A smooth verification of income process is crucial for mortgage lenders to satisfy customers and maintain efficiency. Unfortunately, with consumer expectations evolving and with better, more secure digital verification solutions on the market, manual verification simply doesn’t cut it anymore.
Today’s winning solutions streamline processes for everyone involved. More efficient workflows and solutions satisfy the expectations of digital consumers and increase ROI for lenders. Fintech and the digital mortgage it enables are both revolutionizing income verification and transforming risk management. Here’s how.
What Is Income Verification? When Mortgage Lenders Use Proof of Income
Mortgage lenders need to accurately determine whether or not a potential borrower is a risk. Lenders use a series of verifications to assess that risk, including income verification. A lender will request a verification of income to check that a borrower is bringing in enough money to make their monthly mortgage payments. If a verification of income report shows that a loan amount is higher than a borrower can pay back, that borrower is less likely to receive a loan.
Lenders may complete income verification using a few different methods. Historically, lenders have requested manual documentation to verify a borrower’s income. This often involved delivering a paystub and the borrower’s most recent W-2 form along with bank statements. Today, more borrowers can submit documents electronically, via email, or through a lender’s online portal.
However, with digital mortgage solutions and digital verifications, specifically, on the rise, manual income verification is becoming a thing of the past. Instead of relying on paper documents, borrowers can authorize lenders to access their financial data, where they can quickly and easily verify income.
It’s not just that manual verification of income is behind the times (even though it is). Manual verification, while a tried-and-true method for many lenders for a long time, presents concrete drawbacks and even risks that digital verification eliminates.
Manual verification simply takes longer. Hunting down relevant documents and generating friction with a frequent back-and-forth with borrowers takes time that drags out the origination process. Longer origination times mean lower ROI for lenders and less satisfaction from the consumer.
And that consumer satisfaction matters. In this digital economy, your borrowers expect increasingly streamlined processes. High-friction paper chases just don’t meet expectations anymore. And you don’t just want to meet expectations; you want to exceed them. Failing to meet today’s consumer expectations frequently results in fewer returning customers, fewer referrals, and all-around lower brand loyalty.
This is where fintech comes in.
How Fintech Streamlines Income Verification For Better Credit Decisioning
Fintech services remedy the problems inherent in manual verification with secure, convenient technology that streamlines processes for lenders and satisfies digitally-accustomed borrowers. Instead of requiring borrowers to dig up old documents, financial technology can verify income by directly accessing a borrower’s financial data. Fintech aims to simplify the mortgage lending process for everyone involved.
Digital verifications streamline mortgage lending by removing friction with borrowers, cutting origination times with fast processes, and moving borrowers more quickly through the conversion funnel. The most innovative technology also goes a step beyond simply removing friction with borrowers to also deliver a quick and secure user experience that simplifies the verification process.
Streamlining income verification isn’t just about speeding up the process. Digital verification solutions also address the risk- and fraud-related problems associated with manual verification. Physical documents received from borrowers can be unreliable. Inaccurate information leads to poor decisioning. Legacy technology that requires copy-pasting and re-keying leaves ample room for error. More risk and higher chances of fraud cost you more time and money in the end. Early Warning reports that “instead of getting information directly from financial institutions,” relying on manual verification “costs banks and lenders millions of dollars.”
Fintech ultimately improves credit decisioning with solutions that provide more accurate data and deeper insights into a borrower’s financial situation, all while cutting the time and risk associated with manual processes.
What’s Next? How The Latest Technology Will Better All Lending Platforms
The proliferation of financial data, and the open banking platforms that enable its access, are continuously evolving, especially amid the digital acceleration brought about by the pandemic. That latest technology and the innovative solutions it powers will improve lending platforms in every way, from streamlining the overall origination process to enabling more accurate, secure verifications from multiple data sources.
An abundance of consumer-permissioned data enables lending platforms to better serve consumers and increase ROI by easily and simply delivering data from multiple sources that may have been previously unavailable. Verifying employment gets easier when lenders can receive payroll and paystub information directly. Lenders that need to refinance or consolidate a loan can rapidly get the necessary loan details. The combined speed, accuracy, and security of these data connections, as well as increased access to additional data sources, enable mortgage lenders to develop the agility necessary to hone their competitive edge and adapt to future changes and challenges.
The Finicity Solution Is Transforming Risk Management For Traditional Banks
The more accurate, more secure, and more convenient solutions enabled by fintech have the potential to transform risk management for traditional banks and lenders. But transforming risk management involves more than delivering better insights to mortgage lenders; it also involves meeting the digital borrower in their digital ecosystem with a solution that benefits the consumer as much as it does the lender.
Enter Finicity Lend.
What is Finicity Lend?
Finicity Lend is a suite of fintech solutions that easily integrates into any lending platform and streamlines the verification process for mortgage lenders. Finicity’s open banking platform powers these solutions and places the consumer at the center of the verification process, which benefits everyone involved.
It goes like this: when it’s time for the borrower to verify their income, the lender kicks off the consumer permissioning process. The borrower then securely consents for the lender to access their financial data. Finicity then generates a “Verification of Income” report using data straight from the borrower’s financial institution. This guarantees the most accurate data, direct from the source. And to top it off, a verification process that could have taken weeks now takes minutes.
The Finicity Lend Verification of Income report includes:
- Financial institution for each account
- Up to 24 months of deposit transactions
- Average monthly income
- Historical and estimated annual income
How Finicity Lend Streamlines Income Verification and Transforms Risk Management
Finicity Lend is the answer to the flaws inherent in manual income verification. And it’s all thanks to data solutions that revolve around consumer empowerment. Using consumer-permissioned data, provided through Finicity’s open banking platform, Lend gives consumers more control over and transparency into their financial data and its benefits. And when the consumer is empowered, mortgage lenders reap the benefits, too.
Thanks to Finicity Lend’s data solutions, both mortgage lenders and borrowers can enjoy a streamlined verification process. Steve Smith put it best: “Once [consumer permissioning is] done, we’re able to gather all appropriate data across multiple accounts, rapidly analyze it and send a verification report to the lender. No papers. No multiple requests. No questions on validity of the data. All done in minutes, not weeks.”
Access to real-time data is the foundation of this streamlined process. Our verification solutions pull and analyze data straight from financial institutions. And all it takes is a report refresh to get immediate updates to reports. No more hindering the origination process with long periods of back-and-forth, hunting down bank statements and other documents. To top it off, our data intelligence layer analyzes financial data and ranks identified income streams with confidence scores, which both streamlines the decisioning process and provides more accurate data for better risk assessment.
Lend also streamlines the lending process and mitigates risk in the long-term. After all, fraud that comes back to bite lenders usually costs not just money, but time. Access to real-time data directly from financial institutions drastically reduces the chances of fraud when compared to verifications completed with manual verification. Our Lend solutions even compare transaction data with other source data (such as employer-provided data) for an additional layer of security.
In the end, streamlining verification of income with Finicity Lend enables mortgage lenders to close more loans more quickly. That enables greater agility, more space for more business, and more money saved in expenses. And with everything about Lend designed to put the consumer front-and-center, everybody leaves the lending process happy.
Thanks to Finicity Lend, you get the information you need for income verifications, and you get it fast. Your borrowers get a better, more empowering experience. You get a more reliable assessment of risk. And both of you can enjoy a streamlined income verification process. Learn more about Finicity Lend’s data solutions and request a demo to see streamlined income verification in action.
Recognition underlines Finicity’s efforts to improve financial inclusion and deliver new technologies and solutions to change the credit-decisioning experience
SALT LAKE CITY, Utah – Oct. 20, 2020 – Finicity, a leading provider of open banking solutions, was recognized by the Mortgage Bankers Association (MBA) as a winner of its fifth-annual Residential Diversity and Inclusion Leadership Award under the category of Market Outreach Strategies. MBA presented the award to Finicity during a general session of its 2020 Virtual Annual Convention and Expo on Oct. 19.
As part of MBA’s strategy and promotion of diversity and inclusion, the award recognizes member company initiatives that are specifically designed to increase outreach, marketing or products to attract customers from the industry’s fastest-growing market segments. The award commends the hard work, dedication and creativity of exemplary programs that focus on achieving organizational diversity and inclusion.
“We’re honored to have been recognized by MBA for our concerted efforts around diversity and inclusion,” said Steve Smith, Finicity CEO and Co-founder. “We feel there’s an increasing need to re-evaluate the current credit review process in a way that helps consumers from all backgrounds become more empowered to take control of their own financial data and make better financial decisions. We believe our secure open banking platform can truly help consumers benefit from their data, prove their creditworthiness for loans, and include more people in the traditional financial system.”
In its evaluation, MBA notes: “Finicity stood out for its unique platform to provide a more robust picture of credit worthiness for borrowers. We were particularly impressed by your efforts in improving access to homeownership.”
Finicity’s open banking platform is the engine that drives improvement in the lending process and has introduced several new products and partnerships to further the inclusion of more people in the traditional financial system. Leveraging the Finicity open banking platform’s robust data intelligence layer, Finicity Lend provides a new alternative data service, Cash Flow, that analyzes financial account data delivering a broad set of cash flow attributes. This gives lenders more accurate insights into a small business or individual’s creditworthiness.
The Cash Flow analytics service digitizes and automates the capture and delivery of data that previously required significant combinations of manual and automated processes to extract and analyze. The use of this alternative data is supported by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency as referenced in their Interagency Statement.
In addition, Finicity’s open banking platform provides the technology that empowers consumers to control and share their data to improve their financial lives. And now they can share their utility and phone payment data in order to improve their credit score.
Building on its leadership position with financial institution coverage, Finicity has added payroll data as a source from a leading payroll provider to further enhances Finicity’s open banking platform’s ability to verify consumer-permissioned income and employment details — critical to many lending use cases — with real-time, direct from the source data. These connections empower the consumer through better financial outcomes while at the same time reducing risk and providing better data for lenders to make better decisions.
Expanding the types of data used to determine creditworthiness addresses longtime consumer concerns that have resurfaced recently due to the COVID-19 pandemic and resulting economic downturn. According to a recent study by Finicity, 82% of consumers said they believe the current credit review process and criteria need to change to make it easier for responsible borrowers to prove their creditworthiness and increase access to loans.
About Finicity
Finicity’s mission is to help individuals, families, and organizations make smarter financial decisions through safe and secure access to fast, high-quality data. The company provides a proven and trusted open banking platform that puts consumers in control of their financial data, transforming the way we experience money — everything from budgeting and payments to investing and lending. Finicity partners with influential financial institutions and disruptive fintech providers alike to give consumers a leg up in a complicated financial world helping to improve financial literacy, expanding financial inclusion, and ultimately leading to better financial outcomes. Finicity is headquartered in Salt Lake City, Utah. To learn more or test drive its API, visit www.finicity.com.
Media Relations Contact:
Corbin Mihelic
104 West Partners for Finicity
corbin.mihelic@104west.com
316-209-9794
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Company Demonstrates Breakthrough Solution for Verification of Income and Employment
LAS VEGAS — Sept. 25, 2019 – Finicity announced today that it won the LendingTree Innovation Challenge Best in Show award at Source Media’s Digital Mortgage Conference 2019 for its Verification of Income and Employment (VOIE) with TXVerify™ solution.
For the second year in a row, the LendingTree Innovation Challenge highlighted innovation in the digital mortgage ecosystem at the conference which was held September 23-24 at the Wynn Las Vegas. The challenge featured 36 live demos showcasing the mortgage industry’s most innovative digital technologies.
“We are truly thrilled by the reception of our VOIE solution,” said Steve Smith, CEO and co-founder of Finicity. “This award is another acknowledgement that income and employment verification was ripe for innovation. Until now, no one had figured out how to deliver an automated solution that addressed the majority of the market.”
A panel of three judges scored all the demo presentations. Finicity received the high honor by receiving a score of nine out of 10 from all three judges for its inventive approach to verification of income and employment. Additionally, attendees were able to weigh in through an audience voting process.
Finicity’s VOIE solution digitally extracts a borrower’s pay statement data from a paystub and then cross-verifies that key data with direct deposit transactions within their bank accounts. Enabled by its patent-pending TXVerify™ technology, this detailed vetting process creates a real-time picture of an applicant’s income and employment for fast, accurate reports. The solution does this using consumer-permissioned data – direct from banks – along with a scan, photo or PDF of a borrower’s paystubs for the most current and accurate verification. This process significantly shifts the current paradigm from a mostly manual process to one that is fully digital, all while reducing fraud and increasing confidence in the underwriting process.
Sharing the Best in Show award this year was CoreLogic.
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About Finicity:
Finicity’s mission is to help individuals, families and organizations make smarter financial decisions through safe and secure access to fast, high-quality data. The company, which launched its first financial product in 2000 and has since grown to provide financial data APIs, credit decisioning tools and financial wellness solutions, partners with influential financial institutions and disruptive FinTech providers alike to give consumers a leg up in a complicated financial world. Finicity was awarded API World’s 2016 Finance API of the Year and is a 2018, 2019 HousingWire Tech100 winner. To learn more or test drive its API, visit www.finicity.com.
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Finicity CEO Steve Smith discusses simple digitization steps that lenders can take to boost mortgage applications even in the face of rising interest rates. Lending apps, a digital lending experience, and expanded financial data are key. Read the full article at National Mortgage News.