loan, make a deposit or speak to a banker, customers have usually traveled to a physical branch.

But today, more banking services are available digitally. As a complement to existing online banking services, innovators are building the new and improved financial experiences that consumers are looking for. These innovators may not even have a brick-and-mortar presence, but they add multiple layers of value on top of existing financial services.

The digital movement is giving customers more tools and options to build their financial lives in the way they see fit, and Banking-as-a-Service (BaaS) is making this possible. Customers can now turn to innovators who offer niche financial services that cater to their unique needs, creating new ways for them to split dinner bills, take out a microloan, invest in crypto, track spending, saving and more.

But creating a new fintech company, app or product has not been simple. The traditional path to creating financial services was a long, hard road, from getting a banking license to building a new tech stack. Synctera is one fintech that offers an easier on-ramp to new, innovative financial products through BaaS. BaaS platforms and technology solutions provide the building blocks necessary for a fintech or neobank to quickly start creating innovative financial use cases for the modern consumer.

Synctera acts as a fintech banking platform, connecting a fintech builder with a community bank that has the requisite banking license. On the development side, Synctera provides an end-to-end toolkit, offering the critical technology services and providers that help innovators build their ideas. This includes consumer-permissioned data for account verification through Mastercard’s open banking platform, to help bring financial service ideas like quick money movement to life.

Modularizing banking solutions

All the things an entrepreneur needs in order to offer a banking service—including the ability to accept deposits, make loans and payments — BaaS service providers like Synctera encapsulate into the application programming interface (API) as modular blocks, so a fintech can tap in and build new solutions. Whether it’s issuing cards, sending ACH payments or more basic financial operations, developers can take these blocks and reassemble them to meet their needs.

The key to building with a BaaS provider is having just one API that’s simple to connect to. This reduces architecture and modeling requirements on the fintech development side. These tools allow fintechs to set up new customer accounts without delays from microdeposits, using instant verification, enabling customers to connect their external accounts and transfer funds into new financial services faster.

Another advantage of BaaS: Since multiple solutions are offered in the same API, it’s easy to make changes. If a company that’s scaling up tries an account authentication solution that’s slow and not quickly verifying that customer accounts are funded, they can replace it seamlessly with an alternate solution. That means less disruption to operations; money can keep moving.

Offering a marketplace of options

BaaS wraps all of its services, including those developed in-house and those from outside developers, into one API marketplace to make it easy for fintechs to launch everything together. Instead of trying to integrate tech from multiple financial services partners, a fintech developer can come to a BaaS provider like Synctera and build more, with less overhead and less plumbing.

Working with a BaaS provider allows fintech builders to focus more on the features of the product they’re offering to customers, like offering a virtual storefront to artists, discounted pet insurance to pet owners or easier access to small business capital. The marketplace solution means a fintech could choose a waterfall approach; if one solution fails, the system can be set up to automatically try another one.

How Mastercard fits in

Consumer-permissioned financial data can also be piped into BaaS solutions. Mastercard’s open banking platform provides secure connections to consumer-permissioned financial data from 95% of bank deposit accounts in the U.S. This data can power use cases like credit decisioning, account opening and linking. It creates more choice in payments and transaction data for better financial insights.

Every fintech product needs financial data, the ability to manage consumer permission and to access those accounts. It’s one thing to have a customer knock on your door. It’s another to help them walk through the door without unnecessary obstacles blocking their way, and to make the first deposit into their new accounts happen quickly and compliantly.

Mastercard’s open banking platform provides consumer-permissioned data to power the tools that Synctera and other BaaS providers and innovators create. By using account verification and transaction data from Mastercard’s open banking platform, all ecosystem players can authenticate users and get them online fast, and in a compliant manner.

Fraud detection and speed are of utmost importance

Understandably, the risk, compliance and customer experience balance is delicate–efficiency can’t compromise fraud prevention. By adding open banking data to the BaaS platform, financial service providers can verify and access bank account data with instant account verification, helping to ensure that the person opening a new account actually owns the account they are linking to the new fintech app, before moving money.

Speed is another top concern for fintech builders. And since banks are not tech companies, many operate on pre-internet tech. COBOL, a programming language developed in 1959 that underpins many banking systems, can make it difficult to upgrade systems quickly, or to seamlessly connect with today’s technology. This can result in a speed mismatch between banking networks and the world of fintechs, who want to be able to release new products and services in a few weeks. Mastercard helps connect customer accounts quickly and speeds up the customer onboarding process.

There’s a lot of new and improved technology being created in the world of financial services, and more options for developers result in more next-gen products that help consumers on their financial journeys.

Learn more about how Synctera and Mastercard are helping neobank and fintech builders unlock better financial access for people at synctera.com.