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

In an interview with Insider Intelligence, Steve Smith unpacks why open banking is a valuable tool for consumers, fintechs, and incumbents alike—and where it’s headed next. He breaks down the regulatory landscape and identifies where regulators can take the baton from the industry to keep consumers safe. He also gives his take on why consumers have a hard time trusting fintechs with their financial data and the role that open banking and APIs more generally will play in web3.

Read the full interview here.

Buying a home in today’s market is challenging from start to finish for many consumers. Reduced supply, increased demand and competitive bidding wars riddle the path to homeownership. The struggle doesn’t end there, according to recent homebuyers who responded to Finicity’s 2021 Mortgage Survey, which is available now. 

Many are still struggling with the decades-old headache of collecting mountains of paper documentation for underwriting. This antiquated holdover from a bygone era continues to add unnecessary stress and anxiety to processing, underwriting and closing a mortgage.

To get a better understanding of what borrowers are going through in this white-hot market, Finicity surveyed over 1,000 consumers who have purchased or refinanced a home in the last year and compiled the insights into High Demand, Higher Hurdles in the Mortgage Market, which details these pain points and provides a window into how the mortgage lending industry can evolve to meet the shifting needs of today’s homebuyers and refinancers.

Big Opportunities for Change in the Mortgage Process

Many consumers approach their home purchase with excitement and, understandably, a bit of trepidation. But while today’s homebuyer grits their way through a challenging shopping and bidding environment, any excitement can quickly turn to angst when they are met with a cumbersome and laborious mortgage loan process.

Refining the mortgage process means identifying and removing pain points for homebuyers. Our survey uncovered that 89% of borrowers believe the loan application experience was as stressful if not more than the home buying experience itself. Eliminating friction during the mortgage process is a critical step in building loyalty and meeting the expectations of today’s homebuyer.

Many homebuyers were surprised to learn that physical documents still make up a large portion of mortgage documentation. Seventy-two percent of respondents were surprised or very surprised at the volume of paper that’s still used during the mortgage process. 

Going Digital Means Reduced Stress

The majority of today’s homebuyers are accustomed to navigating life digitally, and the mortgage experience should align with this.

Only 12% of respondents indicated that they were uncomfortable permissioning their personal financial data to a lender. Meeting consumers where they feel most comfortable helps save them time and reduces unnecessary stress. 

Borrowers who 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.

Embracing Change

For many industries, the COVID-19 pandemic has been the catalyst to transition to digital solutions. While the mortgage industry has started down this path as well, there is still work to be done. Reducing friction through digitization of manual loan documentation and minimizing the document-chasing between lender and borrower is a key component of this transformation.

Consumer-permissioned data delivered through our open banking platform allows for digital verifications throughout the mortgage process, significantly reducing the time it takes to close. In today’s mortgage landscape, this can mean the difference between consumers stepping into their dream home after a quick, seamless loan process, or losing out to a buyer who is using digital lending for a quick close.

The complete findings are now available in Finicity’s most recent mortgage survey, High Demand, Higher Hurdles in the Mortgage Market.

Banking at the speed of now requires financial institutions to process payments quickly and maintain compliance. Today, open banking lets Financial Institutions (FIs), payment platforms and fintechs deliver payment services with the speed and ease that consumers now demand. 

But many organizations still rely on outdated methods to process payments, forcing consumers to wait. They could and should be supporting lightning-fast, real-time payments, recurring payments, refunds and disbursements. Practices like micro-deposits and pre-notifications for account opening and funding or payment processing jam up the experience. Delays around bank account details and balance verification don’t help, either. 

The stakes are high. According to one industry report, twice as many consumers walk away when faced with slower methods. “The abandonment rate for FIs that do not require micro-deposits for ACH funding is 13%–in contrast to 27% for those that do.” 

Dissatisfied customers can overwhelm customer support channels when these methods fail. Even worse, scammers love to exploit these older practices to gain rogue access to accounts. 

Enter: Finicity, a Mastercard company. 

Our open banking platform meets the needs of digital consumers and the digital payment ecosystem by enabling clients to verify the essential account details, owners, and balances that are needed to transfer, get paid or set up an account with confidence.

Digital payments just make sense. One study shares that close to three-quarters of consumers have or would connect their bank accounts for digital payments. In another survey from PYMNTS of supply-side organizations, the majority (63%) said they prefer being paid electronically, specifically via ACH. Just one-quarter wanted to get paid by paper check.

Read more: Learn how to harness the power of open banking for secure, rapid, delivery of consumer payments – Download our free eBook now!

Our platform relies on open banking innovations to support a wide range of digital payment experiences for FIs and consumers. A few popular use cases include:

Move Money With Confidence

We designed our platform behind a driving principle: Pay Confidently. 

This means reliably fast data and superior, API-based connections with leading financial institutions. We layered in added intelligence and deep learning which can help to mitigate fraud while reducing payment failure and pesky NSF fees. 

Each year, more of the world’s leading banks, fintechs, and payment platform providers deliver faster, more secure consumer payments with the power of open banking.

We look forward to seeing how you’ll use open banking capabilities to exceed your customers’ expectations. 

Do you have a question about how open banking can improve payment enablement? Send us an email or download our PDF overview. 

Ready to see open banking in action? Request a demo online.

Co-founder and former CEO of Finicity Steve Smith and other CEOs with experience across the global payments spectrum offer up their views on the current open banking landscape in the United States. Should U.S. policymakers and regulators take action to push it beyond market-driven moves, such as bilateral agreements between companies?

Read more here.

In the world of real-time ACH payments, open banking instant account verification is quickly making the old, manual methods look like the rotary phone. Why use an unreliable relic, when there’s a better, more secure, faster innovation? Throughout the years, financial institutions have relied on voided checks, manual routing and account number input by the consumer and microdeposits. These require days or weeks to complete, and are prone to errors or fraud.

More recently, data consortiums were used to confirm customer-submitted account details, checking them against existing databases. This assisted with clearing Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements. Mixed-solution authenticators provided a fraud risk rating for the account being verified, but their information was sometimes based on older data. At best, these methods yielded only a sensible prediction of risk. With FinicityPay, failed payment risk is mitigated by obtaining account owner and balance insights prior to processing.

Previous methods of verification were rife with processing delays and lost revenue due to failed payments and fraud. Open banking APIs and platforms are the next evolution of payments. Faster, more secure and more transparent.

Open Banking Platforms Create a Real-Time Network of Connections to Financial Institutions

Using secure, consumer-permissioned access, financial institutions and vendors now get instant account balances and data from a consumer’s bank. Owner details, addresses, account and routing numbers and real-time balances are all immediately available. They can be scrutinized before authorizing payments on an open banking platform. Account access credentials are packaged into a “token” that can be passed to a third party. It yields no meaningful data if intercepted and hacked. This new level of security is spawning a much larger, more niche-oriented market of financial services providers and app developers. Open banking applications allow users to move money at the speed of the market. 

Open Banking Opens Up Payment Enablement and Authentication

All of this has been revolutionary for consumers. Their mobile phones are full of financial services options powered by open banking, and they’re adopting them at a rapid pace. With a few taps on the screen, a user can grant permission to third-party apps and platforms, without having to type in account or routing numbers. The app or service the user wants to access is up and running with a full package of information pre-loaded. Secure, real-time ACH payments can be made within moments of installing and setting up an app. With the richer level of insight that’s available through consumer-permissioned data, developers are giving consumers a wealth of new options for managing, spending, and borrowing money. This is industry-changing innovation. It’s giving consumers more flexibility and ownership of their financial position than ever before. 

Open Banking Simplifies the Payments Experience for Consumers

While authenticating account details, ownership and current balance can streamline your payment process, it also reduces the hassle of setting up accounts and making payments for your customers. Enhancing their experience, especially when setting up payment is one of the first interactions they have with you.

Learn more about Finicity’s data solutions for verifying account details, account ownership, and check balances here.

How people pay bills, shop online, open accounts and experience their finances is evolving quickly. Fintech innovations are altering the way consumers think about and relate to money. The COVID-19 pandemic has only accelerated the digital transition. The shifting reality of how finances are managed is underway. Bank branches and paper checks are an afterthought to a growing number of consumers. Eight in 10 Americans are linking their bank accounts digitally, using these connections to automate everyday tasks like paying credit card and utility bills, according to Mastercard’s new study, The Rise of Open Banking. 

The sea change in consumer expectations is already in motion. With every leap in speed, security, and ease of use, open banking apps and services usher in the next generation of finance. The advent of the internet has trained the human mind to process far more information than in the past, and to do it quickly. When it comes to their personal finances, people want the real-time data whenever they want it. Save them time and money, and enhance their financial health, or they won’t adopt your platform.

1. Saving More Time, Creating Less Work

Just a handful of years ago, a group of friends out to dinner would have to all reach into their wallets and purses, chip in cash, write a check or stack a pile of credit cards on top of the bill, and wait for the server to swipe them all. With the massive adoption and growth of P2P payment apps, these antiquated processes are quickly becoming a thing of the past. 

In real time, payments can be split between friends with a few taps on the mobile screen. Digital wallets allow a busy shopper to tap their phone against a payment terminal and breeze through checkout at retail stores. Encrypted credit card info auto-populates, saving time and reducing user error when shopping online. The countless hours these new processes save is the biggest driver for adoption. 59% of study respondents cited this as their number one motivator. 

2. Saving Money

65% of Americans don’t know how much money they spent last month. Saving doesn’t come naturally to many people, and our emotionally-charged relationship with money certainly doesn’t help. So much emphasis is placed on new and better ways to spend that saving becomes just a lurking afterthought. Open banking innovators are addressing this huge segment of consumers with a rich slate of apps and services. AI and machine-learning engines do the heavy lifting of savings calculation, goal-setting and projection, raising the level of users’ financial literacy. 42% of Americans surveyed wanted help saving their money, and trust technology to give them the advantage they need.

Open banking technology powers some of the most effective fintech apps for saving money, using artificial intelligence and machine learning to take a deep dive into spending habits and cash flow. Some even gamify finances, injecting the process with fun and some healthy self-competition. 

3. Improving Financial Health

Open banking and AI make a powerful duo. Open banking connections to third-party financial service providers are flipping the data experience to favor the consumer. Anyone can download a financial management app, grant permission to access their bank accounts, and be guided easily through opening accounts, investment suggestions, and loan applications. This happens in moments, not hours or days. 

Fintech AI systems process massive amounts of data in milliseconds. App and service developers can leverage this power to analyze a consumer’s subscription payments, utility bills, direct deposits and loan obligations near-instantaneously. Machine learning and AI engines can use this rich, real-time data to suggest smart financial planning and investing options. It’s a growing expectation that has to be accounted for in app development. Exposure to the open banking ecosystem is raising the level of consumer financial literacy, and it’s happening quickly. As a result, financial decision-making can improve dramatically. Consumers are seeing the positive results of adoption in their bank balances: 35% of respondents to the survey say improved financial health is why they use fintech. 

4. Automate It!

No one leaps out of bed in the morning in wild anticipation of paying the electricity bill. Mundane, time-consuming financial tasks don’t actually have to absorb anyone’s time. Open banking allows easy setup and maintenance of connections to financial institutions, allowing consumers to set a variety of monthly payments and subscriptions to auto-pay. With the average consumer spending $273 per month on a mixed bag of small payments, automation saves a considerable amount of time, and it ensures payments aren’t missed. U.S. households average nine separate payments per month just for entertainment subscriptions. Add gym memberships, retail subscriptions and utilities to an ever-growing list of small, recurring transactions, and the benefit of utilizing technology to manage these payments becomes obvious. 26% of North Americans surveyed are attracted to technology to help them automate these little chores, freeing up their time for more important concerns. 

5. Getting a Better Holistic View of Finances

Gone are the days when consumers used file drawers stuffed with manila folders, neatly tabbed, in an attempt to keep checking the pulse of their financial health. Open banking data has spawned a wealth of apps and services that give consumers and small businesses an up-to-the-moment picture of their finances. Open banking connections across accounts and across financial institutions power the apps that consumers are using to take their financial temperature. The growing expectation is that individuals should be able to see what their money is doing and where it’s going, 24 hours a day. 18% of North American users said that tracking their money was a major driver for fintech adoption. 

To drill down even further into the use cases driving consumers to fintech, read the full study here.

Infrastructure-as-a-Service platform FinTech Automation (FTA) signed an agreement with Mastercard company Finicity on Tuesday (Jan. 4) to access consumer information for secure account validation and ownership when opening new accounts.

Consumers can now connect their primary accounts to deposit funds into a new investment account, which will minimize risk by verifying the owner of an existing account.

Read more here.

Financial services are going through a rapid digital evolution to keep up with the needs of digital-native consumers. The percentage of Americans who use fintech services daily rose from 37% in 2020 to 48% in 2021. 

The first step in adopting a new fintech app is to set up a new account. Here is where you can lose those digital native consumers. Slow and time-consuming background checks, eligibility requirements, ACH microdeposits and inadequate credit scores are all major sources of friction and can cause abandonment of the account setup process. Integrating Finicity’s open banking data can reduce friction through secure account verification and eliminate frustrating delays. 

“Secure account opening is crucial for financial institutions today. Open banking data can reduce the friction and mitigate the risk associated with digital account opening,” said Andy Sheehan, President and COO, of Finicity, a Mastercard company. “FTA’s integration of Finicity’s open banking platform will further empower consumers to take charge of their financial data and financial futures.”

FTA Partners with Finicity to Add Secure Account Verification and Automated Personal Financial Management Capabilities to IaaS

The agreement with Finicity provides FTA’s customers access to consumer-permissioned account data for secure account validation and ownership when opening new accounts. This allows consumers to connect their primary account to deposit funds into a new investment account. It signals the end of tedious validation methods like micro-deposits, which can take days to clear, and can minimize risk by verifying the ownership of an existing account.

“Integrating consumer-permissioned data from Finicity’s open banking network streamlines account opening and funding, making it safer, easier and faster, which reduces account opening abandonment for our customers,” said David Park, Founder and CEO of FinTech Automation. “It’s a great example of how open banking can improve banking and personal financial management offerings and their customer experience at the same time.”

FTA will also utilize consumer-permissioned data from Finicity’s open banking platform to give consumers a holistic picture of their finances across all their financial and wealth accounts by allowing customers to download all transactions from their wealth account into their personal financial management tool.

Fintech Automation’s Unified Business Platform

The first era of fintech dealt with helping consumers more effectively visualize what is happening with their money across their different account types. In essence, building a better user experience and user interface on top of each of the specific accounts, providing a more user-friendly experience to customers.

While digital apps and interfaces may have changed how consumers experience financial services, the underlying systems facilitating those products and services have not advanced. To meet this growing market opportunity, FTA and its open-loop FinServ Infrastructure-as-a-Service platform offers financial institutions and other fintech companies a banking, payment and wealth management core system of records, bridging multiple financial verticals.

 The FTA platform can operate across several financial verticals while bearing the innate complexity, reducing the cost and difficulty of building and deploying financial applications. The platform will allow financial institutions and fintech companies to embed additional services into their existing offerings, providing a better customer experience and an opportunity to drive more profitability.  

 This enables FTA’s B2B customers to shift the burden of technology to FTA, focusing instead on relationships with customers and offering new types of services. A fast, easy, secure way to launch financial services such as banking, cards, wealth management and payments is critical to increasing customer engagement and revenue.

 FTA’s platform offers a one-stop access point to various account types and services through a single point of entry. It also offers regulatory, compliance, and KYC/AML uniformly, while offering a suite of best-in-class providers through a single, secure integration with Finicity’s open banking platform.

Using consumer-permissioned data from Finicity’s open banking platform, FTA is helping FamilyWealthTM, a startup personal financial management and digital advisory firm, to power its growing range of digital financial services that leverage artificial intelligence and automation algorithms to make better financial decisions for their users. FamilyWealth will analyze data to understand users’ spending habits, financial goals and risk tolerance, building a data profile that is used to enhance decision-making while maximizing financial performance. Finance features will include automatically moving funds to the highest-yielding accounts, automating portfolio allocation or paying bills. Key to FamilyWealth to automate finance are improvements in AI and data accessibility, such as financial data including debt, income, spending and investments. 

 Visit FintechAutomation.com for more information about their Infrastructure as-a-Service platform. Or request a demo from a Finicity representative today. 

Bob Schukai, EVP of Technology Development, New Digital Infrastructure and FinTech at Mastercard and other prominent execs recap 2021’s accelerated digitization in the payments space. The significant development and strengthening of Mastercard’s digital infrastructure foundation ensures that evolving consumer demands can be met. The nuances of new use cases like NFTs and cryptocurrencies are discussed, along with a forecast for 2022.

Read the article and download the eBook here.

Finicity CEO Steve Smith was nominated for leadership, integrity, performance, team-building and his contribution to the advancement of the industry. Finicity’s innovative relationship with TomoCredit is up for the Most Promising Partnership award.

It was record-breaking year for the fintech industry. After an excellent year for valuations, IPOs, startups, and digital finance innovation, LendIt is celebrating these finalists. The 2021 winners will be announced at the year-end award ceremony and Dinner on Feb. 8, 2022, in South Beach, Miami. Industry awards are a featured part of the LendIt Nexus Dealmakers conference.

Check out the article and full list of nominees here.