The COVID-19 pandemic and resulting economic downturn have led to mounting financial uncertainty and anxiety for many Americans. They have lost jobs at staggering rates, and of those who were fortunate enough to keep their jobs, many still saw an impactful reduction in their income. But a closer look at these losses unveils a much more dire situation for American families with the lowest household incomes, who are already financially vulnerable. 

In our recent survey report, Combating the Emerging COVID Credit Crisis, we surveyed 2,000 US consumers about the financial impact of the pandemic. The survey found that 55% of Americans have had their jobs or income impacted by the economic downturn, but when we examine the responses of those with household incomes below $50,000, that number jumps to 62%, showing that the lowest income Americans have taken the hardest hit.

The job and income loss is leading to many of those affected already falling behind, with 64% of all those who have been impacted saying they’re struggling to keep up with bills and payments, but further analysis shows the lowest income Americans are feeling this pain most acutely. The survey found that 73% of those making below $50,000 per year say they’re struggling to keep up, compared to 57% of those with income between $50,000 and $100,000, and only 54% of those with income over $100,000 who said the same. 

To compound the issue, the people who are taking the greatest financial hit from the pandemic and resulting recession also expressed the greatest anxiety about their credit, with 68% saying they’re worried their credit will be negatively impacted, compared to only 52% of those with income over $100,000. 

In addition to the financial impact and credit anxiety, the lowest income Americans also signaled lagging financial literacy. Only 51% of those with a household income under $50,000 said they know what financial information lenders are using to determine their creditworthiness, compared to 61% of those who make between $50,000 to $100,000, and 68% for those who make over $175,000. 

With over half of respondents essentially in the dark about their financial data, showing the greatest concern over their credit health, and struggling under the weight of job and income loss, the time has never been better to examine the changes needed in the credit-decisioning process. Financial inclusion will come when all consumers are empowered with control and visibility into their own financial data, and how it’s used by lenders when they evaluate creditworthiness. For consumers and lenders alike, the COVID pandemic has put enormous urgency on the need to reevaluate how financial data is used in the credit review process.

For this and more on the financial impact of COVID-19, download our new report. 

Loan origination isn’t just about account numbers and closing balances. Ultimately, the lending process is about providing borrowers with a great customer experience. Lending professionals have four main objectives: 

1. Identify potential borrowers.
2. Obtain and analyze borrower financial data.
3. Advise borrowers about lending options and decisions.
4. Move borrowers through the loan origination process until they have the funds they need.

Finicity’s new AssetReady report was designed to help lenders achieve each of these objectives with maximum efficiency. This digital asset verification solution uses high value data to deliver accurate, real-time verification in seconds. And this means better decision-making for lenders and borrowers alike. In the end, access to this data saves time, improves overall workflows, and makes for a better borrower experience.

Critically, the more information a lending professional has at the beginning of the loan origination process, the more they’ll be able to provide their clients with meaningful insights into their financial situation and possible lending options. And once your borrower is ready to move forward with their lending application, you can easily shift from the AssetReady report into Finicity’s Verification of Assets and Verification of Income and Employment solutions. All from one source. All with the best data. 

The Return on Investment: Digitizing the Loan Origination Process

What does this return on investment look like? A larger volume of prospective clients, reduced closing times, increased closing volumes, and improved customer retention and referrals. By using AssetReady, lenders are able to better qualify customers up front. With the efficiencies created by an entirely digital process, lenders can expect savings in both time and costs. The process is faster and requires less manpower and that drives profitability. 

This digital process also boosts borrower satisfaction. Today’s consumers expect total convenience. They want their loan application to be simple and intuitive. They require proactive service, personalized interactions, and connected experiences across multiple channels. 76% of customers say it’s easier than ever to change service providers. There is no shortage of options, so, like Goldilocks, they will just keep searching until they find the perfect fit. 84% of customers report that they crave personalized interaction. They don’t want to feel like just another invoice number.

If service providers fail to meet these demands, they will be left behind. The streamlined AssetReady process makes it easy for borrowers to submit their financial information. They can permission use of financial account data anytime, anywhere. Not to mention, it also enables lenders to engage with borrowers in meaningful and relevant ways. This all adds up to happy customers and happy customers become repeat customers who are willing to refer others down the road.  

Why the Right Data Platform Provider Matters  

Paul Parisi, President of PayPal Canada, explains that “Big breakthroughs and progress can’t happen in silos. Working collaboratively with partners – within an organization as well as within your ecosystem to solve business problems – generates the kind of energy that fuels growth, innovation and creativity.” 

But this growth and innovation only happens when partners foster trust, communicate openly, and deliver their best. Because partnership is so important in business, we wanted to share our approach to partner relationships here at Finicity.

• The Best Data: Our data is exceptionally accurate. We use it to supply our partners with an innovation platform to compete in and disrupt markets, envision new business models, and deliver exceptional experiences using consumer-permissioned financial data. Our direct data agreements with leading financial institutions mean reliable connections, enhanced informed consent for consumers, and access to the very best data. 
• Commitment to Consumer Control: Finicity is the only registered CRA currently in the data access and insights/digital verification space. We take the consumer data privacy and security very seriously. Our standing as a registered CRA ensures transparency and borrower control of the lending process. 
• Smart Onboarding: Our training resources, step-by-step guides, and personalized support make it simple for new partners to integrate our solutions with existing platforms. They have everything they need to successfully use and implement Finicity products. Beyond that, our customer-facing products have been carefully designed to guarantee a simple, streamlined borrower experience. 

Ready to learn more? Register for our AssetReady webinar on Thursday, Nov. 7 at 2 p.m. ET, or schedule a demo today. Here’s a product brief and a guide to reading the report to get you started. 

In March, Ellie Mae released the findings from its annual Borrower Insights Survey. The results of this survey of 2,000 renters and homeowners deliver a valuable window into the motivations and experiences of borrowers. Specifically, this particular survey highlights areas where communication between borrowers and lending professionals can be improved. Let’s take a look at some of those numbers.

How do digital options impact borrower decisions?

According to this survey, the borrower demand for digital options across the mortgage lending process is up 18 percent since 2017. Not too surprising given the digital trends across industries. Just look at retail commerce. In 2016, 1.32 billion people bought goods and services online. By 2021, that number is projected to reach 2.14 billion. In other words, about 164 million people become digital buyers each year. 

Perhaps because of this larger trend to go digital, 50 percent of borrowers surveyed said that they chose their lender based on the availability of an online application or portal. They want the convenience of doing everything on their phone or personal computer. After all, they can do all of their other shopping and spending online. Why not manage their mortgage application online, too? 

What digital options do borrowers use most?

Of those surveyed, the overwhelming majority will take advantage of digital tools when they are part of the lending process. For example, 83 percent of borrowers will use an online portal to electronically sign and notarize documents and 80 percent will use an online portal to upload the various documents required for verification and approval. Even this process remains tied to analog document handling. A truly digital verification process, like that powered by Finicity’s verficiations solutions, results in increased customer satisfaction because it makes it even easier. People also appreciate the convenience of mobile solutions with 78 percent reporting that they used their lender’s mobile app. 

Where do borrowers experience friction in the digital lending process?

About 25 percent of those surveyed reported that they have started an online mortgage application that they later abandoned or completed offline. Some of those borrowers were likely window shopping and weren’t yet ready to complete their application. Considering the high stakes of mortgage borrowing, it makes sense that this number is relatively low compared to rates of abandonment in other industries. Looking at retail numbers, it’s clear that smaller purchases result in higher rates of transaction abandonment. In 2018, about 75 percent of online shopping carts were abandoned. It’s easy to change your mind about a pair of shoes or a new area rug. Filling out a mortgage application involves more thought and commitment.   

Even when online mortgage applications are completed, about half of those surveyed reported that it took multiple sessions to work through the process. This is important because about 60 percent of people that abandoned online applications did so because the process was simply taking too long. And 20 percent of those borrowers went on to choose a new lender. When customer expectations aren’t met, today’s marketplace makes it easy to move on to a new provider. This is where a true digital verification process can make a huge difference. This process avoids potential barriers by going straight to the financial institutions that house financial data. No more uploading documents and trying to make sure everything is in the right place. Streamlined and frictionless, this process increases adoption and significantly reduces borrower abandonment. 

What about offline lending support?  

While it might seem counterintuitive, according to the Borrower Insights Survey, 79 percent of millennial borrowers said that they frequently meet with their lenders in-person. That’s compared to 61 percent of baby boomer participants. Millennial borrowers want more frequent communication and interaction with their lenders to support them across all channels.

Joe Tyrrell, executive vice president of technology and corporate strategy for Ellie Mae, discusses the need for lenders to meet this communication expectation. “As more Millennials enter the housing market,” he explains, “it will be imperative for lenders to prioritize the use of all available technologies, digital tools and communication channels to foster strong borrower relationships throughout each step of the loan lifecycle – from the moment they are interested, all the way through to closing.” 

Finicity provides the data access and insights solutions that help lenders meet and exceed customer expectations. Our digital verification reports make it simple for borrowers and their loan officers to access financial history information. And they are exceptionally accurate. Not only that, but by removing mortgage application roadblocks and paperwork, our solutions drive customer satisfaction and free up resources so that loan officers can focus on their customers. 

Today was the public launch of the Financial Data Exchange (FDX). We’re thrilled to be a part of this industry organization that has broad representation across the financial services ecosystem.  The group has set out on a mission to create a universal standard for data sharing and promote its proper implementation.

Today’s consumer is using their personal financial data more and more. Access to their data, an offshoot of the digital-era, has created an opportunity for them be more informed, personalize their finances to their desires and needs, and improve their financial choices.

With many different organizations providing services using consumer-permissioned data, it’s a good sign to see financial institutions, aggregators, developers, and even other industry organizations coming together in the interest of the consumer and the secure use of their data.

While many individual organizations have made data sharing a priority, existing models and agreements don’t fully address the gaps that result in security concerns for consumers and industry players alike due to a lack of a standard. Forming FDX shows that the industry takes these opportunities seriously enough that we aren’t waiting for regulations or other governing bodies to determine what’s best for data sharing relative to consumers.

Data sharing is an innovation engine. By coming together as an industry to address the technical requirements and data sharing framework, we believe that innovation engine will run much faster and go much further. Opportunity abounds.

All 22 members of the founding board have been instrumental in helping put the needed work into this effort, to show that it matters, not only to current members, but to the industry as whole. Simple, secure access to data for consumers and businesses should be an industry standard that will reduce complexity and increase collaboration and act as a foundation for the next generation of financial products and services.

This has been a two-year process whose ideas started even farther back. Finicity sought out partners to help collaborate in such an industry-wide effort.  We were excited to find like-minded partner organizations who rallied around the concept to make FDX a reality.

FDX will build on standards that have existed in the market for years, centered on the Durable Data API (DDA).

While today’s announcement is a culmination of a lot of work, it’s just the beginning. We see FDX as freeing our industry from discussing the how of data sharing and instead allowing it to focus on further empowering the consumer to better their financial lives.

HousingWire just announced their 2018 Tech100, and we at Finicity were very happy to be included. And while being on the list is a highlight for us, what we are really excited about is the future of lending. The HousingWire list is a great reflection of where the world of mortgage lending is headed. Simply put, it’s going digital.

What Does the Future Look Like Today?

The future will be about speed, convenience and accuracy. With a digitally driven process both lenders and borrowers will have a radically improved experience. One that will be much faster and more pleasant. And because a digital process will have access to more and better data, decisioning and insights will be more accurate.

The Tech100 reflects a maturing digital ecosystem where lenders and borrowers will have everything they need at their fingertips.  Probably quite literally as access will be driven by mobility and cloud-based solutions. Finicity is a player in the ecosystem as well as a beneficiary.  Through the ecosystem, we are broadening our ability to deliver data solutions to lenders either directly through an API to their internal systems or through an LoS, PoS, or a reseller.  

The HousingWire Tech100 also highlights this interdependence of the ecosystem. Finicity wouldn’t be as efficient in delivering its digital tools without other mortgage lending ecosystem players of one type or another. Each of these digital innovators, such as Fannie Mae, Ellie Mae, Black Knight, MortgageHippo, Advanced Data and others are helping facilitate a digital mortgage experience. We’re fortunate to call many of them, as well as others soon to be announced, ecosystem partners working together with Finicity to deliver rapid verifications or even working together on new solutions.

“Finicity is rapidly moving the industry towards an all-digital verification process”

Lenders are already beginning to see a difference as they transition to digital processes and remove antiquated practices that required time, focus and lots and lots of paper. Quicken Loans is a great example of a digital innovator (or should we say disruptor). They have become the nation’s largest mortgage originator in the last quarter of 2017 thanks in part to their “end-to-end” digital mortgage solution Rocket Mortgage and a relentless focus on improving the customer experience – which they realize will be digitally driven.

Lenders and financial institutions are discovering just how liberating digital processes can be, even if they’re only using digital verification solutions on top of their legacy systems. Asset, income, and employment verification can save lenders up to 20 days of origination time, which equates to a 36.5 percent processing cost reduction according to Fannie Mae. This frees up loan officers to focus more on customer satisfaction by providing the best experience possible, while also being able to process more loans.

Finicity has not only improved the process of verifying assets – using data direct from financial institutions gathered in real-time, but it has improved the benefits of doing so by providing reports as a registered Consumer Reporting Agency (CRA) that adheres to FCRA requirements and is subject to compliance guidelines. As a CRA we provide the consumer with a channel to better understand their reports as well as a channel for disputes as needed. We believe this is important in providing the most consumer friendly experience.

Finicity is currently the only data aggregator who is an authorized report supplier for Fannie Mae Day 1 Certainty verification of asset reports. Using validated digital verification reports also protects lenders from reps and warrants when used through Fannie Mae’s Desktop Underwriter ®  (DU®) platform. Finicity is also an authorized Freddie Mac asset validation report provider, and Freddie Mac and Finicity are partnering on new methods to validate income from payroll deposit data from bank statements.

What’s Next?

The next steps for Finicity include continuing to broaden the availability of digital verification reports in the mortgage lending ecosystem as well as diversifying its verification solutions. Finicity’s verification of income reports are on their way to pilot for Fannie Mae’s Day 1 Certainty. Finicity and Fannie Mae are also working on a Single Source Validation pilot that will provide asset, income and employment verification through one pull of borrower-permissioned transaction data.

The digital processes being introduced today will continue to be improved and upgraded to offer the cleanest, fastest, most intelligent data possible. Origination time will continue to drop while cost per loan will decline to make a digital mortgage the only option that makes sense for both lenders and consumers.

Fincity looks forward to pushing mortgage lending into the digital age and making it simple for everyone to receive a mortgage that is easier to close, quicker to originate, and cost-effective.  And our recognition from HousingWire demonstrates we’re on the right track.

Steve Smith, CEO of Finicity, recently spoke with Dice’s Elisabeth Greenbaum Kasson about what employers in Silicon Slopes look for when recruiting. He stressed that maintaining the right kind of culture is critical to an organization’s success.

“From a soft-skills perspective, we’re very team-oriented,” Steve explained during his interview. “You have to be able to communicate openly and transparently, and we prefer employees with diverse interests, who can be relatively fungible as the company moves and pivots.”

To read the rest of Steve’s interview, click here.