Editor, Author at Finicity

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.

“Partnering with Mastercard ensures we can deliver the best tools and insights the industry has to offer. This collaboration will assist lenders with quickly and easily obtaining income verification.”
Daniel Miller, Freddie Mac Single-Family Director of Strategic Technology Partnerships

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

Efficient assessment

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. 

Want to elevate your efficiency while enhancing the customer lending journey?  Get started today.

Freddie Mac (OTCQB: FMCC) today announced enhancements to its ground-breaking automated income assessment tool that allows lenders to assess a homebuyer’s income paid through direct deposit to also include the borrower’s digital paystub data. This detailed information can help lenders calculate income faster and more precisely to improve loan quality, simplify the mortgage process and, most importantly, expand access to credit.

“Over the last year, we’ve consistently rolled out innovations to ensure our digital tools are improving speed and efficiency, reducing risk and, ultimately, helping us serve our mission by reaching more qualified borrowers. Today’s innovation further automates income assessment by using historical direct deposit pay patterns and current gross income from recent paystubs, which can help more families achieve homeownership.”
Kevin Kauffman, Single-Family Vice President of Seller Engagement at Freddie Mac.

This new AIM capability will be available to Freddie Mac-approved Sellers using Loan Product Advisor beginning June 7, 2023. Finicity, a Mastercard Company, is the initial service provider supporting Freddie Mac’s AIM for income using direct deposits plus paystub.

Read more about this inclusive innovation here.

Loanspark partnered with world-leading tech brands Mastercard, Middesk, and LexisNexis to enhance, speed up, and secure service delivery for its co-branded partners and their business customers.

A partnership with Mastercard enables Loanspark to leverage Mastercard’s open banking platform, with some services delivered through its subsidiary, Finicity, allowing businesses to establish direct consumer-permissioned connections with their customers’ bank accounts. This enables SMB owners to submit financial information securely and easily while focusing on running their business, and in turn allowing Loanspark to make better credit decisions by quickly verifying the borrower’s financial details. Accurate borrower information minimizes the lending risks and increases accuracy and speed of funds for SMBs.

“Small businesses are increasingly looking for greater choice in how they borrow, pay and manage their finances. Partnering with organizations like Loanspark provides small businesses with a streamlined process to gain access to capital and putting their financial worries at ease.”
Andy Sheehan, EVP, US Open Banking, Mastercard.

American Banker makes the case for smarter innovation through collaboration

Mastercard is extending its services and technology reach, including deals with JPMorgan Chase, LSEG/Giact, Stax’s CardX and Jack Henry & Associates, enabling Mastercard partners to connect merchants to payments, improve authentication and streamline transaction processing.

“For the partners, the networks like Mastercard bring their technology and processing capabilities, but I think even more crucially they bring that brand and extremely high levels of trust,” said Gilles Ubaghs, strategic advisor for commercial banking and payments at Aite-Novarica Group.

Mastercard’s multi-rail payments approach gives consumers more choice. Digital first and open banking offer an expansion of that choice, while ensuring transactions are easy and safe.

Read about Mastercard’s innovative partnerships at American Banker.

Our focus on the developer experience has resulted in a platform and APIs that are designed to meet the needs of developers throughout their onboarding and integration journey: rich documentation, tutorials, quick start guides, and technical and product support.

Mastercard Developers gets you up and running quickly with auto-provisioned sandboxes, Postman Collections, reference and demo applications and sample code. We’ve also developed an intuitive developer dashboard that facilitates easy API and encryption key management.

Find out more about Mastercard’s developer experience and access links to our resources here.

By Jess Turner, Executive Vice President of Global Open Banking and API at Mastercard

So much has changed over the last 20 years in payments that it’s hard to imagine the way the world used to be. A world where booking a trip or shopping for everyday needs required visiting a local travel agent or a grocery store in person, using paper currency for every transaction.

Today, we’ve become used to an ever-expanding menu of payment choices. Different circumstances call for different types of payments — the convenience of cards for everyday purchases and extended payment terms; bill pay and account-to-account for recurring payments; installments plans for larger purchases spread over a few months. All of these options have emerged as money has become an increasingly digital or data-driven experience, and they are only expected to become more popular in the coming years. According to the results of Mastercard’s 2022 New Payment Index Report, 85% of consumers made at least one digital payment in the past year and 93% expect to in the next 12 months. Consumers are also increasingly adopting alternatives such as digital wallets (35%), digital credit or debit cards (32%) and digital money transfer apps (31%).

We all saw the impacts of COVID when we needed to be socially distanced. Electronic payments played a key role in keeping life and the economy running. Now, those digital experiences are supercharging other activities. Open banking lets people and businesses safely share their financial data with forward-thinking organizations in order to access new and improved financial experiences like digital payments.

Going forward, consumers will likely have access to even more sophisticated payment solutions. Mastercard’s 2022 Index Report also showed that:

Nearly 60% of consumers are open to connecting their bank account to other financial services to enable automatic repayments for installment plans.
More than half of consumers have already used a merchant-specific currency, including loyalty points, store credit or “in-game” money.
Younger generations are more likely to explore payments in emerging spaces – 48% of Gen Z and millennials are interested in being able to purchase virtual products in the metaverse.

The financial data that’s now delivered from open banking was historically available to the consumers themselves – on a computer screen or a paper statement – but traditionally has been cumbersome and complex to use. Yet, with open banking, consumers can now take advantage of new services that make their daily lives easier and with higher levels of safety by opting to share their data with a host of financial institutions and third parties, ranging from billers, merchants, fintechs and digital platforms.

Open banking can help build an economy that works for everyone. Data is at the heart of every financial experience, from lending to money management to payments and beyond. It can also help the under-banked or those with thin or no credit files by providing easier access to financial data.

The world is still in the early days of open banking. As an industry, we’re connecting to additional financial data types (sometimes referred to as Open Finance) such as investments, retirement, payroll, and utilities. Financial institutions and fintechs are continuing to innovate financial experiences. In the ecosystem of payments, we’re dramatically expanding choices for consumers and businesses to pay or get paid how, where and when they want.

As an industry, we’re increasing payment choice, but we’re also optimizing these experiences. Our Smart Payment Decisioning Tools integrate consumer-permissioned data in the account-to-account payment experience, providing billers with indicators of payment success likelihood. Then enhancing payment processing options based on factors like speed and confidence. We are working with our partners to modernizing account-based payments to provide the best outcome for consumers, banks and merchants. It can ensure a higher level of completed payments, supporting stronger impact for consumers and operational efficiencies for banks. Some of these data services are delivered through Finicity, a Mastercard company.

As open banking-enabled financial services proliferate and their use impacts our daily lives, we as consumers and businesses will expect the same security, protections, and confidence we’ve come to expect of our other financial experiences. We will also see that our ability to control and safely share our data using bank accounts, Pay-by-Bank, blockchain, cards and digital wallets will be transformational to our money experience – making it easier to understand our financial fitness and gain the insights needed to make the best financial decisions.

To deliver on its promise, open banking requires the most advanced principles and technology in data privacy and security — to provide an easy and effective way to verify account ownership and identity. The open banking ecosystem is rapidly expanding, ushering in the next wave of systems that scale. Players with deep expertise are injecting further trust for even greater adoption. Early results indicate that we’ve got a bright future ahead – more choice in lending and payment types, more control over our financial data and more insights to help us achieve our financial goals. Learn more about our Mastercard Open Banking solutions for payments and account opening.

Choosing messaging apps over landlines and electric scooters instead of gas-guzzling cars, tech-savvy Gen Zers and Millennials think and experience life very differently to Gen X and Baby Boomers.  

Although their priorities on money differ, there’s one common thread that pulls the generations together: each wants to be in a healthy financial position to enjoy the lifestyle they want both now and in the future. 

Like generations before them, to reach their goals, digital native Millennials and Gen Zers are fast turning to budgeting apps such as Quicken Inc’s Simplifi which helps people stay on top of all their finances in under five minutes a week.  

Driven by consumer-permissioned data from sources including Mastercard’s open banking platform, Simplifi pulls together a wealth of data ranging from checking, savings, stock portfolios and retirement accounts in addition to the other account types that Simplifi integrates into a single, easily customizable dashboard.  

“Putting an emphasis on how we categorize data helps to optimize time spent by customers on tracking their finances,” said Kristen Dillard, Quicken’s vice president of product management. “Now users can see their investment balances, account types and holdings in real time, while personalizing the look, feel and function of the app.”  

It’s a one-stop shop that gives users a big picture view of their finances and lets them choose how they track their money, set spending plans, pay bills, and channel money into rainy-day funds.  

“People are looking to do the same basic thing across generations. They worry: ‘How do I balance my bills with the fact I need to save for retirement, or how do I make sure I spend my money on things that really matter to me, or how do I make sure that inflation isn’t getting the best of my finances,” says Dillard.  

To tune into its mobile-first Millennial and Gen Z users, Quicken looked to the fitness and gaming industries for inspiration on how to help Simplifi customers personalize their experiences.  

Younger users want ease and flexibility when it comes to budgeting. Some might like to track every dollar, similar to tracking every carb and calorie, while others might just want a view of how much cash they can spend on entertainment or travel. Simplifi lets each user decide exactly how they want to slice and dice their spending and savings each month, while push notifications warn if they max out their set budgets.   

For generations who have grown up gaming, receiving rewards for paying bills on time and reaching net worth goals makes the process fun, encouraging them to stick to their financial health plans. 

“Everybody’s approach to personal finances is unique. You have to allow customers to see that data and manage that data in a way they want,” says Dillard.  

“Younger generations expect everything to be in an app. They’re mobile first, they expect to do everything on the go, and they expect efficiency and ease.” 

With Millennials and Gen Zers less likely to take lifelong jobs with plump pension plans, Simplifi helps prepare for the future by pulling in wealth data that let users easily track multiple retirement accounts.  

There’s definitely a different mindset between younger and older generations. In 30 years, will we see the same trend we’ve seen with older customers where they end up in a better financial place? Adopting the right financial tools can be the first step to achieving those goals. 

If you are interested in learning more about Quicken, you can do so here. Click here to learn more about Simplifi by Quicken.

The promise of digital finance and banking is coming true, moving consumers away from paper statements, branches and phone calls and into quick, intuitive fintech apps and services at a rapid pace. Nine in 10 U.S. consumers are using fintech to handle the simple tasks, and there’s a rising appetite for more complex needs like financial forecasting, investing via cryptocurrency and crowdfunding.

Every year that goes by, the pace of technological development just continues to increase, offering more and more options for people to track, manage and allocate their money. To create winning financial experiences, access to smart wealth data through a single API call can accelerate innovation, powering visionary apps and services.

U.S. workers move between jobs every 4.1 years on average, opening and managing various financial and investment accounts as their careers develop, each requiring different credentials to access. Put simply, people have their money stored all over the place, and there’s an opportunity to bring it all together in one dashboard that simplifies consumers’ financial lives and saves them precious time.

With the advent of open banking data and embedded finance, fintechs and financial institutions can offer a growing menu of innovative investment products and experiences.

The fast track to smart, accurate investment data

Capture and consolidate all the various investment accounts, positions and transactions from a consumers’ portfolio in real time with one API call. Mastercard’s maximum connection reliability and high-quality data and support capabilities cover 95% of deposit accounts.

One API call returns smart, normalized data across all account types, ready for innovation. Account balance, the type of account, available cash balance, position-level data and cost basis are just a few of the 40 different data elements available in each call. Connect only the fields that you need. This approach makes it simpler to develop insights for consumers, like showing them where they’re overweight or helping them improve their asset allocation and uncovering financial opportunities.

With the speed and ease of fintech app adoption in the digital era, consumers can build up a wide variety of open accounts across institutions and platforms. Mastercard’s wealth data provided via its open banking platform gives innovators the ability to consolidate, or simply gives consumers the ability to see all their accounts in one place.

Create financial experiences that are quick, comprehensive and easy to use. One API call for innovators, one dashboard for consumers. Build an app or service that eliminates the need to handle a jumble of different credentials for account sites and apps.

Bringing next-gen ideas to life

The data is the medium to realize your vision. Whether that’s a dynamic dashboard, account consolidation, investment insights or another creative solution, a trusted data partner is vital.

See how Quicken brought this to life with a new Personal Financial Management tool called Simplifi, targeted at helping Millennials and Gen Z manage their finances. Or talk directly with a Mastercard Open Banking representative about your ideas on delivering new financial insights for your customers. Request a demo.