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.

 

what is ACH

Automated Clearing House (ACH) transfers may feel like one of those invisible processes that go largely unnoticed yet have become essential to everyday life, especially in business. When you received your last paycheck through direct deposit to your bank account, that was made possible through an ACH transfer. When you paid your utility bill directly from your checking account, you likely used an ACH transfer. 

If you’re already passively benefiting from ACH transfers, imagine the positive outcomes that could come from actively leveraging the ACH network. Here are six fundamentals to get you started. 

What Is ACH?

“ACH” stands for “Automated Clearing House,” which is a payment network built by the National Automated Clearing House Association (Nacha). An ACH payment is an electronic bank-to-bank payment enabled through the ACH network, rather than through a card network. ACH payments are also frequently called ACH “transfers” or ACH “transactions.” The ACH network is used in the United States, but there are also International ACH Transactions (IAT).

Banks and other financial institutions use the ACH network to aggregate transactions for batch processing. In a given year, the ACH network processes around 25 billion transactions, likely including your paychecks and monthly bill payments. There are three types of transactions:

  1. Direct Deposits: These transactions are any electronic transfer made from a business or government entity to a consumer. Direct deposit transactions may include: 
    • Paychecks and other employee expense reimbursements, bonuses, and commissions
    • Social security payments and other government benefits
    • Pension/401(k) disbursements
    • Annuities
    • Tax refunds
    • Interest payments
  2. Split Deposit: This transaction enables deposits to be split into different accounts. For example, an employee could have a percentage of their paycheck deposited into a savings account while the rest is put in checking.
  3. Direct Payments: If you’re sending money through the ACH network, then you’re making a direct payment. Payment solutions can enable any consumer to make these kinds of payments with their bank account:
    • Charity donations
    • Bill payments
    • Tuition payments
    • Send money through social payment apps
    • Send money to friends and family
    • Make ACH-enabled purchases

How Do ACH Transfers Work?

The ACH transfer happens in two key steps: initiating the payment and receiving the payment. Before you can initiate the transfer as the payment originator, a customer must first give the business approval to initiate the transfer. This approval usually happens by signing an ACH authorization form or through verbal agreement. During this initiation process, the customer can set up one-time payments, recurring payments, split deposits, and so on.

Once the customer has authorized the transfer, your bank account will “pull” the payment from the customer’s bank account. If your customer has insufficient funds, then the payment can “bounce” just like a paper check. 

“Pulling” money from an account is known as an ACH debit transaction. An ACH credit transaction, on the other hand, allows you to “push” money from one bank account to another.

What Are The Benefits Of Accepting ACH Transfers?

More and more businesses are leveraging ACH transfers in their business transactions. That increasing adoption has likely come as more businesses realize the benefits of ACH transfers for both them and their customers:

  • Low cost: ACH transfers tend to be a cost-effective method of moving money. We’ll cover more on costs below.
  • Open and inclusive: As long as you have a bank account, you can pay and receive money through the ACH network. No need to worry about having a credit or debit card.
  • Fast and easy: ACH transfers are much faster than delivering checks through snail mail, and you don’t have to worry about losing payments in the mail or dealing with paper check deposits.
  • Better customer experience: Since ACH transfers can be customized for recurring purchases, customers don’t have to worry about receiving and paying a bill, which reduces friction between them and your business. ACH transactions are also easier than customers filling out a check, which may additionally increase the chances of converting prospects.

What Are The Costs Of ACH Transfers?

ACH transfers will save your business much more than processing fees or wire transfers (which we’ll get to in more detail shortly). The median cost per transfer is $0.29, but that number can rise or fall depending on:

  • The average transaction size
  • Volume of transactions you submit
  • Whether or not a bank uses same-day ACH
  • Size of the bank
  • Other incidental or bank fees

What’s The Difference Between ACH Transfers and Wire Transfers?

In many instances, ACH transfers have replaced more traditional wire transfers. But that doesn’t mean that wire transfers have completely lost their utility. For example, wire transfers happen in real time, which means they can process within minutes or hours, where ACH transfers could take a few days. However, wire transfers cost more, typically between $20 and $30 for the customer, and the recipient frequently has to pay a fee as well. 

The bottom line: wire transfers are likely better for large-sum, international, or time-sensitive transactions, where ACH transfers are more appropriate for smaller, more frequent transactions that can stand to take a little longer to process.

How Does Finicity Enable ACH Transfers?

What does all of this have to do with Finicity? On March 19, Nacha implemented a new WEB Debit Rule that requires account validation with the first use of an account number, or following changes to the account number. The purpose of the rule is to reduce the chances of fraud. 

In order to help businesses satisfy Nacha’s new operating rule, Finicity delivers an instant account validation solution as part of our Finicity Pay solution set. In fact, Finicity is a Preferred Partner of Nacha for using instant account validation to mitigate fraud and maximize the accuracy of payment transactions by providing account and routing numbers, account owner and balance checks to make ACH payments even simpler. The speed and security of our open-banking-powered validation solutions also empower consumers with a streamlined, easy, digital-first experience.

ACH transfers are an innovative way for both businesses and consumers to move money while also cutting costs and saving time. Learn more about how Finicity is enabling secure and less risky ACH transfers.

data access agreement

Data has driven incredible improvements in the way people have experienced financial services over the last decade. Services that once could only be done at bank branches can now be easily accessed online. And people now have powerful financial information, products, and management tools at their fingertips via their mobile devices. 

The expansion of open banking is creating a new turning point in the money experience. Open banking allows consumers to share their financial data with third-party developers and fintechs in exchange for new services—unlocking the potential of financial data to catalyze another generation of innovation across the industry. Services such as providing financial data to build credit and gain immediate access to capital, initiating a direct payment to a business or individual, and managing household expenses and budgets fundamentally change the boundaries of banking relationships.

Responsible data practices are required for participants to best take advantage of this technology. The key differentiator that sets the world of open banking apart from previous innovation environments is the requirement for consumer consent in data sharing and adherence to core data principles: control, access, transparency, traceability, and security (CATTS).

In order to enable open banking and empower customers, data access agreements (DAA) must be in place to ensure access to financial data that financial service providers need to innovate and provide new services and benefits in a digital world. These agreements define common rules for how two parties—usually an open banking platform or financial data aggregator and a financial institution—will communicate and exchange financial data. More secure data access agreements mean more connections that financial service providers can use to empower consumers with greater control over their financial health. 

Finicity’s Market Leadership in Financial Data

Finicity’s connections cover 95% of direct deposit accounts in North America. And thanks to 20 signed direct access agreements with some of the nation’s largest financial institutions, we support 60% of our traffic with direct API access. We expect that direct-API traffic share to grow to over 80% by the end of 2021, greatly reducing the use of user credentials and screen scraping in the financial services market.  

Since 2017, we have led in signing data access agreements with the top FIs including Wells Fargo, Bank of America, Chase, Fidelity and many others.  And, in just the past year, Finicity has worked to strengthen the open banking ecosystem by creating stronger, more secure data access agreements and partnerships with key financial institutions and fintechs, including Charles Schwab, TD Bank, Citi, Brex, Chime, US Bank, and BMO Harris.  

And where Finicity has been leading, the market is following. Along with an increasing number of financial institutions and other financial service providers, more payroll providers are recognizing that consumers can benefit from the data they hold. As a result, these providers are adopting API connections to open banking platforms that expand the use of financial data in lending, tenant screening, background checks, government verification and personal financial management.  Finicity announced a Direct Access Agreement with the leading payroll provider in September 2020, representing 16% of the payroll provider market.

DAAs provide the broader fintech and financial services community with access, through Finicity, to consumer-permissioned financial data that enables a variety of apps and services across financial management, payments, lending, and beyond. And a key result for all parties is enhanced data stability, accuracy and improved security through reduction of user credentials.

A direct access agreement with Finicity ensures the most reliable data security for financial institutions while still enabling fintechs and financial service providers to deliver solutions that empower consumers and foster financial inclusion. 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.

open banking payroll data access

Payroll data is a tremendous resource upon which fintechs and financial services providers can build better experiences for consumers and, at the same time, enable consumers to benefit more from their financial data.

But enabling access to payroll data isn’t as easy as flipping a switch. And we can’t build better experiences without a simple and trusted process for consumers. This is where open banking comes in. Open banking platforms can unlock payroll data, but such data access has to be done the right way with a consumer-centric model that ensures successful connections and collection of data.

How to Leverage Payroll Data the Right Way

Payroll data is a beneficial resource, but how it’s accessed is central to enhancing the customer experience and ensuring successful data collection. Let’s look at this in greater detail. 

API Connections Vs Credentialed Access

In some cases, data providers look to access payroll data by using a consumer’s credentials. Unfortunately, this model is overly cumbersome for the consumer. Unlike digital banking, where consumers know the data source and have login credentials, consumers are largely unaware of their payroll provider, and in many cases haven’t even set up an account to access a payroll portal. Plus, many employers use a firewall-protected HR portal to enable employees to view paystubs and other income information, which means the employee never directly interacts with the payroll provider. That firewall also protects the payroll data from external access. 

These credentialed-access hurdles make it painful for employees to permission data access and significantly depress successful connections to payroll data. With a low hit rate, financial services innovators or others looking to leverage such data are left with an awkward, sub-par user experience at best and no data at worst.

The best way to leverage payroll data is to provide technology that enables the consumer to easily access their data, and protects them while they do so. This is achieved through direct API connections to payroll providers that eliminate the need for employees to have or know their credentials. It even eliminates the need to know who their employer is using as a payroll provider.

By connecting directly via an API, an open banking platform provider partners with payroll organizations that are equally committed to providing consumers with access to their financial data. The open banking platform can then connect the employee with their payroll provider for them, enabling the employee to more readily benefit from their payroll data and, should they choose, permission access of that data to a fintech or financial service provider. 

Finicity is already leveraging direct API connections to payroll providers and is quickly expanding those tested and proven connections to reach more employers and benefit more employees. We already provide direct connectivity that covers tens of millions of employees in the U.S. Finicity has a history of building partnerships with leading data sources, such as our  direct API connection with the largest payroll provider.

In the case of payroll data, direct API connections have created the best experiences and led to the best outcomes for both our partners and for consumers. This remains consistent with our market push on direct API connections to a broad range of financial institutions.

Consumer-Centric Means Consumer Protection: Operating as a CRA

It’s not enough to promise consumer-centric processes or protection in word only. After all, leveraging payroll data the right way also comes down to how the open banking platform handles the data and how they involve the consumer in that process. 

One of the primary uses of payroll data is in lending. Our Finicity Lend™ solution set, for example, currently leverages payroll data to enhance income and employment verifications necessary for credit decisioning. In this use case, consumers can gain additional protection and strengthen engagement through the Fair Credit Reporting Act (FCRA). These protections hold the data provider accountable for data accuracy and ensure the consumer has a mechanism to dispute the data in case of issues. 

While other data providers claim FCRA compliance, at Finicity we’re not just talk. Finicity operates as a Consumer Reporting Agency (CRA), which means we are legally required to adhere to FCRA requirements. When data providers are delivering income, asset, and/or employment data for the purpose of credit decisioning, operating as a CRA is not only the best way to provide the data, it’s the right way. 

But data access that truly empowers the consumer and keeps data secure doesn’t stop there. We also keep the consumer at the center of all our data-access experiences with our CATTS data principles: Control, Access, Transparency, Traceability, and Security. These principles inform our policies, our products, and ultimately our entire approach to empowering the consumer with their financial data.

It all comes back to trust. Consumer-centric principles, reinforced both in word and in deed, establish trust between data access providers and consumers, as well as with financial institutions, payroll providers, and other financial services providers.

How Can Open Banking Platforms Use Payroll Data?

Payroll data enables financial service innovators to leverage consumer data to improve decisioning and enhance lending processes, as well as create new financial services experiences.

While financial service providers have traditionally relied on ‘physical’ documents, such as bank statements, tax documents, paystubs, and more to verify information about consumers, digital payroll data via open banking provides quick access to all insights necessary to create next-gen financial experiences.

Finicity payroll partnerships provide access that enable or enhance various use cases, such as:

  • Mortgage lending
  • Auto lending
  • Personal lending
  • Tenant screening
  • Background checks
  • Government verification
  • Personal financial management

And where Finicity has been leading the market, the market is following. Along with an increasing number of financial institutions and other financial service providers, more payroll providers are recognizing that consumers can benefit from the data they hold. As a result, these providers are adopting API connections to open banking platforms that expand the use of financial data. 

Employees aren’t the only ones who benefit from consumer-permissioned data. Payroll providers ensure greater security when specific data is only shared with third parties for the use case, rather than released on a large, broad scale. They retain greater control in their role as data stewards.

Payroll data goes even further in delivering a more complete view of a consumer’s financial story when it’s paired with other open banking capabilities, such as validating information with bank transactions and, in appropriate cases, with digitized paystubs—another area where Finicity has led the market. 

Consumers own their payroll data, and they should be able to benefit from it. But to ensure the best experience for the consumer and the financial services innovators looking to use such data, enabling access to that data must be done right. See in action how Finicity is leveraging partnerships with payroll providers and financial institutions to provide technology that empowers consumers to benefit from their financial data and improve their lives.

MVS flexibility simplicity

The traditional mortgage process can feel cumbersome to borrowers and loan officers, especially when the digital solutions dominating our lives have us accustomed to fast, convenient, and simple processes. Slow and complex mortgage workflows are more than inconvenient and unfortunately all too common. They require input at every step, back and forth between multiple partners even for some of the simplest tasks. Traditional, manual mortgage processes can also hinder lenders from reaching the full potential of their organizations.

Fortunately, Finicity Lend’s Mortgage Verification Service (MVS) enables lenders to build a simple, streamlined mortgage verification experience with the flexibility to adapt to different mortgage lending use cases and enhance the lending experience for all.

The Drawbacks of Yesterday’s Mortgage Process

Gathering documents, calling employers, and conducting manual verifications add time to the origination process and can be a source of stress for prospective borrowers who have to hunt down paperwork. All that paper shuffling can also increase the chance of fraud and risk for lenders. High-friction lending experiences are frustrating for borrowers who have become accustomed to digital experiences in all aspects of their lives.

And while adopting a digital mortgage solution can simplify this otherwise cumbersome process, adapting digital solutions can be daunting when your organization is accustomed to a particular traditional workflow. Do you have to ditch everything about your current process? Are the returns of a digital mortgage solution worth the time and resources to transform your organization?

Let’s find out.

Finicity MVS: The Simple and Flexible Mortgage Verification Experience

Finicity Lend’s Mortgage Verification Service addresses these problems with traditional mortgage lending and the concerns lenders face when confronted with the thought of changing their workflow. It comes down to two key components that have been core to MVS’s development from the beginning: simplicity and flexibility.

MVS Simplicity

Thanks to Finicity’s open-banking platform, MVS can deliver the financial data necessary for accurate, GSE-accepted, reliable verification of assets, income, and employment. And it gets better: MVS enables lenders to receive the verifications they need with only a single permissioning experience by the consumer, from multiple data sources. Even adding paystub data to bank and payroll data for a more comprehensive picture of income can still only take one permissioning experience that feels right at home in the digital lifestyle of today’s borrowers.

Data-driven verifications cut the risk of manual verifications and toss out the paper chase that came with ‘paper-based’ (from actual paper to digital documents) processes. The all-in-one, one-touch experience further streamlines and simplifies the lending process and improves the overall experience for both borrowers and lenders, potentially cutting up to 12 days off the origination timeframe.

MVS Flexibility

Every lending scenario is as different as the borrowers that come to you. These unique scenarios mean that there can’t be a one-size-fits-all digital mortgage solution. It needs to be flexible. MVS is flexible enough to adapt to unique mortgage lending use cases and workflows and balance the appropriate level of borrower friction, optimizing the overall process.

With MVS, lenders can request only the data they need to validate income, assets, or employment, or they can request all the verifications at once. No need to sort through unnecessary information to assess a borrower’s risk. For example, a refinancing may not require the asset verification necessary with a new home purchase. MVS provides what you need, when you need it, and in the best, most simplified way with clean, easy-to-read reports.

And while MVS’s one-touch experience is ideal, some use cases or customer experiences require more than one permissioning experience with the borrower. Some consumer flows, for example, only require asset data in one step, and then request income data separately. Or, your flow may attempt a complete verification from transactions only, and you may return to the borrower for a second permissioning experience for paystub data later. MVS can as easily adapt to these two-touch scenarios as the one-touch experience, enhancing lender flow rather than replacing it, and allowing lenders to balance friction with borrowers on their own terms.

Regardless of the permissioning experiences required for accurate and reliable risk assessment, borrowers and lenders will always enjoy a streamlined, fast, secure permissioning process through Finicity Connect for less friction and more time saved. Thanks to this flexibility, MVS helps lenders balance what you believe is the best experience for the borrowers with the tools you need to get the highest possible verification success rate.

With Finicity’s MVS, you can enjoy the benefits of a streamlined, simplified, and flexible digital mortgage experience without sacrificing what makes your lending process unique to your organization. And to top it all off, you get the most accurate data, courtesy of open banking and consumer permissioning. Enhance your lending with Finicity Lend’s MVS.

digital adoption barriers

2020 accelerated the adoption of many remote and digital solutions across nearly every industry. And while mortgage lending has some catch-up to play relative to some other industries in adopting digital solutions, change is happening, and it’s happening fast. Even if you’re not adopting digital mortgage solutions, many of your competitors are. 

But digital adoption can certainly come with its own challenges. These barriers, however, are not impenetrable, and a targeted approach to overcoming barriers to digital adoption can set you on your way to enjoying all the benefits of a digital mortgage experience. 

Why Adopt Digital Mortgage Solutions?

Digital adoption in mortgage lending involves integrating a digital mortgage solution, such as a digital verification of assets, or transforming a traditional workflow to a digital-first model. Digital solutions enable lenders to verify income, assets, and employment without the high-friction interactions with borrowers that were complicated by pandemic restrictions. 

As digital mortgage solutions have proven during the pandemic, digital adoption enables mortgage lenders to be more nimble and adapt to unexpected disruption in the market. Digital adoption also streamlines the origination process. Fannie Mae found that digital verifications can reduce cycle time by up to 12 days. And that real-time data is more accurate and helps mitigate fraud and credit risk. Digital adoption has also picked up traction as it better satisfies the expectations of today’s digital consumers.

So what’s keeping more mortgage lenders from adopting digital solutions? 

Barriers to Digital Adoption

Changing a mortgage lending workflow is no light task. Even if you see the benefits to digital mortgage adoption, it’s another issue entirely to actually implement digital solutions and strategies. Understanding the barriers standing between you and a successful digital adoption is the first step toward targeting and overcoming these challenges and enjoying the many returns of a digital mortgage process. Let’s take a look at some of the most common barriers to digital adoption.

1. Apprehensive Teammates and Borrowers

Frequently, the barrier to digital adoption isn’t so much technical as it is about the apprehension of the teammates who will be using the solutions and the prospective borrowers who will give their trust to the solutions. Although many consumers already share their financial data digitally, allowing access to bank account data can be intimidating for borrowers. The fact is, loan officers, processors, underwriters, and other team members may just be more comfortable with their well-worn traditional workflow. 

Overcoming this barrier will require showing teammates that the returns of digital adoption far outweigh the growing pains, and assuring borrowers that the secure consumer-permissioning process actually empowers them with greater control over their financial data. It also helps to integrate a simple-to-use verification technology like Finicity’s Mortgage Verification Service (MVS) that simplifies the entire verification process into a one-touch experience.

2. Integrating Technology with Traditional Systems and Workflows

At the core of digital adoption is leveraging innovative technology and solutions that enhance the mortgage experience. Adapting to new technology, however, can become a barrier when you’ve been relying on the same traditional solutions for decades. Technology must also be able to integrate with a lender’s loan origination software. 

Fortunately, while any adoption involves some learning curve MVS is built to be intuitive and quick to integrate. And as a one-touch solution for mortgage verifications, MVS makes adaptation easy. No more using multiple processes to get the necessary information. Everything you need is in one streamlined process.

3. Changing Trusted Processes

Trust is an integral element of mortgage lending. Borrowers trust lenders with personal information and with the hope and stress of one of the most significant decisions of their lives. And you trust your tried-and-true process to deliver a low-risk, accurate origination. Traditional processes may be out-of-date, slower, and potentially higher-risk than newer processes, but it can nonetheless be difficult to leave that familiar process behind. 

Fortunately, digital adoption doesn’t necessarily involve abandoning everything about familiar processes. Instead, adoption enhances those processes. For example, Prosperity Home Mortgage has implemented a hybrid lending model. They leverage Finicity’s digital verification solutions for a streamlined, competitive experience, but they also still prioritize in-person guidance for borrowers to personalize their lending experience. Prosperity maintained trusted, familiar priorities while augmenting their overall process with digital solutions.

Solutions like MVS also ease the enhancement of trusted processes by enabling a single process to verify assets, income, and employment. That process is also built to satisfy and exceed the expectations of today’s digital borrowers, which means this new verification solution will feel more comfortable and seamless than traditional paper-based processes.

4. Disjointed Strategy and Poor Change Management

Some lenders may have already overcome the other adoption barriers and may be on their way to integrate digital mortgage solutions. However, a disjointed adoption strategy or poor change management can become another barrier to successful adoption. Weak buy-in to the digital adoption at different levels in the organization can slow down the adoption process and prevent proper training and effective synergy between teams. 

A cohesive digital adoption strategy and effective change management involves demonstrating the benefits of digital adoption from the top of your organization on down. Successful adoption requires commitment and coordination from all. MVS can smooth out that commitment and coordination by reducing the amount of change being instituted with a single simple process, making the overall adoption easier to manage.

Target these digital adoption barriers and you’ll be on your way to a successful digital adoption and all the benefits that come from digital mortgage. Finicity’s Mortgage Verification Service can help you do just that.

instant account verification

Consumers know all too well how time consuming it can be to set up financial services or products. The last thing consumers want is to wait for microdeposits or other verifying procedures to clear so they can get access to their accounts or money in a new app. Consumers deserve a better experience, whether they’re accessing financial services or applying for a loan.

With instant account verification, consumers can connect to their financial accounts and apply for loans more quickly without having to jump through several hoops along the way. Let’s dive into further details about what instant bank account verification is, how consumers can use it to open a new bank account or get that loan they need, and the benefits of using Finicity’s AI-driven open banking technology. 

What Is Instant Bank Account Verification and When Do Consumers Use It?

Instant account verification (IAV) is a convenient and automated method that helps consumers connect to and fund new accounts. By enabling lenders and financial service providers to verify and access bank account data in a matter of seconds, IAV allows consumers to open accounts more quickly. These accounts may include a new online bank account, a new app that connects to a bank account, or even a loan application. 

Setting up accounts and applying for loans once took days to complete from start to finish. Now consumers can set them up in minutes. All that’s necessary is for the consumer to permission access to the specific accounts so they can direct how third parties use their data.

IAV is useful for those who want to use a new organization to either open an account or use one of their services. It can also be particularly helpful in situations where individuals already have a relationship with a financial institution and want to move money into their account or need a loan. For example, instant account verification may be used when applying for a personal loan to expedite the process and get the money into their account as quickly as possible.

At Finicity, we know digital verifications are invaluable to the loan process. With our open banking platform and its AI-driven analytic insights, we enable lenders to screen consumer credit history and consider eligibility quickly. That efficiency enables borrowers to get the loan they need without the hassle of finding and bringing in a paper trail of their historical data. Finicity uses instant account verification to provide a seamless user experience that enables consumers to take full charge of their finances. No matter what they’re trying to accomplish.

How Consumers Can Connect Their Accounts Online and Track Financial Data

Using our Finicity Connect widget as part of financial apps or services, connecting to bank accounts online is simple and quick. All the consumer needs to do is log into their financial institution(s) with their username and password. Then, they can choose what accounts and data they want to give access to. With Connect, consumers can benefit from their financial data by easily permissioning data and accessing new apps, accounts, or other financial services in minutes.

The entire digital verification process can be broken down into five easy steps:

  1. When it’s time to connect to the bank account, the app or service requests that the consumer permission access to their accounts and provides the terms of the data sharing.
  2. The consumer selects the financial institutions that they want to use and permission the specific accounts to use.
  3. Data is aggregated from the bank or payroll provider and is passed along for its specific use.
  4. Transaction data is intelligently analyzed, summarized, and used by the app or service to verify consumer assets, income, and employment, or account details are used to verify ownership, current balance, or provide account and routing numbers for payment.
  5. For certain use cases, ongoing aggregation of data or refresh of the data to keep data current can also be included.

Why Finicity AI Technology Keeps Consumer Information Up-to-Date and Secure

Data security has become a critical issue, and it will only continue to grow more important as technology evolves. With the constant threat of bad actors, it is paramount to protect consumer information at all times. While the convenience of technology is a great perk, it doesn’t matter if a consumer’s data isn’t safe from security threats.

This is why Finicity is equipped to not only connect to consumer accounts quickly and easily, but to keep their data updated and safe as well. Because financial data is pulled directly from the bank, it isn’t stored by Finicity and only the data permissioned is accessed when it’s needed, minimizing how much data is used and stored. Additionally, our technology does not store consumer information—it grants access to it. This enables consumers to take permission away just as easily as they allowed it. 

On top of data protection, Finicity also encrypts data when it’s in transit and at rest. All of the consumer’s data is protected throughout the process as it would be at the financial institution. 

Instant account verification helps consumers and lenders make wiser financial decisions more quickly and efficiently. To learn more about how Finicity’s services can help streamline financial experiences, read more about our solutions.

verification of income and employment

If you’re a lender, landlord, or employer, you know this to be true: it’s crucial to have up-to-date, verified information about applicants. You don’t want to underwrite a mortgage, provide a car loan, or rent an apartment to someone you don’t have needed information on. You want to make sure applicants can do what they’re promising.

We’re talking about verification of income and employment, and it’s what makes many significant transactions or agreements possible. It allows businesses to take wise risks and helps consumers make financial decisions that are right for them. Let’s take a closer look at what employment and income verification services are, how they work, and how businesses can leverage Finicity Lend™ for more streamlined and accurate verification experiences.

What Is Income and Employment Verification?

Income and employment verification—or verification of income and employment (VOIE)—is just what it sounds like: a way to ensure that someone’s stated income and employment are accurate. Employers and lenders typically use VOIE for more significant purchases or agreements. Lenders might use VOIE for preparing a mortgage or other loan, landlords for tenant screening, and employers for background checks.

If, say, a lender completed a VOIE for a potential borrower, what would they see?

  • Whether the applicant actually worked for the employer they listed
  • Income streams and deposit transactions
  • Two years of deposit transactions
  • A historical and estimated average gross monthly income amount

How Does Online Income and Employment Verification Work?

Verifying income and employment can be pretty simple using consumer-permissioned data. For example, at Finicity, here’s how it works:

First, the consumer grants permission for their data to be used either from their financial institution or a payroll provider. They can upload a pay stub, if needed, or other income data.

Second, we digitally extract and verify the income and employment data you need. We’ll analyze the data and add insights to provide a historical view of income and/or employment and confirm the current employer and/or income level by cross verifying employment data with transactions in their bank account.

Finally, we provide a thorough, but easy-to-read report or just the specific data you need.

Other services typically don’t connect directly to banks and use lagging data like database solutions or manual verifications that request information directly from the applicant’s employer or even the IRS, for example. That can take a long time, though (some documents may take months to make it to you), so it’s worth it to go with a service that can automate employment and income verification. It’ll do the heavy lifting for you in minutes, making your life simpler.

The Benefits of Using Finicity’s Open Banking Platform for VOIE

When choosing an online income and employment verification service, you don’t just want a simple process. You also want accurate information and the assurance that the service is keeping your data secure. Finicity’s open banking platform is provides those important benefits, plus some nice perks:

  • It’s quick: It takes us seconds to give you two years of income history with income streams and assigned confidence scores.
  • It’s easy: Instead of manually calling employers, you can get the employment data delivered straight to you, with data access and insights, too.
  • It’s real-time: Real-time, bank-validated data provides an accurate snapshot of a borrower’s current income and employment status.
  • It’s cross-verified and multi-sourced: With data from the bank and the employer, and from multiple accounts, you know the data you’re getting gives the full picture. Finicity’s patent-pending TXVerify™ technology matches key data from pay stubs and bank accounts, ensuring the highest level of data quality. All the accuracy and confidence needed for critical decision-making.

Additionally, Finicity’s solutions mitigate risk for lenders and reduce liability for prospective employers. We act as a consumer reporting agency (CRA), so we follow strict standards that maintain the highest data accuracy and consumer protection.

First, our data meets and exceeds the demanding data quality requirements of investors and GSEs like Fannie Mae and Freddie Mac. In fact, our data is used for high-dollar decisioning governed by strict regulatory oversight, so it’s ready to be leveraged in any use case.

Second, we use consumer permissioning, which means that borrowers have control over how their data is shared and used. That’s a win-win for consumers, lenders, landlords, and employers. 

Third, we implement best-in-class physical, technological, and procedural security safeguards similar to those used by major banks, credit card companies, and trading firms. As security threats evolve, we evolve to stay ahead of the curve. 

How Finicity Is 3x More Successful Than the Leading Automated Verification Company

Currently, most businesses conduct verification of income and employment manually. For example, mortgage lenders contact employers directly to request income information and other documents. They’ll ask for verbal confirmation, or they may need to wait for fax or email verification. Sounds pretty old-fashioned, but that’s still the way a lot of this business is done.

Even some forms of online income verification may be slower or less secure than they could be. In today’s fast-paced, threat-laden business world, that’s bad news. Finicity’s VOIE solution was designed with these issues in mind, and our solution is three times more successful than the leading automated verification company. 

  • When compared with other automated VOIE options, our solution allows three times as many borrowers to instantly verify income and employment. 
  • Over 96 percent of employees are using direct deposit, which means our solution is primed for covering almost all transaction data direct from financial institutions.
  • We cover more than 95 percent of consumer bank accounts, so we’re able to gain reliable access to the vast majority of transactions. 
  • And with over 75 percent cross-verification available, we’re confident our data is as accurate as it could be. 

Employment and income verification services help businesses and consumers take wiser financial risks. To learn more about how Finicity’s VOIE service can help you make smart decisions, request a demo of our income and employment solutions.