Mastercard’s Jess Turner, EVP New Digital Infrastructure and Fintech, was featured in PYMNTS The Way Payments Are Now Done eBook discussing how account opening needs to follow customer expectations to provide the best experience possible. You can read the full report at PYMNTS, but here’s what she had to say:
As we contend with in-person restrictions, the demand for and use of digital financial services has grown. Mobile banking, account opening or making real-time payments are now not only our first reflex but often a necessity. Mastercard’s 2020 Global State of Pay study found 73% percent of consumers and 67% of small businesses had used mobile banking apps to manage their finances and make payments in the past 12 months, and 53% of consumers said they were using them more now than they had before.
Consumers want flexibility in how they manage their finances, and true financial services innovators are delivering experiences that provide this choice. Opening checking accounts online is increasingly part of a consumer’s normal payments routine, and it is powered by open banking, which has also seen significant acceleration during COVID-19 and is expanding globally. Nearly two-thirds (64%) of the checking accounts opened during the height of the pandemic were submitted either online or on a mobile device with more than eight in ten banking app users reporting the experience was “easier than they thought.” That’s largely due to open banking.
Digital account opening is here to stay, and consumers expect to open an account in seconds. But issues like manual uploads and micro-deposits add delays. Open banking introduces new ways for financial institutions and apps to verify account ownership and authenticate credentials for opening and funding accounts. The balance of risk, compliance and customer experience is delicate – efficiency can’t compromise fraud prevention. Trust is critical in our hyper-connected digital environment and the consumer must be at the center of control, ensuring greater transparency.
That’s why we have a solution that provides secure, lightning-fast account verification. Mastercard’s open banking network is removing friction points in the account setup, onboarding and funding process. Open banking introduces new ways for financial institutions to verify account ownership and authenticate credentials for opening and funding that include account owners, account details, and balances that boost sign-ups and reduce abandonment. The connectivity is also useful when customers have an existing relationship with a financial institution but want to move money or add services. Data services help financial institutions verify account details and balances in milliseconds while moving money accurately and securely.
With the rapid emergence and global expansion of open banking, the money experience will never be the same. At Mastercard, we are redesigning our network to power the future of payments and services. A global open banking network, coupled with our existing multi-rail expertise, empowers our partners to better serve consumers and their changing expectations with digital experiences.
Mastercard announced a bank-driven buy now pay later (BNPL) platform to allow borrowers to apply for loans through mobile banking and be able to use a virtual card when making the purchase. The platform will pre-qualify borrowers for zero-interest installment loans.
Approved borrowers can fund their purchases with participating lenders and repay the loans through their card, checking or savings account.
You can read on how Finicity factors in at American Banker ($).
While digital experiences are rapidly becoming the norm for mortgage lending, the verification process has largely remained a manual, paper-driven process. Fortunately, this is changing.
Finicity, a Mastercard company, is the only authorized report supplier that offers a digital, single-vendor solution for assets, income, and employment authorized for representation and warranty relief through both Freddie Mac and Fannie Mae. By automating the asset and income verification process, providing transaction data for rent payment history and providing a 10-day pre-closing report, we can help you streamline the approval process and in turn even be a more inclusive lender.
Approved by Freddie Mac and Fannie Mae
Finicity is an authorized supplier for Freddie Mac’s Loan Product Advisor® AIM, which automates borrower assets, income, and employment assessment for lenders. By leveraging the expertise of third-party service providers, AIM helps to deliver a simpler, more efficient loan origination process.
Fannie Mae’s Desktop Underwriter® (DU®) validation service also accepts our mortgage verification services to independently validate borrower assets, income, and employment data—providing Day 1 Certainty® on validated loan components. By digitally validating secure third-party data through DU, you can help eliminate the paper chase and help get your borrowers approved quicker.
Rent payment history in credit decisioning
On September 18, Fannie Mae introduced the inclusion of rent payments in their automated mortgage credit decisioning process in DU. Fannie Mae identifies recurring rent payments in bank statements and transaction data as a factor which could deliver a more inclusive credit assessment.
For first-time homebuyers who may have a limited credit history but a strong rent payment history, the enhancement creates new opportunities for homeownership while still promoting safe lending. Fannie Mae said 17% of applicants who have not owned a home in the last three years and who did not receive a favorable mortgage recommendation could have instead received an “approved” or “eligible” recommendation if their rental payment history had been considered.
To take advantage of the rent payment history feature, Finicity provides a Verification of Asset and Income (VOAI) report through its Mortgage Verification Service (MVS) that includes up to 24 months of transaction data that Fannie Mae can use to identify rent payment history and provide a more favorable credit assessment.
The VOAI report can be called with a direct API or is available currently in ICE Encompass and Encompass Consumer Connect, as well as the SimpleNexus mortgage point-of-sale (POS) platform.
10-day pre-closing verification
Additionally, Finicity’s 10-day pre-closing reports provide just the right data GSEs need for 10-day verification of employment.
In adding a 10-day pre-closing report to our mortgage verification services, we have enabled lenders to receive only the data GSEs require for the 10-day verification. You can use these 10-day pre-closing reports to view just your borrower’s employment status rather than refreshing our current full reports that contain financial data. This minimizes the introduction of new income data or other redundant and unnecessary underwriting changes.
One of the reports available is the VOE Transactions report, which contains 120 days of refreshed transactions with dates and description but no amounts or totals so that income is not re-assessed. It shows the latest direct deposits in the income streams so that it can be determined that the borrower is still being paid on their regular cadence.
Another option is the VOE Payroll report. This contains only employment status—no income or other data—so lenders can see that the individual is still employed according to their payroll provider.
Our 10-day pre-closing reports are part of MVS at no extra charge and are currently only available for lenders connecting directly to Finicity.
These new reports could help you improve accuracy and simplify the process of verifying employment within ten days of closing, which is simplifying the loan origination process even further without increasing risk. Because these products are part of Finicity MVS, you would no longer have to call your borrower’s employers to get the information or manually ask for any extra interaction from the borrower.
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. You can find documentation here. As we integrate them further into LOS and POS platforms, they will be even easier for consumer loan officers to access. To see Finicity’s Mortgage Verification Services in action, request a demo here.
Finicity CEO Steve Smith testified before the House Committee on Financial Services FinTech Task Force on Tuesday, Sept. 21. He cited open banking powered by data aggregation as the game changer that flipped the data experience to one that empowers consumers and small and midsize businesses with access, control and the consented use of data.
As it continues to emerge, policy makers “will play a meaningful role in the direction and pace of this transformation by providing clarity on data protection expectations, data privacy requirements and consumer data rights.”
You can read the summary of his testimony at PYMNTS or you can watch the full hearing on C-SPAN.
Nick Baguley, VP of Data Science at Finicity, writes in the Fintech Times about how artificial intelligence (AI) and machine learning (ML) has the ability to make lending and verification processes easier and more efficient. Most importantly he talks about what’s already happening today and where it’s headed.
Read the entire article here.
PYMNTS talked with Finicity CEO Steve Smith about open banking, open finance, data aggregation, where we’re headed with technologies and standards and how consumer-permissioned data is the future of lending.
Innovation is largely occurring differently in each fintech segment so the usefulness of a broad open banking platform to provide relevant, quality data across investing, budgeting and mortgage is becoming more and more important.
“We’re entering an age in which – through open banking – consumers are increasingly comfortable sharing their personal financial data with third parties. And amid that “gold rush,” a slew of companies have popped up (mostly fintechs), promising to upend financial services, though they tend to focus on segments of financial life – investing, let’s say, or mortgages, or high-yield savings accounts.”
Read the full article here.
On a daily basis, payroll providers solve many of the pain points faced by HR teams. For example, payroll solutions save employers time and resources and deliver valuable services that enhance the employee experience.
However, by leveraging their valuable data in new ways, payroll providers have the ability to deliver income and employment verification solutions that even better meet the needs of HR teams. Payroll providers can benefit from their data by connecting with an open banking platform—a consumer-permissioned means of accessing financial data via APIs. By leveraging data to enable empowering and innovative services open banking benefits both the service provider and the consumer.
Ultimately, payroll providers also hone their competitive edge and bolster their security when they connect to open banking platforms. Once connected to the platforms via API, payroll providers empower employers and consumers to benefit from their payroll data on request. The API connection is a partnership between a payroll provider and an open banking platform. A mutually-beneficial partnership that’s dedicated to delivering the best, most secure experience to businesses and their employees.
Providers can use the open banking connections to add new services and apps to their offerings. Additionally, the data doesn’t have to be sent in batches to be stored in a database to be used by third parties. These real-time data connections benefit consumers, payroll companies, and employees by minimizing when and how data is used and providing it more securely and transparently.
Let’s look at how these partnership-driven connections help payroll providers unlock new opportunities.
How Does Connecting to Payroll Data Work?
Payroll data can streamline the verification of income and employment for various use cases, such as:
- Mortgage lending
- Auto lending
- Personal lending
- Tenant screening
- Background checks
- Government verification
- Personal financial management
Payroll providers can connect to open banking platforms and data aggregators in a variety of ways. Many aggregators offer only credentialed access to payroll data, which means that the data access provider uses a consumer’s credentials to access a payroll platform and get the necessary data. While this method may deliver the data necessary for employment and income verifications, credentialed access is less secure for payroll providers and a less consumer-friendly experience since employees may not know their payroll provider or login credentials.
Ideally, connecting consumers to their valuable payroll data happens via direct API connections. API connections are far more secure than credentialed access and don’t require employees to know their payroll portal credentials to access the content. The user doesn’t even have to know their provider. An open banking platform, or data access provider, is a better method to connect employees to their data with a direct API connection. It provides the highest standard of control and transparency over who is accessing their data and how it is being used to benefit them.
Payroll data clearly helps consumers benefit from their financial data to access important financial services. But what’s in it for payroll providers? Why should they connect to open banking platforms?
How Payroll Providers Benefit from Connecting to Open Banking Platforms
Payroll providers can leverage open banking platforms to enable better experiences for their customers, effectively improving their competitive position and ensuring secure data sharing. A competitive advantage of payroll providers would then be the security and privacy standards baked into the API direct connection. In the end, everyone benefits, from payroll providers, to data access providers, to verifiers, to employers and employees.
How Connecting to Open Banking Platforms Makes Payroll Providers More Competitive
Connecting to an open banking platform empowers payroll providers to better serve their core target: HR executives.
What do HR executives need? They need a reliable payroll solution, one that may also deliver other ancillary services, such as benefits, expense reporting, applicant tracking. Like almost any other executive, HR executives need more time and resources for their team, which means that time-consuming, manual employment and income verifications can become a burden.
Many HR executives are already choosing to outsource their payroll and ancillary HR services in order to cut costs and save time. But to whom they outsource matters. The payroll and HR experience is an important element of a positive employee experience with a company. Payroll providers who already offer successful payroll and HR experiences have the opportunity to further enhance those experiences with an additional service: streamlined, simple, and empowering income and employment verification.
By connecting to an open banking platform, payroll providers enable employees to self-permission their employment and income data when trying to access a financial service or engage with the other use cases described above. In this way, the employee benefits from their financial data by delivering a more reliable, comprehensive view of their financial story for greater access to financial services. In turn, verifiers get more accurate, real-time data for better decisioning. Both get a streamlined, faster experience that saves everyone time and resources. And employers (HR executives specifically) never had to waste the resources performing the verifications.
A ready connection for third parties through an open banking connection also makes it easier to add or provide services through third parties like fintechs. These connections can provide financial guidance, simplify complex purchases like insurance or mortgages, or just provide a clearer view for tax preparation.
All of those benefits come from the payroll provider who, through partnership with an open banking platform, offers a better experience and empowers both employer and employee. That payroll provider distinguishes itself among its competitors and better positions itself to onboard more clients and scale.
How Connecting to Open Banking Platforms Maintains Payroll Providers’ Security
In contrast to the model described above, payroll providers and employers open themselves up to risk when they send data used for verifications in batches and are stored with a third party. These methods leave them open to breaches because they house the data. This method potentially compromises employees’ private information by duplicating data and storing it in multiple places. However, connecting to an open banking platform through an API removes the necessity of sending data in batches. Instead, verifiers only need to access the data at the moment of verification. Thanks to real-time connections to accurate, data,no parties have to pass through the protection of an employer’s or payroll provider’s firewall.
And when those APIs use secure authentication, such as OAuth, employees keep their credentials secret and secure. By partnering with an open banking platform, payroll providers protect themselves, employers, and consumers. Offering a secure experience also empowers employers and employees, and further sharpens the competitive edge already honed by connecting to an open banking platform.
Connecting to open banking platforms enables payroll providers to scale by delivering secure, streamlined, empowering experiences for HR teams and employees.
Read this post to learn more about the connections that power payroll provider data. Or reach out and we can answer your questions about using an open banking platform for payroll provider data.
SALT LAKE CITY, UT – August 26, 2021 – Finicity, a Mastercard company and leading provider of open banking solutions, announced today that it is expanding its one-stop Mortgage Verification Service (MVS) availability within ICE Mortgage Technology™, part of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure. This integration enables borrowers to permission data quickly and easily so lenders can verify assets, income, and employment in a streamlined interaction. The result: both parties are met with a significantly reduced turnaround time and improved borrower experience.
The verification can be accepted by both Freddie Mac and Fannie Mae and makes the loan eligible for representation and warranty relief in place of a cumbersome and difficult manual loan documentation process. With more lenders and borrowers adopting digital mortgage experiences, moving from a largely manual process to a more digital one creates an enhanced overall experience.
“With MVS integrated into Encompass® and Encompass Consumer Connect®, our goals are to reduce risk for lenders, create an overall improved consumer experience, and ultimately simplify the mortgage process for everyone by helping borrowers prove their creditworthiness in a more robust, yet streamlined way,” said Finicity CEO and Co-founder Steve Smith.
For more information about ICE Mortgage Technology Encompass platform and Encompass Consumer Connect visit: https://www.icemortgagetechnology.com/encompass.
ICE Mortgage Technology combines our innovation and expertise to automate the entire mortgage process from consumer engagement through loan registration, and it handles every step in between. ICE Mortgage Technology is the leading cloud-based loan origination platform provider for the mortgage industry with solutions that enable lenders to originate more loans, lower origination costs, and reduce the time to close, all while ensuring the highest levels of compliance, quality, and efficiency. Visit icemortgagetechnology.com or call (877) 355-4362 to learn more.
About Finicity
Finicity, a Mastercard company, helps 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 for 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.
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds, and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital, and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics, and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process from consumer engagement through loan registration. Together, we transform, streamline, and automate industries to connect our customers to opportunity.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 — Statements in this press release regarding ICE’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE’s Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 4, 2021.
Finicity’s Mortgage Verification Service is the one-touch, GSE-accepted digital verification of assets, income, and employment that shortens the time it takes to originate a mortgage.
According to ICE Mortgage Technology, as of June 2021, the average loan closes in 49 days. Verifying assets, income, and employment digitally can save up to 20 days on that time, helping lenders close loans in less than a month.
What makes MVS unique, and how does it help lenders? Download our MVS infographic to learn more.
MVS uses data from bank account, payroll provider, and pay stub, three separate data sources, to provide the most accurate verification as well as the broadest coverage and highest success rate of income and employment verification solutions.
MVS is a single-vendor solution approved by both Fannie Mae and Freddie Mac for use in verification, one of only two such solutions on the market.
MVS provides a one-touch experience for borrowers for verification in only one session, so they don’t have to hassle with a second time. Once the verification is permissioned, it’s also available to be refreshed if the lender needs to update the information without bothering the borrower.
If you’re ready to explore how to incorporate MVS into your asset, income and employment verification for mortgage lending, sign up for a demo today.
Tomorrow’s lending experience runs on consumer-permissioned data. Credit scores and self-submitted details have provided a framework for easy personal lending and even some business loans, but tomorrow’s lending will utilize consumer-permissioned data. This data comes directly from bank accounts, and this process increases accuracy and improves the experience for borrowers when used to augment credit scores and verify self-submitted information.
This transformation into consumer-permissioned data use in credit-decisioning is already happening today thanks to Finicity’s leading open banking data access connections direct to bank accounts. Where’s lending with data headed? How will it benefit lenders and consumers? Download our open banking lending infographic to learn more.
Introducing consumer-permissioned financial data from Finicity’s open banking platform to lending makes a difference in a number of ways.
This data allows for simple, personal experiences to capture customers and build trust. It also reduces friction and allows consumers to apply for loans across the devices they use.
One interaction with your borrower can tell a complete financial story using data from different accounts for real-time insights without needing to wait to confirm borrower-submitted details.
Empowering experiences provide direct benefits to the customer by allowing access to their financial data, control over how it’s used, and the ability for them to benefit from its use, such as with obtaining a better loan product or lower interest rate. Additionally, this new innovative service provides lenders a competitive edge.
A more secure experience provides clear reasons for consumers to test the waters of new lenders or new products. Knowing your data is safe makes trying new lenders, partners, or products more likely providing a boost to innovative, new products by answering a big question for many people — security.
If you’re ready to explore how data can positively impact how you lend to your customers, sign up for a demo today.