How is consumer-permissioned data driving the digital evolution in lending? In this video, Mastercard’s Executive Vice President, Open Banking, North America Markets Andy Sheehan and Tearsheet’s Zach Miller get into the details of Mastercard’s lending priorities: inclusion, transparency and security. What do they look like in practice?
The two discuss Mastercard’s strategy and role in the open banking space, and how Mastercard is building out a new network of consumer-permissioned data as a trusted source for consumers and small businesses. This network works alongside traditional payment networks and identity networks, so that consumers can put their information to work across the ecosystem, accessing the tools to enhance their financial lives.
Sheehan breaks down how Mastercard is leading the industry in creating next-generation API connections to financial institutions and overlaying its open banking network with Mastercard’s unique capability mix.
Watch the full session above and learn more about the Mastercard open banking platform.
Mastercard provides open banking technology to support leading partners across the ecosystem with safe, flexible and secure lending and payments experiences, partnering with leading players across the ecosystem. Our partnerships with Worldpay from FIS, the merchant solutions business of global financial services technology provider FIS, Zip and J.P. Morgan Payments are driving innovation in billing, lending and payment choice as we scale our global network.
Read more here.
J.P. Morgan Payments’ Pay-by-bank solution, which provides billers with the ability to allow their customers to pay bills directly from their bank account, is now live. Leveraging Mastercard’s open banking technology to enhance J.P. Morgan Payments’ ACH capabilities, Pay-by-bank offers payment choice and provides a simple, secure and frictionless experience for billers to offer to their customers.
For consumers, Pay-by-bank elevates the checkout experience, allowing billers to provide their customers with the option for a new, secure way to pay. The solution uses the consumer’s existing authentication protocols with their bank, including technologies such as biometrics, to retrieve all necessary information to execute a payment. As a result, they can securely make payments like rent, utilities, tuition, insurance, and healthcare.
J.P. Morgan Payments is a global leader, processing more than $9 trillion in payments daily, operating in over 160 countries and over 120 currencies.
Read more about this innovative new solution here.
For over 45 million Americans, the weight of unyielding student loan debt is a major cause of stress and anxiety, a barrier to homeownership and can be a lifelong impediment to building wealth. Nationwide, the total student debt level stands at a staggering $1.7 trillion. Managing that debt has proven to be complicated and inefficient for borrowers and lenders alike.
Bottom line: Access to consumer-permissioned student loan data presents a unique opportunity. Innovators can step in and create apps and build better services that leverage student loan data through Finicity’s open banking platform, to help consumers with student loan debt.
Introducing Normalized Student Loan Data
For fintech innovators, lenders, refinancers, employers and institutions of higher education, working with student loan data has been challenging. Until now, the data hasn’t been normalized. Higher learning institutions have used different naming conventions for data fields, making documentation harder to read, compare or translate. Lenders and servicers have to navigate a forest of screenshots, phone calls with lengthy hold times and unsecure paper documents in their efforts to verify loan information.
These time-consuming manual processes incur labor costs to lenders and servicers. This can cause stress, revenue loss, time loss and negatively impact the lender’s operational efficiency.
Finicity has normalized the data across data fields, vocabulary, naming conventions and applications of rules, resulting in a modernized ecosystem for all stakeholders through its open banking platform. This significantly reduces the time to market for your student loan solutions.
Innovation Platform Using Student Loan Data
Student loan data doesn’t have to be confusing or complicated. With Mastercard Open Banking (some services provided by Finicity, a Mastercard company), an optimized API call can help reduce costs, and is delivered in a formation that doesn’t require additional coding. Our API endpoints can yield the complete loan details, and the full payment details of a student loan account, including up to 24 months of transaction history.
99% Data Coverage
- Normalized, comprehensive data covering most student loan accounts. It’s delivered through our open banking platform, with connections to student loan accounts that include federal Direct Loans, FFEL & Perkins, and some of the largest private lenders and servicers (e.g. Aidvantage, Navient, Nelnet, Sallie Mae, Discover, Firstmark, Commonbond, LendKey, etc).
Quality of Data
- Extensive Loan Account Details: API calls to the Finicity open banking platform can yield a primary account, transactions by account, loan payment details, statements, account owner and much more. Data is aggregated at the three largest levels of the student loan hierarchy; student loan, student loan group and student loan account, while also being able to provide customer & institution-level details.
- Transaction lookback period has been extended to one year in order to accurately capture transaction additions or changes. Up to twenty-four months of transactions can be offered for an extended view of account history.
- Complementary data insight solutions with analytics of a borrower’s credits, debits and balances to deliver smarter credit decisioning.
- Reliable Uptime Data Monitoring: Multi-tier data integrity and student loan-specific data monitoring.
Create Winning Borrower Experiences
Innovators can quickly develop and scale new and improved financial services with Finicity’s open banking platform. Student loans are the second-largest debt sector in the United States. There is a massive opportunity to develop new apps and services to help individuals with student loan debt. Through partnering with our clients, Finicity’s open banking platform is powering solutions to help over 45 million Americans who carry student loan balances.
Some of the ways innovators can upgrade the borrower experience, using permissioned student loan data:
- Create frictionless onboarding and account setup for borrowers to apply for loans, set up accounts, manage repayment and distribute funding to students.
- Better data for better credit decisioning. It’s pretty simple. Student loan borrowers want a better experience. Lenders want the most accurate and real-time data for better credit decisioning. So we’ve combined the best data with smart insights to transform the lending experience.
- Finicity data powers leading personal finance management (PFM) apps. These tools allow borrowers to view, monitor and manage their debt in near real time by pulling smart, categorized and permissioned loan data into the app. If borrowers can easily understand their financial position and repayment options, they may reduce stress and more effectively manage their debt.
- Attracting and retaining the best talent in today’s job market is a challenge for any company. Leveraging permissioned student loan data, some employers are taking advantage of the SECURE 2.0 Act, creating benefits like 401k accounts that match student loan payments and direct matching of student loan payments back to the student loan.
- By using the account details endpoint, it’s possible to verify that a student is enrolled in at least half-time coursework by the National Student Loan Data System. Using this data, a rich field of possibility opens up for student-specific benefits. Discounts, rewards and loyalty programs can be built specifically for current students.
- Even the more administrative aspects of student loans can be modernized by open banking technology. Student borrowers can be offered the ability to easily and securely apply for federal programs like Public Service Loan Forgiveness or an Income-Driven Repayment plan. No wading through W2s, paystubs and long, frustrating calls to student loan servicers. Quick and secure.
Step Into the Future
Break out of the spider web of paper documents, screenshots, phone calls and mismatched data. Replace countless lost hours of productivity with optimized API calls that offer the comprehensive, relevant, normalized data to build solutions on.
Innovate with us to create knowledge-based services that empower students, so they can manage, consolidate, refinance and repay their obligations with the level of transparency that they deserve.
A rapidly changing digital landscape
While speed and convenience are crucial in today’s financial innovations, they have to be paired with security. As financial apps and services become more digital, so do the fraudsters who are hard at work trying to pose as legitimate consumers. The spike in identity fraud has become an expensive problem, costing consumers, merchants and financial institutions billions of dollars. In 2021, nearly 42 million Americans fell victim to identity fraud. In that one year, fraudsters made off with some $52 billion through identity scams.
As the exponential growth of digital banking and services has moved more transactions online, fraudsters’ methods have evolved to take advantage. A recent report published by Aite Novarica, Key Trends Driving Fraud Transformation in 2021 and Beyond, showed that 64% of financial institutions were experiencing higher rates of account takeover (ATO) fraud since the onset of the COVID pandemic. According to a 2021 survey of 110 fraud and loss prevention decision makers at fintech firms, 46% of fintechs report that ATO is their most prevalent problem.
Fraud risk can increase when consumers are opening accounts and documenting identities digitally. According to research from Aite-Novarica, almost a quarter of checking account applications filed online in the first three quarters of 2022 were fraudulent, as were nearly one in five online credit card applications.
Open banking and identity networks work in unison to cut down on fraud
In response, financial service innovators are loading up on new tools capable of spotting and preventing fraud in real time, like the integration of identity and open banking solutions. Mastercard Open Banking allows consumers to safely share their financial data to verify account ownership and facilitate transactions, and now we have integrated open banking with our identity network to make sure participants in transactions are who they say they are.
Mastercard can deliver instant identity verification, spotting compromised identities that manual verification may miss. Mastercard’s Identity and Open Banking networks deliver deep insights into the customer’s identity by analyzing relationships between and among the individual pieces of account owner data. For instance, identity network analysis keeps track of how often a name is linked to a phone number or email address.
Open banking also helps providers create low-friction customer experiences. The technology enables them to:
- Reduce manual paperwork
- Shorten turnaround times
- Grant instant access to new accounts
Innovations to secure the future of financial services
For all the promise that the emerging world of consumer-permissioned data holds, none of it will work without trust. Consumers must know that their money and data are safe. Consumers, banks and fintechs must trust that the system is secure and reliable enough to warrant continued investment and innovation.
Open Banking for Account Opening provides a solution from Mastercard to specifically create and protect the ecosystem and minimize identity fraud. By doing so, we’re setting the trusted foundation needed to help our partners create financial services that deliver speed, convenience and security for today’s digital commerce.
Download our e-book Open Banking Data + Digital Identity: Stronger Together in the Fight Against Fraud to learn more about the trends and solutions in combating fraud.
Digital payments are everywhere.
Whether we realize it or not, most of us have incorporated technology into our financial lives. According to the Mastercard New Payments Index, which surveyed 35,040 general consumers across 40 markets, 85% of people globally have used at least one emerging payment method in the last year.
Part of the appeal is choice and simplicity. Consumers can buy a new refrigerator with a credit card, digital wallet or using an automatic buy-now-pay-later program. And they can perform most of their financial transactions from anywhere within a few minutes.
Yet enabling consumers to bank and pay with ease is anything but simple. Banks and fintechs must carefully conceive and build payment technology stacks that are agile, user friendly and integrated with their organizations’ complex infrastructures.
Platforms like i2c can help. A global banking and payment processing platform, i2c provides financial institutions and fintechs with “building block” technology to create their own unique consumer and commercial solutions. As a partner, the company relies on Mastercard Open Banking’s consumer-permissioned data to get the right information into the right hands, safely and quickly.
In a recent conversation at the Tech Innovation Roundtable in New York, Jess Turner, EVP, Global Open Banking and API and i2c CEO Amir Wain sat down with moderator Sherri Haymond, Head of Global Digital Partnerships, to explain how their collaboration works and why it matters:
What are the key market drivers that are leading to unprecedented demand for digital payments?
Jess Turner: The pandemic changed the way people interact with services and products, as well as the way they interact with each other. That change accelerated digitization faster than we expected, providing an opportunity for innovation. People expect more from their digital payment experience. And because of that, everything we do at Mastercard —whether it’s direct-to-consumer or business-to-business products—must have a best-in-class user experience.
Jess Turner and Amir Wain in conversation at the Tech Innovation Roundtable, Master Tech Center, New York
How does the partnership between i2c and Mastercard help deliver a best-in-class experience to fintech innovators?
Amir Wain: A significant component to the digital payment experience rests in the hands of banks and fintechs. These financial institutions provide consumers with the ability to bank, borrow and buy what they need. To make those services work seamlessly, a lot of connectivity needs to happen between Mastercard and service providers like i2c. Through our platform, banks and fintechs can access Mastercard capabilities —such as digitization, open banking and APIs—to extend those services to their end users.
How does open banking strengthen i2c’s platform offerings?
Amir: The basic tenets of payments—convenience, security and ubiquity—haven’t changed. Now open banking offers the right tools to keep us up to date with the new underlying digital technology, not to mention the consumer’s desire to interact with their finances differently. Through i2c, our clients can use open banking to help sign on new customers. Like mortgages, opening a bank account has largely been a manual process, one that required a lot of paperwork for banks and customers alike. But with open banking, customers can give permission to share their data digitally.
Jess, can you share other use cases in which open banking creates opportunities?
Jess: In addition to digital payments, another powerful example is that people can use open banking to get a loan for the first time in their lives. These are people who have been credit invisible or considered thin credit, perhaps because they have a low income, or they lack a credit history. Now they can share open banking data –such as bank transactions or rent payments— to prove they are creditworthy. And that could help a consumer qualify for a loan or empower a budding entrepreneur to kickstart their idea or a small business owner to invest in its growth.
Open banking is also precise. At Mastercard Open Banking, we are working with permissioned data that we then must clean and categorize to verify things. So, if someone says they make $12.9 million dollars every year, we can check that quickly and accurately.
What are you seeing in the landscape of digital payments that you are most excited about?
Amir: I look forward to seeing consumers benefit from even more payment choice. Different people need different kinds of products that are relevant to them. Cookie cutter products are a thing of the past. Expanding what you know about the totality of a customer through tools like open banking and AI enables the development of more personalized products.
At i2c, we work with partners like Mastercard to enhance our building block technology that helps banks and fintechs offer differentiated products and elevated customer experiences.
Jess: I agree with Amir. Right now, these building blocks are critical for innovation because the world is becoming borderless. I am looking forward to seeing how our partnership with i2c will make real innovation happen at scale.
Move money with confidence. Our instant account owner and balance verification enables accurate, confident payments. Learn more here.
NEWPORT BEACH, Calif.–(BUSINESS WIRE)–FundingShield, a market-leading, cloud-based firm providing fintech solutions to manage risk, compliance and fraud prevention, has entered a partnership with Mastercard to leverage its open banking platform delivered by Finicity, a Mastercard company. FundingShield provides live, source data-based technology products and SaaS solutions that have been used to secure the funds of over $2.5 trillion in mortgage closings.
FundingShield CEO Ike Suri shared, “FundingShield has over 95% coverage of licensed service providers in the real estate, mortgage, closing and settlement space in our live repository. This partnership with Mastercard allows us to leverage its open banking connectivity of over 95% of U.S. based deposit accounts for consumer-permissioned access to real-time, bank-sourced data to expand our B2B and B2B2C payment verification solutions for clients.“
This partnership expands FundingShield’s offering within the real estate, mortgage and title sector with solutions that protect buyers, sellers, brokers, bank and non-bank lenders, warehouse lenders, and title and settlement entities. More broadly, the firm’s solutions provide risk management surrounding payments to vendors, suppliers, and other outgoing fund recipients in markets where cybersecurity experts estimate cybercrime costs to reach over $10 trillion annually by 2025.
Learn more about this partnership here.
Jorn Lambert joins Fintech Insider host David M. Brear and guests to ask “How does Big Tech shake up the payments industry?”
David, Jorn and guests discuss how partnerships, acquisitions, processes and public fallouts affect the relationship between financial services and Big Tech, how the relationship has developed, the challenges in that relationship and how the industries cross over and influence each other.
What does the future look like for Big Tech and the payments industry?
To learn more and listen to this podcast episode, click here.
Five open banking startups from around the world join new Start Path Open Banking program to access resources, expertise and tools to grow
Mastercard has launched the Start Path Open Banking global program to engage open banking startups on their path to scale, uncover unique opportunities to co-innovate and power experiences that enable consumer choice. The companies handpicked for this inaugural class – Dapi, Finantier, mmob, Mono and Paywallet – demonstrate strong synergies with Mastercard’s tech-driven approach and are committed to putting consumers and small businesses at the center of where and how their financial data is used to further access services they want and need.
During the three-month program, startups will have an opportunity to leverage Mastercard’s open banking expertise and market insights and learn more about the company’s open banking platforms through wholly-owned subsidiaries Finicity and Aiia.
“Open banking is a natural progression of how Mastercard has always embraced innovation and consumer trust with equal measure, and how we’ve remained a trusted partner for our customers. We are thrilled to launch the Start Path Open Banking program and welcome five high-growth startups from around the world to collaborate with us and accelerate open banking innovation.”Blake Rosenthal, executive vice president, Fintech & Segment Solutions at Mastercard
Learn more about the inaugural Start Path class, and access a link to apply for future Start Path Open banking classes here.
Give consumers a priceless asset: more time. Endless errands, work tasks and countless obligations big and small chip away at their free time and fill their schedules. Applying for a loan shouldn’t add to that.
To power a faster, better mortgage experience for consumers, Freddie Mac’s Loan Product Advisor asset and income modeler (AIM) continues to evolve, now including paystub data in addition to direct deposit data for income assessment. These cost-saving efficiencies provide increased rep and warrant coverage while continuing to meet Freddie Mac’s strong credit underwriting standards.
Open banking drives new mortgage capabilities
Using consumer-permissioned data from trusted third-party providers like Mastercard (with some services delivered through Finicity, a Mastercard company), direct deposit plus paystub increases the confidence in income calculations by matching digitized paystub data to borrower direct deposit history sourced from trusted providers.
Mortgage Verification Service (MVS) supports this new AIM capability by providing direct deposit transaction data paired with digitized paystub data to fuel this innovative, data-driven approach. It identifies the income stream that matches the paystub, delivering accurate risk assessment results.
Assets, income and employment verifications are vital to mortgage lenders looking to verify borrowers’ finances. However, between unreliable results, miscommunications and paperchases, verifying assets, employment and income can be cumbersome. MVS helps borrowers get faster approvals with fewer conditions up front, allowing them to close and move into their homes faster.
MVS can help lenders:
- More easily assess borrower capacity/automate income calculations
- Reduce frustrations caused by paper submissions and re-asking for documentation to verify assets, income and employment
- Remove subjectivity and manual errors in processing and underwriting
- Lower risk and probability of fraudulent activity
- Increase referrals by providing a better borrower experience
AIM leverages consumer-permissioned data from open banking providers like Mastercard to better identify pay deposits using accurate and verifiable data that meets Freddie Mac’s underwriting standards. Lenders can automate the manual processes of assessing borrower assets, income and employment. This can improve the success rates for identifying income and employment by reading information provided on a paystub and verifying income transactions within a borrower’s bank account.
“Partnering with Mastercard ensures we can deliver the best tools and insights the industry has to offer,” said Daniel Miller, Freddie Mac Single-Family Director of Strategic Technology Partnerships. “This collaboration will assist lenders with quickly and easily obtaining income verification.”
How it works
Previously, direct deposits to a consumer’s bank account would qualify for rep and warrant assessment. With enhanced direct deposit and paystub capabilities, a borrower or a loan officer can upload a paystub and the technology will match the data on that paystub with the deposits from the borrower’s asset report, boosting the rep and warranty success rates and income gross-up.
The asset report can include 24 months of direct deposit transactional history and also includes income streams identified by the open banking platform. Now, with the added paystub capability, Mastercard can add a paystub report that can provide greater success assessing income through direct deposits.
The paystub report generated through MVS has two sections; the top section includes digitized paystub information. The bottom section is up to 24 months of income stream credit transactions only. These income streams are reconciled with the deposits shown on the asset report.
As an added bonus, the reduced cost of implementing MVS is reflected directly in the balance sheet. On average, up to 7 days can be cut off the processing time for each loan. The hours formerly spent by loan officers chasing down borrower documents are invested in higher-return work activities such as marketing and sales to drive additional loans. The new AIM capability will be available to Freddie Mac-approved Sellers using Loan Product Advisor beginning June 7, 2023. MVS is available via direct integration and ecosystem integrations including SimpleNexus & ICE Technology and Order Reports Service in the Client Hub today.
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