secure account opening

In a hyperconnected world, it’s hard to name a transaction, financial or otherwise, that takes more than a few moments. Much of our business and personal lives take place on a tiny mobile screen. Instant results are the universal expectation. Buying a pair of shoes, commenting on a social post, and paying utility bills are all part of consumers’ continuous, uninterrupted flow. If it happens on a screen, it has to be now, now, now. Secure account opening is no different. Make your customer wait, and they’re gone. 

While account opening should take only seconds, issues like manual uploads and microdeposits add delays. Finicity, a Mastercard company, is addressing this new reality aggressively, stripping away friction points in the account set-up, onboarding and funding process. Open banking introduces new ways for financial institutions to verify account ownership and authenticate credentials. Accounts are opened and funded in moments, with a full package of data that includes account owners, details and balances. This creates the perception of immediacy that the end-user expects throughout their on-screen day.

Locking Fraudsters Out of the System

Understandably the risk, compliance, and customer experience balance is delicate. Efficiency can’t compromise fraud prevention. That’s why Finicity built its payment solution behind a driving principle: Pay Confidently. This means secure, lightning-fast account credential and balance verification. Financial service providers can verify account ownership and simplify the process by implementing their own application pre-fill functionality. Access to bank account data with instant account verification boosts sign-ups, reduces non-sufficient funds (NSF) fees and lowers abandonment rates. The connectivity is also useful when customers have an existing relationship with an FI but want to move money or add services. Data services help FIs verify account details and balances in milliseconds so they can move money accurately and securely.

Throughout the 2020 COVID-19 lockdowns, online fraud attacks rose by 250%. By far, the majority of them were account takeover scams, where fraudsters steal credentials and account information to siphon funds away from account holders. These attacks rose by a staggering 650%. In 2020 alone, the FTC tracked $3.3 billion in fraud losses to consumers. The convergence of fast-paced digital banking growth and a new wave of inexperienced customers created an opportunity for criminals to exploit. Finicity built its payment solution to cancel out these threats. Finicity Pay uses secure, tokenized access that yields no meaningful data if hacked. Our account verification service instantly and accurately identifies the account holder, stamping out account takeover scams before they get started. The user experience is positive, fast, and most importantly, onboarding is completed at the exact moment that the consumer wants to complete it

Why Finicity Open Banking?

  • 95% Market coverage of direct deposit accounts. From the largest FIs to the smallest credit unions  – Finicity has you covered. Receive fast, reliable financial data that has been permissioned by the consumer for their benefit. Finicity is leading the industry towards direct API connections, signing Data Access Agreements with the largest financial institutions, payroll providers and wealth management companies.
  • Added intelligence and deep learning. The analytics layer in our data services enables accurate, confident payments and verifications. Our added intelligence helps mitigate fraud risk, reduce payment failure and fees, enable onboarding, and maintain compliance.

A True Partner 

The open banking wave is just beginning to rise. COVID-19 has only accelerated the shift to digital banking options that offer faster, slicker ways to set up new accounts, move money and make payments. From October 2020 to August 2021 alone, Gen Zers and Millennials doubled their adoption of digital banks as the primary holder of their accounts. Open banking is the backbone behind the innovation and lifestyle options that are driving fintech app growth.

This is where Finicity provides a differentiated experience. As an innovation partner, Finicity’s development team can identify the best tools to suit your unique use case with the transparency and control that consumers demand. If they feel they can easily set up a new account and then pay quickly and safely, they will adopt your platform. The confidence that secure account opening inspires will drive down-funnel conversions and build confidence in your organization. 

Visit our demo page to see how Finicity can help you innovate with data today.

rent payment history

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.

payroll provider open banking

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.

mortgage verification service

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.

open banking lending infographic

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.

credit decisioning

Finicity’s open banking platform delivers consumer-permissioned data, the foundation of a more comprehensive, more accurate risk assessment. Lenders need to enhance their assessment capabilities in order to remedy these five problems in today’s credit decisioning market:

  • Traditional credit scoring is a lagging indicator of financial health
  • Credit scores do not follow individuals across borders
  • 62 million Americans have a thin credit file or are credit invisible
  • Millennials are lagging behind other generations in building credit
  • The COVID-19 pandemic has exposed problems with traditional credit scoring

Download our 5 Key Problems in Credit Decisioning and How Open Banking Solves Them eBook to learn more.

Open banking data augments the foundation of credit histories and credit scores by providing real-time insights into cash flow, stable income and the actual room in someone’s monthly budget to afford a loan or a new purchase.

Millions of Americans have thin credit files meaning they don’t have enough data in the credit bureaus to even create a score. By looking at data from their bank account, lenders can determine if they are able to to pay back a loan based on income and expenses, not the lack of data.

Above all, consumer-permissioned data helps to empower consumers with control over their data, access to better financial products and a simple way to connect with fintech apps or financial services.

If you’re ready to learn how Finicity’s open banking platform can improve your credit decisioning experience for you and your borrowers, schedule a demo today.

Open banking is rapidly growing and responding to the call for greater consumer empowerment,  giving people and businesses across the globe easy and secure access to their financial data so they can better manage their money, secure loans, and make payments. Finicity’s connections cover 95% of direct deposit accounts in North America. Today, our signed data access agreements with most of the nation’s largest financial institutions, credit card companies, and wealth management institutions cover 63% of our open banking platform traffic with direct API access. 

We expect that our direct-API Data Access Agreements will increase coverage of our data traffic to over 80% by the end of 2021.  Direct-API connections greatly reduce the use of user credentials in the financial services market. 

We have clearly set the industry bar and expect to continue to lead the market with direct data access. 

Finicity’s Continued Leadership in Financial Data Access

Signing data access agreements has always been an integral part of keeping the consumer first by enhancing simplicity, control, and security. In Q2, Finicity has continued to build strong partnerships by signing DAA’s with leading financial institutions such as Navy Federal Credit Union, Jack Henry, and Green Dot

Finicity’s integration to Jack Henry’s  Banno Digital Toolkit enables community financial institutions to provide consumers with the freedom to control, access, and share their financial data, creating a real-time picture of their financial health. The more than 400 community financial institutions using the Banno Digital Platform will be able to deliver this holistic financial experience to consumers through secure API access to third-party financial institutions, fintechs, and financial partners of their choice at zero lift and zero cost.

Green Dot and Navy Federal Credit Union will connect their customer’s bank accounts to Finicity’s open banking platform so they’ll be able to link their accounts to third-party apps to connect, manage, and move their money securely, manage how and what personal data is accessed by those third parties, revoke that access when desired, and have more transparency as they use their data.

These new relationships, on top of the ones that have been fostered since 2017, help expand the reach of our open banking platform and pave the path for evolution in the financial industry. With a greater network, more data can be attained providing higher quality products and services.

Finicity’s Commitment to Data Stewardship

Open banking has improved innovation, accessibility, and convenience and has changed the way people and financial institutions experience money. In the United States, Finicity is leveraging its best-in-class data connections as we continue to add direct API connectivity for financial institutions.

To provide access to real-time information, the network of data is expanding and providing more opportunities. Data Access Agreements (DAAs) are put in place to provide access to financial data to expedite the financial experience in the digital age, allowing for innovative services that benefit both the financial institution and consumer. The agreements also set the stage for how the parties involved will communicate and exchange financial data based on consumer consent.

Finicity’s commitment to responsible data practices is defined by the CATTS principles – control, access, transparency, traceability, and security. Adherence to these principles serves as the backbone for how consumer-permissioned data is treated by both parties involved in the DAA, providing the trusted safety needed in the current financial landscape.

To learn more about becoming a supported financial institution and how that benefits you and your customers, be sure to check out our financial institutions page. And request a demo today to see how the power of data from Finicity’s open banking platform can accelerate your fintech innovation to get to market sooner.

live balance insights checks ACH

You need to move money, but with that comes risk. How do you know a customer has enough funds available in their account? The answer: balance checks. With balance checks, you can guarantee that a customer has sufficient funds to facilitate confident money movement. And with live balance checks, you can get the most accurate, most up-to-date account information. Let’s dig deeper into how that works.

What Are Balance Checks?

Many payment solutions rely on balance checks to ensure that an account has the funds necessary to make a payment. For card payments, this comes in the form of a network authorization. For ACH transfers, balance checks help mitigate financial risks like payment failures, overdraft fees, and NSF fees, all of which can happen if an account holder tries to move money they don’t have. 

Why Implement Balance Checks?

Balance checks deliver visibility into a customer’s bank account balance so payment facilitators can move money confidently and mitigate risk. Implementing balance checks into your workflow can produce benefits like:

  • Streamlined payment experiences
  • Reduced ACH payment errors
  • Higher rate of payment success
  • Mitigate money lost due to payment failures
  • Better decision-making thanks to more accurate, up-to-date data
  • Improved consumer experience with fewer fees and more successful payments

Altogether, balance checks help payment facilitators build better experiences for consumers that in turn yield better business outcomes.

How Finicity Enables Live Balance Checks for Streamlined, Lower-risk Account Funding

As part of our Finicity Pay solution set, we offer several balance check options so that payment facilitators can enhance the payment experience and move money confidently. Some balance checks are cached, meaning that you receive lightning fast account balance data with timestamps. For the greatest accuracy, live balance checks deliver real-time, instant balance information at the moment of the request. This might be ideal for higher value or riskier payments.

Our live balance call delivers real-time balance information (both cleared balance and available balance) complete with time stamps directly from a consumer’s financial institution. And thanks to the speed of our high-quality data connections, you can get that important balance information in seconds.

For use cases that may not require a live balance check, we also offer balance checks that occur throughout the day at regular intervals so you can retrieve lightning fast results.

These balance check solutions rely on our open banking platform, which is founded on secure data connections that ensure a seamless, low-friction experience, and consumers permissioning their data for their use. At Finicity, we empower the consumer to benefit from their financial data. That means they remain in control of their data and get a trustworthy experience.

Live balance checks aren’t the only payment-experience-improving solutions that Finicity offers. To complement live balance checks, our Finicity Pay solution set also enables you to verify:

  • Account and routing number
  • Account owner and address

Live balance checks are the key to more successful, more confident money movement. To see Finicity’s instant balance insights in action, request a demo today.

AI lenders open banking data

While the chaos of 2020 wreaked havoc in many industries, the housing and mortgage markets boomed. Mortgage rates set 15 records in a single year as they dropped, encouraging equally record-breaking volume. In mid-December, mortgage applications were 26% higher than the previous year, while refinancing applications were up 105% from 2019. With rates still low, demand remains high, even with climbing costs and low inventory. On top of all the widespread adaptation required last year across the board, lenders have been sprinting to keep up with this high demand. The solution? Accelerated digitization of the lending process.

And artificial intelligence (AI) is opening the door to even more possibilities.

New Trends In The Mortgage Lending Market

Volume trends in the mortgage lending market are continuing in 2021. Bankrate reported that the slowdown usually experienced by the market in the winter was far less noticeable this year, which implies that the first quarters of ‘21 will continue to see high demand. 

Low rates haven’t been the only factor driving high mortgage lending volume. As social distancing became the norm across much of the economy, employees worked from home. And even as coronavirus cases dropped in some areas, many companies announced a transition to long-term and even permanent work-from-home. This transformation has encouraged some employees, who were previously restrained by a daily commute, to move into a new home. As Bankrate puts it, “demand is especially high in neighborhoods outside of downtown city cores, as increasing work from home and virtual learning requirements have driven many homeowners to favor space over on-the-doorstep amenities.”

High demand, for all its reasons, is butting up against rising costs and low inventory. Low rates appear to be sufficient to encourage continued sales, despite median home prices now rising above $340,000. This combination of factors means that we’re likely to see a competitive housing market persist over the coming months.

On top of factors driving high demand, other trends in the mortgage lending market are fostering change. For example, social distancing, quarantines, and lockdowns increased consumer adoption of digital and remote solutions. US ecommerce sales jumped 37% by Q3 2020. Utilization of telemedicine and remote diagnostics increased. Remote education relied on digital learning solutions, as well as virtual communication tools like Zoom. Consumers, especially digital natives, were already expecting and becoming accustomed to digital solutions in many industries. Why wouldn’t they expect the same in mortgage lending?

The Digital Mortgage: How Mortgage Companies Are Adapting

With demand and market competition so hot, lenders are looking for ways to streamline their processes and keep up with consumers and potential homebuyers. The solution? Digital adoption. 

In this high-demand mortgage lending market, mortgage companies may need one thing above all else: time. They need to cut cycle times, allowing for more loans to be processed. They need to save borrowers time to keep them satisfied. Traditional paper-based mortgage processes tend to take more time and involve more friction. Digital mortgages, on the other hand, streamline not only the mortgage application, but the entire lending process, removing high-friction back-and-forth with borrowers through digital verification solutions.

Digital verification solutions enable mortgage companies to adapt to high volumes and empower consumers along the way. Where paper-based verifications require borrowers to dig up old documents to verify creditworthiness, digital solutions powered by open banking, AI, and consumer-permissioned data, allow borrowers to quickly and securely share all the financial data necessary to get them a loan. Digital verifications enable mortgage lenders to automate and streamline workflows, all while delivering borrowers with a convenient, simple, digital-first experience. 

In addition to challenges revolving around time, today’s mortgage lenders are facing another issue in a physically-distanced world: trust. Borrowers are frequently navigating the mortgage application process or refinancing remotely, without meeting agents, sellers, buyers, and loan originators. Lenders can empower borrowers with a consumer-centric experience that enables them to control and benefit from their financial data. Layer that with secure, consumer-centric data sharing principles and protocols and lenders can build with borrowers valuable relationships founded on trust.

Some mortgage companies implement a digital solution here and there, but there’s a difference between doing digital and being digital. Any digital solution will of course help streamline processes and update workflows, but a completely digital workflow informed by a company-wide digital-first strategy enhances mortgage companies with consumer-first experiences that accelerate growth and increase ROI. 

Why High Demand For Mortgages Needs A Digital Mortgage Solution

Digital mortgage solutions streamline the verification process and, by extension, the entire origination process. That streamlining cuts time from the origination and leaves more time to process more loans. A necessity in today’s high-demand market. As Allen Taylor of Lending Times notes, leveraging digital solutions and AI models will “likely drive the greatest overall efficiencies, both reducing costs and boosting revenues. This enhanced efficiency can be used to drive competitive position and ultimately higher profits.”

As purchase volume and demand rises, so do chances of fraud and risk. Fortunately, digital mortgage solutions reduce fraud and overall risk by connecting directly to secure financial institutions and getting the most accurate data from the most reliable sources. 

How Digital Verification Is Facilitated By AI

The digital verification enabling streamlined digital mortgage owes part of its efficiency to artificial intelligence. This doesn’t mean that Watson or Alexa are performing your digital income verification. Instead, artificial intelligence leverages machine learning, deep learning, and neural networks to mimic human intelligence and predict, optimize, and automate tasks that were once performed manually. 

As IBM explains, “Perhaps the easiest way to think about artificial intelligence, machine learning, neural networks, and deep learning is to think of them like Russian nesting dolls. Each is essentially a component of the prior term.” In brief, fundamental terms, here’s more on each AI component:

  • Neural network – Algorithms that mimic the neurons of a human brain. Consist of an input, weights (how correct or incorrect the input is relative to the task), a bias (or a threshold), and an output. 
  • Deep learning  – A multi-layered neural network. With more layers, artificial intelligence can produce a more accurate output from data fed into the network’s input.  
  • Machine learning – Deep learning is a subset of machine learning, which is fundamentally the “practice of using algorithms to parse data, learn from it, and then make a determination or prediction about something in the world.” The machine learns to perform a task instead of being run through hand-coded software routines. “Classical” machine learning involves training the machine learning model to learn based on specific, labeled datasets fed in so the AI can distinguish between data inputs. This is also called “supervised learning.” “Deep” or “unsupervised” machine learning, on the other hand, involves AI learning without a labeled dataset by identifying patterns in data inputs.

In mortgage lending specifically, AI performs income, employment, and asset verification after a lender connects to a borrower’s bank accounts following a consumer permissioning experience. Once the consumer gives the borrower permission to access their financial data, that data enters the AI’s machine learning algorithm and the AI outputs information based on the task. For example, digital income verification involves the AI recognizing an income stream from financial transactions, and cleaning and categorizing data for a clear output that displays a borrower’s income situation.

Digital verification, powered by AI, automates what loan officers and underwriters once had to do manually. That automation enables lenders to, according to Forbes, “reduce underwriting overhead and delays, which increases profits per loan.” In fact, Fannie Mae has found that digital, AI solutions save up to 8 days for asset validation and up to 12 days for income and employment validation. Ultimately, AI-powered digital verification enhances the entire lending process, delivering a more streamlined experience for customers, and reducing risk while increasing ROI for lenders.

Finicity Can Help Your Mortgage Company Improve Their Process: Here’s How

Through our Finicity Lend solution set, we leverage AI capabilities to help lenders meet high demand. Our open banking platform, powered in part by artificial intelligence, identifies tradestreams in consumer-permissioned financial data and delivers cleaned data, ranked by confidence, in easy-to-read reports to lenders. Finicity Lend delivers valuable real-time data insights on:

  • Income
  • Employment
  • Assets
  • Cash Flow
  • Transactions
  • Statements
  • Scoring Attributes

These data solutions not only streamline the lending process and better enable lenders to meet high demand, but they also reduce risk and improve loans by enhancing decisioning. Finicity’s real-time data connections ensure high accuracy so that you get the clearest picture of a borrower’s financial situation. 

And in addition to the standard verification of income, employment, and assets, lenders can also get a more comprehensive view of a borrower with Cash Flow analytics. Cash Flow leverages artificial intelligence to identify tradestreams not traditionally considered in risk assessment, but that enhance a lender’s understanding of a borrower’s financial habits with a clear view of how money moves in and out of borrower accounts.

We want to make sure you get the most out of Finicity Lend and that your mortgage company can help its lending process reach its greatest potential. To that end, we offer best practices training to facilitate a smooth integration of Finicity solutions into mortgage platforms and an effective transition to a fully-digital mortgage process. We’re not just here to offer products; we’re here to be a resource so you can get the best results.

Artificial intelligence is helping lenders integrate digital mortgage solutions that don’t just meet high demand, but dominate it. With the all-star team-up of AI and open banking platforms, consumers can benefit from their financial data and increase their chances of getting a home loan, and lenders can enjoy enhanced decisioning and ROI, as well as an innovative workflow that hones their competitive edge. Don’t take our word for it. Check out Finicity Lend and see for yourself what AI can do for you.

Nacha web debit

Whether your company uses direct deposit or other direct payments through the ACH network, you’re likely leveraging WEB debit transfers in some way. And if you’re using WEB debits, you should be adhering to Nacha’s WEB debit rule. Doing so will not only keep you on good terms with Nacha, but it’s also an opportunity to enhance payment experiences and protect your company. Here’s how.

How Prevalent Is ACH Fraud?

Nacha’s WEB (meaning internet-initiated entry) debit compliance rules are designed to protect both the ACH network and your company from rising ACH fraud. The Association of Finance Professionals (AFP) 2020 Payments Fraud and Control Survey Report found that 81% of businesses were targets of payments fraud and 55% of businesses were directly impacted by ACH fraud, with 33% of that fraud from ACH debits and 22% from ACH credits. 

Fraud usually occurs when a criminal accesses a customer’s account and submits an unauthorized ACH transaction. In the past, all a criminal needed was an account number and a bank routing number. How many abandoned checkbooks might be floating around in the landfill, waiting for an eager fraudster?

With a third of businesses falling victim to ACH WEB debit fraud, it’s no wonder Nacha is updating its rules to protect both the ACH network and your company. 

What Are the Nacha WEB Debit Compliance Rules?

Nacha has established operating rules that keep the ACH network secure. As part of those operating rules, originators of WEB debit entries must use a “commercially reasonable fraudulent transaction detection system” to screen those debit transactions for fraud. What that detection system specifically looks like has been largely up to the businesses initiating ACH transfers. 

However, Nacha has recently augmented this requirement and now specifically requires that the “fraudulent transaction detection system” includes account validation. Under the new rule, an account must be validated with the first use of the account number, or after any changes to the account number. This updated rule aims to cut down on the WEB debit fraud that continues to climb.

When Do Businesses Need to Be in Compliance?

Nacha had originally set January 1, 2020, as the effective date for the new WEB debit rule. The Board of Directors then approved an extension to March 19, 2021 to allow businesses to educate themselves and implement the new processes. As of now, the WEB debit rule is in effect. Originators of WEB debit payments have one year from the effective date of the rule to implement an account validation solution.

How Can You Ensure Your Payments Are Compliant?

To be compliant with Nacha’s WEB debit rule, your payment solution must include some form of account validation. This validation can take several Nacha-approved forms:

  • Prenotification entry: The payment originator sends a zero-dollar entry through the ACH network to the account several days prior to the live entry.
  • Micro-deposit verification: Small amounts—usually between a couple cents and a dollar—are sent to an account and must be verified by the account holder.
  • Instant account validation: The customer provides consent to access their account information, ideally through a direct API connection to the customer’s financial institution. Of these verification methods, instant account validation delivers the most accurate information in real time and doesn’t rely on the customer manually keying their account and routing information. They simply log in to their account and provide consent for the validation.

Nacha also notes that companies may leverage other validation means. For example, proving that an account has a reliable history of prior successful payments may act as a sufficient validation. Ultimately, Nacha recognizes that every company’s position and situation is unique, and so determining whether an account validation method is “commercially reasonable” will differ, and each company should consult their own attorneys, risk department, or other advisors to ensure the validation method is compliant.

How Finicity’s Instant Account Verification Prevents Fraud and Enables A Better User Experience

Through our Finicity Pay solution set, we offer instant account validation that satisfies Nacha’s updated WEB debit rule and provides additional valuable data to improve the experience and efficiency of ACH payments. Our instant account validation enables money movers to mitigate fraud and maximize the accuracy of payment transactions by providing account and routing numbers, account owner verification, and balance checks to streamline and secure ACH payments. And with easy and fast consumer permissioning, our validation solution empowers consumers to benefit from their own data to have better financial services experiences.

In addition to validating account information, the consumer-permissioned data Fincity’s open banking platform provides can be used to check balances prior to processing payments to avoid fees and returns due to insufficient funds. It can also support Know Your Customer (KYC) by providing the name and address of the account owner on file at the financial institution. While this data is useful for payments, it can also be leveraged in account opening, digital wallet or prepaid card funding, or other use cases where similar information is needed.

Don’t just take our word for it. Nacha has named Finicity a Preferred Partner, which guarantees that our validation solution aligns with Nacha’s core strategies to advance the ACH networks. According to Nacha, those who are preferred partners:

  • Facilitate efficiencies in the use of ACH information and messaging formats and standards
  • Improve ACH risk management and transaction quality that is conducive to ongoing innovation in the ACH network
  • Conduct business according to the highest standards

Nacha’s WEB debit rule protects you and ensures better ACH payment experiences. And with Finicity’s instant validation solution, you’ll also empower your customers and get access to the highest-quality real-time data. To see our instant account validation in action, request a demo today.