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

The financial services landscape is set to change drastically as open banking permeates and changes the way consumers view and use their financial information. As such, regulators, financial institutions and fintechs have striven to create a mutually beneficial relationship surrounding the use of consumer permissioned data (CPD), a trend that will test the limits of innovation, security, competition and more. 

Former Mastercard EVP of Global Open Finance Innovation Nick Thomas and PYMNTS Senior Editor Rasika Rane discuss data access and open banking in this PYMNTS Fireside Chat. 

Tech-forward, software-as-a-service (SaaS) startup LoanPro is partnering with Finicity, a Mastercard company. The partnership integrates FinicityPay™ with LoanPro’s platform, offering consumer-permissioned data, smart analytics, account ownership verification tools, and additional solutions to mitigate payment failure and fraud. 

LoanPro CEO and co-founder Rhett Roberts said that working with Finicity and utilizing its products will be an ‘excellent complement’ to LoanPro. “Our focus is to provide the most robust and quality user experience in the world for loan servicing, and this partnership helps to move that initiative forward,” Roberts said.

Read more here.

Finicity became a three-time winner of the Top Workplaces award this year. Recognized for excellence in culture, performance, leadership, and employee engagement, Finicity is proud to be honored with this distinction.

See the award here.

Open banking is the next iteration of data aggregation. Finicity co-founder Nick Thomas says four segments are all converging simultaneously — digital identity, consumer data rights, regulation around 1033 and blockchain technology. 

The financial services landscape is set to change drastically as open banking permeates and changes the way consumers view and use their financial information. “These cool innovations with open banking and the number of use cases only continue to expand,” says Thomas.

 

Watch the video here.

Utah Business Magazine tells the story of Steve Smith and Nick Thomas, the fintech pioneers who created Finicity in the year 2000.

From Finicity’s beginnings as a personal finance management app to its transformation into a next-gen open banking company, Steve and Nick have been a driving force in the Utah tech sector.

Looking back, Smith and Thomas attribute Finicity’s success to building a great team, a great product, and creating a great culture. Their efforts not only revolutionized fintech, but managed to capture the attention of Mastercard, ultimately leading to the acquisition of Finicity in November of 2020.

Read the article here.

 

Finicity, a Mastercard company, makes the ACH transfer process more secure and more consumer-centric with our open banking platform. Automated Clearing House (ACH) payments are one of the most-used payment rails and are a streamlined form of Electronic Funds Transfer (EFT). In 2020 alone, ACH moved $61.9 trillion in transactions. Strictly for payments moved between US-based banks, these electronic payments operate as paperless checks. 

Payments are issued in two forms: ACH credits (push) and ACH debits (pull). Understanding the difference between the two can help you understand how to better leverage ACH credits and debits in your everyday business transactions. 

What Is an ACH Debit?

An ACH debit transfer “pulls” funds from the payer’s bank account. If you’ve ever set up a recurring bill payment online, this is an example of a pull. In order to initiate an ACH debit, the payer must give their account and routing numbers to the payment receiver (who requests the payment), and give them permission to access the funds. The Nacha Web Debit Account Validation Rule requires the account to be verified before the first payment can be issued from it. While various verification methods are available, verification can happen by confirming the account number, or by the account owner giving permissioned access to it through an open banking portal. 

What Is an ACH Credit?

An ACH credit transfer “pushes” funds to a bank account at the request of a payer. If you receive your paycheck through direct deposit, it comes through an ACH credit transfer, in which your employer is requesting that funds be moved directly from their bank account to yours. You can also make payments in the form of an ACH credit, but unlike an ACH debit, you would initiate the transfer. 

How Do ACH Transactions Work?

ACH transactions happen in two key steps:

  1. Initiating the payment: Before a payment originator can initiate a transfer, they must receive permission to either push or pull funds to or from the account. Originators can receive permission by signing an ACH authorization form or through verbal agreement. This authorization phase is also when the transaction is marked as either a one-time or a recurring payment. 
  2. Receiving the payment: Once the ACH transfer has been authorized, your bank account will either push or pull the funds, depending on whether it’s a credit or debit transfer. If there are insufficient funds to push or pull, the payment can fail. In some instances, this can result in overdraft fees for the account holder.

Direct Deposits and ACH Transactions

Direct deposits have become the preferred method for issuing paychecks, both for employees and employers. Depositing payment directly into an employee’s account via the ACH network is a streamlined option. It also removes the fraud risk and processing delays of paper checks. Direct deposits are a type of ACH credit transfer, where employers push funds to an employee once they’ve received and verified the employee’s account and routing numbers. 

What Are Nacha’s New ACH Debit Rules?

Nacha’s central role is to facilitate the ACH network. Their top priority is ensuring that funds transfers are secure. In order to better protect the network as a whole, as well as individual businesses and consumers, Nacha implemented a new rule that applies specifically to WEB (online-initiated) debit transactions. 

Under Nacha’s operating rules, originators of WEB debit entries are required to use a “commercially reasonable fraudulent transaction detection system” to mitigate fraud risk. As of March 19, 2021, Nacha added account validation as a central component of fraud prevention. Any WEB debit originator now has to validate an account before first use, or when an account number changes.

Common Questions About ACH Transfers

How Long Do ACH Debit or Credit Transfers Take to Clear?

Because they are processed in batches, ACH transactions can take longer than other forms of payment to clear at the receiving bank. Some banks may offer same-day ACH payments which adds an extra window for submitting transactions, but most financial institutions charge extra because they’re moving toward faster payment options. 

What Are the Security Risks of An ACH Transaction?

As with any form of payment, there are security risks associated with ACH transactions. For example, with access to routing and account numbers, criminals can authorize fraudulent ACH transfers. Nacha regularly updates this page with the most current ACH-related threats. 

Following Nacha’s guidelines and using secure ACH payment solutions will mitigate the security risks associated with ACH transactions. 

What Are the Benefits of ACH Transactions Over Other Types of Payments?

ACH transactions are the most widely-used payment rail because they’re simple and secure. This makes them the obvious choice for exchanging payments via the internet. Some advantages of ACH payments include:

Are ACH Transfers Right for My Business?

Many businesses leverage ACH transfers to pay vendors and receive payments from customers, in addition to paying employee salaries. The speed, convenience, and security of ACH payments are behind today’s most successful businesses, assuring a positive impression of your brand. If your company is frequently moving money, making large payments or if it isn’t as important when the transactions goes through ACH transfers may be the right choice.

There are areas where ACH could be improved. It lacks a seamless returns process and there isn’t a dispute mechanism for consumers. It lacks transparency and immediacy in many ways, which is why when fraud occurs it can be costly for merchants and businesses.

Enabling ACH Transactions with Finicity

Finicity, a Mastercard company, can help you make the ACH transfer process more secure and more consumer-friendly with our open banking platform. Through our payment data solutions, we offer instant account verification. This enables originators of ACH transfers to verify crucial account information in real time, increasing the likelihood of successful payments and reducing friction like microdeposits or manual entry. Finicity’s products also offer balance checking to give confidence that funds will be available, reducing the potential for costly insufficient funds returns. However you’re interacting with the ACH network, Finicity’s products are here to enhance the experience.

ACH credit and debit transactions are driving the exponential growth of today’s financial services innovation. To find out how we’re taking ACH to the next level, request a demo today.

Not every customer who walks through the door of your dealership on a sunny weekend afternoon can breeze through the auto financing process with no issues. This group could comprise as much as 18% of the borrowers who step into your dealership. In our quickly-evolving economy, many borrowers can have multiple sources of income, thin credit, or a compromised FICO profile. Verifying income with consumer-permissioned data is a digital solution that can help clear stips and smooth out those tricky loan approvals in real-time.

If you have a borrower sitting in your financing department, the team at your dealership has already invested time with them. They’ve shown them several vehicles, developed rapport, and maybe took a test drive. Don’t lose the sale just because the customer isn’t carrying a stack of freshly-printed pay stubs. Using Finicity Lend™’s income verification, the borrower permissions access to the data in their bank account, generating a verification of income (VOI) report. The results that are returned show a high level of accuracy in determining actual income. This low-friction experience cuts down total time spent on each loan application, finishing the verification process in real-time. The borrower doesn’t have to scramble to collect documentation from various sources just so they can leave with the car. 

Extend Credit With Confidence. Get More Approvals.

Tightened auto lending guidelines and a pandemic-influenced drop in consumer demand are causing a slump in subprime originations. When your customer falls in love with a car and is ready to buy, you don’t want limited lending options to cost you the sale. Traditional FICO models are a good start, but when credit scores aren’t enough to get the green light, Finicity Lend augments the credit decisioning with real-time income data that makes the credit decisioning process faster and more efficient for lenders. 

Today’s lending process is in the midst of a vast digital transformation, placing Finicity, a Mastercard company and its open banking technology at the forefront of this data revolution. 62 million Americans have a thin credit file, with only one to four tradelines listed. While they may be more than capable of financing a car, traditional credit scoring models could result in a denial of these applications. With Finicity Lend’s income verification, permissioned data access to their bank accounts gives a more robust picture of their actual financial health. The borrower can be issued a loan that they can be approved for and repay. Finicity’s open banking network covers 95% of direct deposit accounts in the United States, greatly increasing the number of buyers you can assist in buying a car. Accurate income data helps satisfy loan stipulations and lets buyers purchase a vehicle right away. 

Reducing Risk

When a borrower misrepresents their income, it’s nearly always to gain access to more credit than they can handle. 2020 was a record year for fraud in the auto industry, reaching a whopping $7.3 billion in losses. One of the biggest increases came in income and employment misrepresentation. With a 100% year-over-year jump in falsified incomes, one of the most important investments you can make is in prevention. Be sure that you have accurate data with Finicity Lend’s income verification. 

Higher Verification Success Rates Translates to Fewer Lost Sales

With the increased confidence and efficiency that comes with Finicity Lend’s income verification, good sales don’t walk out the door just because there’s not enough paperwork on hand. Verified, real-time data gets the sale closed. Over the course of a fiscal year, lost sales and fraud can cause extensive damage to your bottom line. Finicity income verification is fast and secure. The speed of the process means you can invest time and effort into higher-return work activity. This positive snowball effect can show up in the win column of your balance sheet. 

Our team will be attending the Auto Finance Summit in Las Vegas, October 27-29. To Learn more about Finicity’s income verification for auto, check out our overview or request an auto lending demo.

In a hyperconnected world, it’s hard to name a transaction, financial or otherwise, that takes more than a few moments. Much of our business and personal lives take place on a tiny mobile screen. Instant results are the universal expectation. Buying a pair of shoes, commenting on a social post, and paying utility bills are all part of consumers’ continuous, uninterrupted flow. If it happens on a screen, it has to be now, now, now. Secure account opening is no different. Make your customer wait, and they’re gone. 

While account opening should take only seconds, issues like manual uploads and microdeposits add delays. Finicity, a Mastercard company, is addressing this new reality aggressively, stripping away friction points in the account set-up, onboarding and funding process. Open banking introduces new ways for financial institutions to verify account ownership and authenticate credentials. Accounts are opened and funded in moments, with a full package of data that includes account owners, details and balances. This creates the perception of immediacy that the end-user expects throughout their on-screen day.

Locking Fraudsters Out of the System

Understandably the risk, compliance, and customer experience balance is delicate. Efficiency can’t compromise fraud prevention. That’s why Finicity built its payment solution behind a driving principle: Pay Confidently. This means secure, lightning-fast account credential and balance verification. Financial service providers can verify account ownership and simplify the process by implementing their own application pre-fill functionality. Access to bank account data with instant account verification boosts sign-ups, reduces non-sufficient funds (NSF) fees and lowers abandonment rates. The connectivity is also useful when customers have an existing relationship with an FI but want to move money or add services. Data services help FIs verify account details and balances in milliseconds so they can move money accurately and securely.

Throughout the 2020 COVID-19 lockdowns, online fraud attacks rose by 250%. By far, the majority of them were account takeover scams, where fraudsters steal credentials and account information to siphon funds away from account holders. These attacks rose by a staggering 650%. In 2020 alone, the FTC tracked $3.3 billion in fraud losses to consumers. The convergence of fast-paced digital banking growth and a new wave of inexperienced customers created an opportunity for criminals to exploit. Finicity built its payment solution to cancel out these threats. Finicity Pay uses secure, tokenized access that yields no meaningful data if hacked. Our account verification service instantly and accurately identifies the account holder, stamping out account takeover scams before they get started. The user experience is positive, fast, and most importantly, onboarding is completed at the exact moment that the consumer wants to complete it. 

Why Finicity Open Banking?

A True Partner 

The open banking wave is just beginning to rise. COVID-19 has only accelerated the shift to digital banking options that offer faster, slicker ways to set up new accounts, move money and make payments. From October 2020 to August 2021 alone, Gen Zers and Millennials doubled their adoption of digital banks as the primary holder of their accounts. Open banking is the backbone behind the innovation and lifestyle options that are driving fintech app growth.

This is where Finicity provides a differentiated experience. As an innovation partner, Finicity’s development team can identify the best tools to suit your unique use case with the transparency and control that consumers demand. If they feel they can easily set up a new account and then pay quickly and safely, they will adopt your platform. The confidence that secure account opening inspires will drive down-funnel conversions and build confidence in your organization. 

Visit our demo page to see how Finicity can help you innovate with data today.

Finicity CEO Steve Smith stopped by Lendit Fintech’s One-on-One with Peter Renton. Steve talks open banking’s everyday applications, the state of open finance around the globe and what we’re doing to ensure consumer-permissioned financial data is used responsibly. 

Listen to the podcast episode here.

Jack Henry & Associates, Inc.® is a leading provider of technology solutions and payment processing services primarily for the financial services industry. Jack Henry announced today that Finicity, Akoya, and Plaid are among the first open banking pioneers to integrate to the Banno Digital Platform using the Banno Digital Toolkit℠. This provides better security, privacy and transparency for the nearly 6 million consumers banking with the Banno Digital Platform by removing screen scraping. 

Learn more about Finicity’s partnership with Jack Henry here.