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

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

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

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

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

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

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

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

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

The past several years have seen digital transformation revolutionize consumer choice across virtually every industry. And in many cases, that choice has anointed new victors, such as Netflix, AirBNB, Uber, and left many vanquished or significantly diminished.  The speed at which the transformation can occur is truly astounding. Did Netflix become the world’s largest movie house overnight. No. But it was fast. So while the Blockbusters of the world probably felt safe in their niche and in their dominance, clearly they weren’t.  There is no better time to be paranoid about what innovation or what organization may displace you. But there’s also no better time to feel tremendous optimism in your ability to adopt a digital or bust mentality and win in your market. No industry is immune.

Mortgage lending is no different. The digital mortgage seems to be the dominant conversation, and rightfully so. Consumers have many choices – the typical local mortgage lenders, mortgage brokers, banks and credit unions that can all meet their needs. But they also have online digital lenders who can provide a mortgage. Out of the thousands of lenders, consumers are able to make their choice based on their situation, reviews and referrals of people they trust, and any other demands they may have. They can educate themselves before ever involving the lender or the bank and they are increasingly turning to online, digital solutions to both become better educated in their choice, as well as to meet their needs.  They are more empowered.

This era of consumer empowerment has swelled into a revolution. Lenders not only compete in their regional markets, but have to compete more and more digitally when it comes to their tools and customer experiences.  And the competition is getting fierce, as it can seemingly come from anyone and everyone.

If customers get simple and pleasing experiences from Uber, Airbnb, food takeout or online bank accounts then they’ll expect it in their mortgage process as well. The hot new thing in any app becomes standard fare across the board faster than ever before and makes the status quo seem even more antiquated.

Delighting customers means finding ways to deliver the experience they want alongside the product they desire — a mortgage. To keep pace it isn’t enough to flip a switch from manual, paper processes to digital ones. It requires continuous, consumer-centric innovation. You either need to be pushing forward with consumers or risk getting passed by.

Finicity offers a path to digital transformation, but more importantly to continuous, consumer-centric innovation. Through our digital verification solutions you can provide your borrowers a simple, fast verification experience that doesn’t require paper or PDF bank statements to be shuffled back and forth. Delays for paperwork or waiting on extra documents are a thing of the past.

Our verification reports also include rep and warrant relief from the GSEs. Check out our announcement with Freddie Mac here.

We provide digital access to consumer-permissioned data that can be used throughout the life of a loan, whether that’s pre-qualification, verification, servicing, or even in other lending verticals.

But providing digital processes isn’t enough. We don’t want to get you from manual to automated processes or simply paper to digital verification. We want to start innovating your origination process to the point you’re pushing us for further innovations in our offerings. Consumers are already demanding the same thing and we’re running fast to meet and exceed their expectations.

Find out where you’re at when it comes to being ready for pushing digital innovation forward with our Digital Readiness Assessment. This is a fun and fast view of where you’re at, but it hopefully inspires you to move forward – fast – with your digital plans.

Joining the continuous, consumer-centric revolution can lead to a lot of positives. Digital lenders have been consistently growing over the past 6 years. Averaging 30% annual growth, they have quadrupled their market share and are continuing to carve out space in the market for their mortgage solutions (The Role of Technology in Mortgage Lending). Online tools have empowered consumers to investigate their mortgage options just as easily from their home as from the local bank’s branch. Ellie Mae found the first choice lender for many people is the one referred to them by a friend or family member who had a great experience. Not the one with the lowest rate or the closest branch. Their second choice was whoever they found in an online search (Ellie Mae Borrower Insights Survey 2018).

Consumers want their mortgage origination personalized or at least customizable. Borrowers can self-select mortgage types or other details to create the perfect mortgage for them. Lenders can provide tools to make the process exactly what the customer expects changing notification type and frequency, detailed or simplistic origination flows, self-service or guided processes and high or low touch interactions.

The mortgage lending process is still people driven.  It’s a major investment, and customers want someone to help them. So it’s not about replacing people, it’s about delivering a superior experience that will make you more productive and more profitable.

Today’s mortgage process is easier to get through for a consumer than it has ever been. It will only increase in simplicity and speed moving forward. On top of delivering a beneficial customer experience, digital solutions also make it easier to continue to test and innovate your process to find what works for your consumers and meet their expectations head on.

Consumer-centric innovation based on digitization will continue to transform the mortgage industry to fulfil the demands of consumers. Joining the revolution requires the tools to keep up.

Are you ready?


For so many people, money is a great source of stress.  As a matter of fact, a whopping 71 percent of Americans worry about having enough to cover their expenses. And this is just one element of finances that occupy people’s time and energy.

For individuals and families, improving their financial wellness and achieving financial goals begins with access to their financial data. By connecting all their financial dots, they can gain insights that help them make smarter financial decisions.

This defines what we at Finicity do every day, which is ensuring superior access to financial data, providing the highest quality data possible, and surfacing intelligent insights for better decisions.

To that end, we’ve entered into a direct data-sharing agreement with USAA which will allow their members to more easily and more securely access and use their financial data in third party apps and services that utilize Finicity’s data aggregation capabilities.  The agreement centers on an application programming interface (API) that provides rapid access to data through a secure tokenized process.

USAA members will have no additional steps in setting up account access in those apps and services they use. The direct API experience will simply redirect them to USAA, where they will provide consent for data access and confirm what data can be shared. This replaces any use of credentials except with the initial direct login to USAA.  Additionally, a USAA dashboard will allow members to manage third-party app access whenever they choose.

Finicity is leading the financial data aggregator market by entering into these data-sharing agreements (see our announcements with Wells Fargo and JPMorgan Chase).  It’s reflective of our commitment to work together with banks to provide the best data and the best experience for our shared customers.

This agreement will give USAA members greater control of their financial information, and provide a more seamless, secure and transparent exchange of data.  Working together with USAA allows us to collaborate on a secure method for data sharing, while helping USAA fulfill its mission to help facilitate its members’ financial security.

The API integration is expected to roll out to USAA members throughout 2018 and 2019. Check out the statement about the relationship on USAA’s site.

We’re thrilled to be working with USAA on improving member experiences!


The Center for Financial Services Innovation (CFSI) named Finicity one of its 2018 Financial Health Leaders. Financial Health Leaders are organizations in the CFSI Financial Health Network who are at the forefront of measuring financial health and then show their commitment to consumer financial health by taking steps to measure and improve the financial health of their customers, employees, or clients.

Finicity is honored to be included alongside other banks, credit unions, fintechs and non-profits in improving financial health through measurement, tracking, and other initiatives.

Helping improve the budgeting habits of individuals and families is what got Finicity started in financial data aggregation. As Finicity has grown into a leading financial data aggregator and intelligent insights provider, the bigger picture of the usefulness of personal financial data and securing personal financial data has taken on an even greater role in our mission.

Finicity provides consumer-permissioned data from thousands of financial institutions to be used in ways customers choose. From connecting users to any number of third-party financial apps to creating loan origination documents directly from bank-validated data, Finicity empowers consumers to improve their financial lives and organizations to improve their financial decisions.

Transforming financial experiences through technology has always been important to us. We believe it can greatly improve financial understanding and help people meet personal and business goals.  Receiving recognition for our efforts from CFSI is rewarding, but impacting the lives of our customers is truly the best.

So, while our solutions have expanded, our mission has remained constant – we work to provide data-driven insights so individuals, families and organizations can make smarter financial decisions.

We love working with consumers on their financial fitness through Mvelopes and its range of services. In addition to the budgeting app, Mvelopes provides educational content, debt elimination tools, and the guidance of a personal finance trainer to help consumers plan, budget, and track their progress while decreasing financial stress and increasing healthy financial communication.

We look forward to working with CFSI and other Financial Health Leaders to continue helping anyone who wants to or needs to improve their financial wellness.

For the past six quarters, more lenders have had a negative profit margin outlook than positive. For the past five, competition has been cited by 78 percent of lenders as the main cause for that negative outlook.

Conversely, only 17 percent of lenders had a positive profit margin outlook. That 17 percent also hold the key to lender growth in today’s competitive, slowing mortgage market.

Their reason for a positive outlook? Operational efficiency or technology – also known as digitization! The improvements that come from simplifying manual processes through digital automation make all the difference in today’s mortgage market. Those that race to a digital experience will survive and thrive.  Those that don’t? Well, let’s just say I won’t be betting on that horse.

Look no further than Quicken Loans and Rocket Mortgage for how this is actually working. In the first quarter of 2018 there was 5 percent less mortgage volume than in 2017. Still, Quicken Loans originated 5 percent more by volume ($20.5 billion total), which was $4 billion more than the next closest lender.

How’d they do it? By significantly investing in technology to get to a true digital mortgage. Quicken Loans said their technology allows for approvals in 8 minutes and closing a refinance in 8 days and purchases in as little as 16 days. That’s almost three times as fast as the average purchase and four times as fast as the average refinance. That also means they have 3-4 times the output available as today’s average lender.

So digitize.  And do it quick. It’s relatively easy to start and can be done in steps. Some pieces of the origination process will always take time, but moving manual processes into an automated digital process frees up resources for everyone.

A loan officer is no longer required for a pre-approval that borrowers can now get online in minutes. Digital verification reports have replaced bank statements, pay stubs, and other financial data that had to be sent from a borrower one way or another, taking nearly 2 weeks to get everything in order. Quicken Loans even demonstrated a complete digital mortgage process, including the borrowers closing online. Everybody doesn’t have to be in the same room any longer.

All of this means digital lenders can originate and close more loans in a shorter amount of time, while freeing up their loan officers and brokers to handle a higher volume.  And the customer experience doesn’t suffer, in fact it can be greatly enhanced.

None of this should be a surprise. Digital lenders have consistently increased their mortgage volume. Over the past 6 years, they have grown by 30% annually. Since introducing Rocket Mortgage during the Super Bowl in 2016, Quicken Loans has set a record for their most volume in a year and has continued to grow. Over the past 6 months, they’ve become the nation’s top lender, not just the top digital lender. They have adopted a digital or bust attitude and it’s paying big dividends.

While the market may continue to give lenders pause, there is a way to stand out and have a positive view on your profit margins. Get started digitizing. Start with verification reports that can cut up to 6 days off verifying assets, 8 days off verifying income, and up to 12 days off verifying employment. Digital verification can account for taking almost two weeks off the typical origination. Even a simple, verification of asset report can save almost a week.


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

What Does the Future Look Like Today?

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

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

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

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

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

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

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

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

What’s Next?

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

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

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


Editor’s Note: Following right behind FINRA, SIFMA also released data aggregation principles. They contain a lot of the same advice, but both are worth reading. Read below to find out how Finicity aligns with FINRA and SIFMA.

The digital world has changed our lives dramatically.  We have more information and insights at our fingertips than could have been imagined just a generation ago.  And while that’s a monumental change, one thing hasn’t changed, the ability to make great decisions is based on having great information….or data.  Our ability as individuals or organizations to have a broader view and deeper insights into our own financial situation and to manage our financial wellness is almost limitless in the digital era.  One of the challenges is that our information or data resides in so many different financial accounts.  Having a clear view across our complex financial landscape has been one of the gaps in understanding and managing our financial lives.

Luckily a wide variety of services and applications now bring that information together into simple, digestible experiences.  Often these apps apply the analytics and intelligence needed to generate greater insights we use for better decisioning.

To gather all this information and make it readily accessible requires aggregation of data across our financial accounts.  Such financial data aggregation is a boon to innovation and to our ability to better our finances. But as with all of our data, protecting and securing that data is critical.  As a result, FINRA (Financial Industry Regulatory Authority – a not-for-profit regulating broker-dealers) issued an investor alert titled, Know Before You Share: Be Mindful of Data Aggregation Risks.  We suggest you take a minute to read this post as it provides some key points for you to consider when sharing your account information with a financial data aggregator – such as Finicity.

We agree with FINRA that you should be aware with whom and how you are sharing your information.  Often you may not know the financial data aggregator behind the service or app you’re utilizing.  But it doesn’t hurt to ask.

Financial data aggregation is our business and it’s critical Finicity not only provides the most accurate and efficient data, but that we also protect and secure the data.

Finicity prioritizes data security and consistently puts our security measures to the test through internal and external audits. We have a SOC 2 Type II certificate and have a PCI DSS 3.2 Report of Compliance.  Furthermore, as we work with banks and financial institutions in certain relationships, such as direct API integrations, they audit our security standards and procedures and do so on a consistent basis to make sure we protect consumer data. On top of that, we screen app and services providers to which we provide data to make sure their security standards are in line with our and consumer expectations.

Here are some of the key considerations suggested by FINRA and Finicity’s positions.  I’ve shortened them to get to the point quicker and easier to address:

  • FINRA Q: Read the terms and conditions to know what rights you are granting with respect to accessing your financial accounts and using your data.
    • Finicity A:  Couldn’t agree more.  It’s your data and you should use it how you see fit.  The terms and conditions should align with that. You should be prompted to accept these before you provide any of your credentials or personal information.  This prompting is a great time to stop and read through them.
  • FINRA Q: Verify that the aggregator will access only the information needed for the service. Be aware there may be charges for certain transactions and services you elect to use.
    • Finicity A:  Again, we’re on board.  In Oct. 2016 the Center for Financial Services Innovation published its Consumer Data Sharing Principles: A Framework for Industry-Wide Collaboration paper.  We are strong supporters of their position, including their stance on data minimization: “Only the minimum amount of data required for application functionality are collected, and the data are stored only for the minimum amount of time needed.”  In regard to charges for certain transactions, this will be through your app or services provider. We don’t make any charges directly to you the consumer.
  • FINRA Q: Understand the aggregator’s privacy and data security measures. Read the terms of use, privacy and security information. Here are some things to look for:
    • FINRA Q: Does (or may) the aggregator share your security credentials and data with, or provide access to your accounts to, another data aggregator or service provider? Does the aggregator sell your data to a third-party entity? If so, are you comfortable with that?
      • Finicity A:  Sharing of security credentials with others is a no-go on our end.  We are 100% committed to the security and privacy of your information. The app and services providers never have access to your security credentials.  As for sharing of a consumer’s data, for Finicity this is only possible if authorized by the consumer. And when this does happen, we share data with other data analytics firms we have partnerships with in an effort to continue to develop innovative solutions for our customers and their clients.
    • FINRA Q: Does the aggregator use encryption when retrieving your data? How long is the data retained? What is the process of purging or disposing the data once you terminate your contract?
      • Finicity A:  Encryption is essential to securing our data.  We utilize TLS encryption and we encrypt both the connections and data as well as data at rest. As far as data retention, this is dependent on the application or service being used.  For example in our credit decisioning solutions for mortgage lending, we keep data for the time period required to complete the underwriting process.  After this, all data is deleted except where required by our position as a CRA. Some apps or services may require longer data retention. As for other data purging and disposal, our customers manage their customer relationships.  So once a consumer engages with their app or services provider to have their data deleted, a deletion process is triggered and all of their data is completely purged from our systems.  It’s worth noting we are also on the path to be GDPR compliant, which further covers consumer rights in regard to data deletion.
    • FINRA Q: What happens if there is a data breach or any unauthorized access to your account? Is there a process in place to notify consumers and financial institutions should a breach occur?
      • Finicity A:  If there were a breach, we certainly have a notification process. Not only do we believe we have a responsibility to inform our customers, but we are also legally and contractually obligated to notify our customers of a data breach.  Through this notification process, we would provide all the details and required information so our customers – the app and services provider – can appropriately communicate to their customers.
    • FINRA Q: What type of liability, if any, does the aggregator bear in the event of a consumer loss due to a data breach or unauthorized access? Does the aggregator have the financial capacity or insurance coverage to compensate consumers for loss? Is there a dispute mechanism in place to resolve any issues related to data breaches or unauthorized access?
      • Finicity A:  Consumers should certainly be diligent in preventing unauthorized access or use of their credentials.  However, in cases where Finicity experiences a data breach and such information is compromised, Finicity carries insurance to cover losses associated with the breach.  As for a dispute mechanism, we do provide a process which is communicated to consumers via the end-user license agreement.
  • FINRA Q: How accurate is the data provided?  And what is done to ensure accuracy?
    • Finicity A:  At Finicity, we work to get the very best data available via direct integrations or capturing source data in the vast majority of our connections.  We use the most accurate data sources available from each financial institution. We spend significant effort on monitoring data access and data quality from each financial institution.  We are constantly testing these connections and vetting the data provided and to that end we’ve created a FI Certification program to ensure certified institutions provide the data elements required for the services we offer. For example, Finicity credit decisioning products only use data sources that offer bank-issued unique identifiers to mitigate duplicate transactions when compiling income, asset, and cash flow reports.
  • FINRA Q: Check with financial data providers to find out what, if any, data is delivered to aggregators through an Application Programming Interface (API), which is generally considered a safer alternative than scraping.
    • Finicity A:  Finicity is at the forefront of direct API relationships with the financial institutions.  We’ve already announced with two of the largest – Chase and Wells Fargo. We have others we haven’t announced yet and are working on many others.  But it’s worth noting here the points made above that we are always focused on secure connections and getting the most accurate data. The vast majority of our data is obtained in this manner and not through screen scraping.
  • FINRA Q: Do your own online research and due diligence. Look up any reviews, complaints or lawsuits against the data aggregator or the third-party service provider you are contemplating using.
    • Finicity A:  This is good advice.  One challenge for consumers is knowing who the data aggregator is behind the app or service they are looking to use.  So as noted, a good starting point will be looking at reviews of the apps and services being used and always looking for organizations that are well perceived in the market. Finicity is rightly proud of it’s A+ BBB rating and works daily to ensure any customer concerns or complaints are quickly and properly addressed.
  • FINRA Q: Finally, make sure you cancel your account and terminate the access and rights you have granted to the aggregator once you discontinue using the service. Failing to do so may expose your financial information to ongoing security risks. Understand and follow the steps that need to be taken to stop the ability of the aggregator to access your account. This may involve more than just deleting the software application from your computer or mobile device.
    • Finicity A:  Here again, consumers will need to work through the app or service provider who manages their relationship.  As noted above we are more than ready to respond to data deletion requests and have a thorough process to do this.

Lenders have long faced daily attacks in the form of fraudulent applications, doctored statements, and fake identities. Due to the lack of in-person interactions, online financial institutions and digital lenders have an added threat to contend with while doing business in cyberspace.

Without face-to-face interactions, fraudsters and thieves attempt to use stolen identities and fictional financial data to commit online financial crimes — believing it to be an easier or more successful prospect.

All financial services companies are subject to Anti-Money Laundering (AML) regulations that usually require an intensive Customer Identification Program (CIP). These policies play an important role in fraud prevention, but are only a basic element of a broader range of risk-analysis and management practices.


An Expensive Cost of Business

When fraud happens, it comes with a cost to lenders. Traditional lenders incur a cost of $2.83 per each dollar of fraud. For large digital lenders, that cost rises to over $3.00 per dollar of fraud. Digital and online lenders also face a five percent higher incidence of fraud attempts opposed to those lenders with little to no digital presence. In either instance, fraud mitigation must be an integral part of any lending risk management plan.

The emergence of consumer-permissioned access to financial data for digital verification services is providing yet another tool to reduce fraud, and has the added benefit of a better experience for the borrower.


Reduce Successful Fraud Attempts with Reliable Digital Verification

Almost half of large institution risk management executives see identity verification as the biggest challenge facing their institutions. Fraudsters exploit vulnerabilities in detection by compiling fake applications, or synthetic identities, that are a composite of several different identities.

In addition, digital copies of bank statements and other financial documents can be readily manipulated for the benefit of a fraudulent application.

Digital verification procedures that are part of a well-developed CIP and Know Your Customer (KYC) practices reduce the chance of synthetic identity fraud, while virtually eliminating doctored documents. Through consumer-permissioned access to financial data, verifications can be based on or validated by information direct from a financial institution. This is dramatically better than relying on documents that have changed hands at least twice in the loan application process.

Access to transaction data provides the opportunity to verify or validate assets, income, and employment.  As needed, this data can be compared with other source data, providing an added layer of security for lenders. For example, income streams can be identified by looking at transaction data within a checking account, and verified against employer provided data.

The incidence of fraud is not a variable that lenders can control, but the success of those attempts can be reduced with best practices and strong digital verification standards.


Digital Verification Encompasses a Wide Range of Applications

Using consumer-permissioning provides an additional layer of protection as it requires the applicant to know unique personal identifying information (PII) for each financial account they intend to use. As they go through the digital verification process, several aspects of an applicant’s identity are challenged.

A fraudster would require access to PII to successfully launch a digital verification, and even in that case it’s unlikely all the other information they’re attempting to provide would match with the data pulled directly from the financial institutions.

This helps reduce successful fraud attempts.

Other verification procedures may include a combination of:

  • Identity and identity document verification
  • Bank account ownership
  • Knowledge-based authentication
  • Identity risk scoring

Online lenders are exposed to a broader range of vulnerabilities and thus require more intensive verification and mitigation procedures.

Finicity works with DataVerify as part of its DRIVE platform for identity verification, fraud detection, risk management and property analysis.

Regardless of whether an institution provides in-person services or digital lending, preventing fraud is a key to reducing the cost of doing business. Applying digital verification in conjunction with regulatory practices will ensure the best defenses against successful fraud.

alternative data lending asset income verification

The world of mortgages is about to see one of its biggest shake ups. Right now, approving someone for a mortgage takes a lot of time and effort by both parties. Even after all that, it’s very dependent on a FICO score. Both of those things are about to change.

The Federal Housing Finance Agency has been looking into alternative credit scoring models and supplements to the FICO score since 2015, but FHFA Director Mel Watt said in a speech in New Orleans on Aug. 1, that any change wouldn’t occur until 2019.

At Finicity, we understand changing the mortgage industry can be a long-term undertaking, but we have found a lot can change quickly with the right push.

Ever since the Rocket Mortgage Super Bowl ad changed the way everyone thought about the loan origination process, shortening the time it takes to get a mortgage has been a major piece of what we’re trying to accomplish.

In his speech in New Orleans, Watt said, “One of our biggest challenges has been getting lenders to make loans to creditworthy borrowers who want to buy a home.”

That shouldn’t be the difficult part. Lenders should be making loans to creditworthy borrowers who want to buy a home, and frankly they’re likely more than ready and willing.

It’s an issue of having the right tools to identify creditworthy borrowers. Alternative data can make the whole lending process more efficient. And while it may take some time to mature and be adopted, like almost every other digital transformation, it will happen rapidly. Even though, the FHFA is waiting, the transformation of lending using alternative data has already begun.

Offering a digitally native process for income and asset verification can play a key role in reducing the lending process from two months to two weeks without the headaches of searching, scanning, and sending bank statements back and forth. Making lending quicker for both the lender and the customer helps make loans easier to process and reduces the time they take, removing the dread of being captive for 10 weeks trying to purchase a home.

A major emphasis for us at Finicity is continued improvement of a consumer’s ability to access their financial data stored across their financial institutions.  With a broader set of data, consumers can then better signal their suitability for a mortgage or car loan, and they can better manage their money on a daily basis. That data can also signal whether a person, despite limited actual credit history and the associated credit score, still has the income and responsible payment history necessary to handle a loan payment. Cash flow, income, assets, and employment history can all provide great insights into how well a person would handle their new loan payment.

With borrower permissioned data, Finicity can provide the methods for credit bureaus and lenders to see the alternative data that can help qualify thin-file and no-file credit applicants for loans they currently can manage, but can’t receive because of their lack of a credit score.

Alternative data can better serve the underserved populations, the younger, less established potential borrowers who have only ever rented and don’t have much if any credit history, as well as those who have never used credit, but have always paid their bills on time.

The FHFA sets benchmarks and goals for Fannie Mae and Freddie Mac to reach in order to spur the approval of mortgages to low-income families and areas of underserved minority populations. It’s these same groups that can be better served through alternative data for credit decisioning.

To borrow directly from the FHFA’s goals for their underserved markets plan, alternative data will help develop new loan products and more flexible underwriting guidelines. It will increase access to credit for those who are creditworthy and not just those with a high credit score. And the kicker is, with a digital experience it will dramatically reduce the time and work it takes to go through the mortgage process.

Alternative data can provide insights that will make the lending process more efficient, effective, and inclusive. And it’s already on its way.

By Sid Thomson, VP of Product

At Finicity, we’ve been amazed at the positive response to our digitizing the verification process through our asset and income reports. After all, who doesn’t want to move away from the days of phone calls and emails to chase down statements and documents needed for verification.

Today we announced Finicity Reports, a standalone web solution that is easy to manage and can work for lenders of any size. This online portal broadens access to our verification of assets reports in cases where a lender may not be using automated tools that integrate our reports or where it fits better within their process.


Fannie Mae Day 1 Certainty™

You’ll get more than just a streamlined, digital verification process with Finicity Reports. You’ll also receive the added benefit of Fannie Mae’s Day 1 Certainty™. Finicity is now an authorized integrated vendor for asset verification reports within Fannie Mae’s Desktop Underwriter® (DU®) tool.

Day 1 Certainty gives lenders freedom from representations and warranties by validating loan data upfront. Now you can better manage your risk and streamline your lending process.


A Faster, More Accurate Experience

With Finicity Reports, you easily request and manage your verification reports.  Once you initiate a new report, an email – with your brand – is automatically sent to your customer.  This  email provides a path for the borrower to quickly and securely connect with their financial institutions, identify financial accounts and permission access to data. Those few steps – can be repeated for as many institutions and accounts as they have or you need.

Once they’re done, Finicity Reports uses your customer’s permissioned financial data and creates a verification report. If you need it updated, you can refresh it later with the click of a button. You don’t have to wait for the new month’s bank statement any longer or make an additional request.


Secure and Consumer Oriented

Privacy and security are very important to us. All data and interactions are protected by bank-level security.  As a matter of fact, we are routinely audited by many of the largest and most stringent financial institutions.

If you have to deny your customer for any reason found in their verification report, Finicity is set up to deal with the dispute since we’re also a Consumer Reporting Agency. We have adopted policies and procedures for fair and accurate reports, the timely resolution of disputes and the safe and reliable storage of verification reports.


Learn More

Finicity Reports will be directly accessible at later this month. In the meantime, get to know Finicity Reports better with our Frictionless Lending whitepaper and Finicity Reports brochure.

Finicity demoed Finicity Reports at this past Finovate Fall in New York,  Sept. 11-15. For a taste of how Finicity Reports can improve your lending process, watch the video below: