As we head into the new year, we are highlighting a few topics that are top of mind for Mastercard Open Banking, and how we see the Open Banking landscape evolving over the next 12-24 months.  

At a Glance 

• Open Banking adoption continues to gain traction across the globe – This is a result of increased consumer, merchant, and biller appetite, regulations, borrower demand for a digital mortgage experience, and an increase in account-to-account (A2A) payments usage. As momentum accelerates, there is more emphasis on safeguarding consumer information and protecting against fraud in Open Banking.  

• A2A and alternative payment methods are increasing in usage all over the world – Open Banking enables a more seamless A2A experience, particularly in verticals like bill pay, disbursements, and recurring payments. However, there are some barriers that are preventing A2A from scaling.  

• Looking ahead, we see 4 key themes that are rising in importance in Open Banking – We anticipate that Open Banking will unlock opportunities for consumers and businesses to benefit from their data and allow companies to power next-generation personalized financial services by improving the financial experiences of small businesses, leveraging technology such as Generative AI which powers innovative new use cases (e.g., categorization, security/privacy), integrating closely with Real-time Payments (RTP), and enabling value-added services and personalization with the transition to Open Finance.

Mastercard’s strategy is centered on the trends we are seeing, where we think the Open Banking market is headed, and being a valued and trusted partner to our customers by enabling them to provide enhanced financial experiences to their end users. 

What we’re seeing in the market  

• Open Banking is on the rise around the world, driven by different tailwinds. Consumers want more automated and digitized ways to move money, to manage their finances (e.g., by viewing their financial data and unlocking actionable insights), and more transparency and control of their data. They are using Open Banking for topping up their investment accounts, funding their wallets, and applying for mortgages. Regulations, Open Banking players pushing forward innovative solutions, and the desire for seamless, enhanced financial experiences are all drivers of Open Banking. In Europe, Open Banking use is expected to double by 2027 and in the UK, 70% of consumers connect their financial accounts directly to tools to conduct financial tasks. In the U.S., 80% of consumers also already link their financial accounts. Open Banking in Australia is still relatively nascent, but 89% of B2B users report using Open Banking today. Brazil has been a trailblazer in Open Finance – there were 4.8B API calls in June 2023 in Brazil, four times the number of calls in the UK. We are cognizant that as Open Banking matures, more and more markets will adopt and accelerate its usage. At Mastercard, market expansion opportunities are evaluated where there is greatest demand, and we will innovate and test concepts in markets that are maturing. 

• Regulations are changing the landscape for Open Banking. Open Banking regulations are at different stages in key global markets. While Europe and the UK were some of the first to introduce Open Banking regulation with the Payment Services Directive (PSD2) and later, Payment Services Regulation (PSR), other countries around the world are putting their own regulatory frameworks in place. For example, Canada’s Department of Finance (DoF) and the Financial Consumer Agency of Canada (FCAC) are also working on elements of Open Banking regulation in the country. Several countries in Africa are adopting frameworks for Open Banking, and Saudi Arabia and Bahrain are launching innovative measures to test Open Banking solutions. Mexico and Brazil led the way in Latin America in establishing Open Banking regulations, with a particular focus on Open Finance and leveling the playing field between fintech startups and incumbent banks. We will continue to work across the ecosystem to support our customers, consumers and small businesses in navigating regulatory changes. 

• Borrower demand for digital mortgage experiences is increasing. Homebuyers in the U.S. are indicating that they are more interested in leveraging digital channels for mortgages. Those surveyed cited process acceleration (75%) and making the process easier (71%) as the top benefits of a digital mortgage process. Open Banking is key to powering these experiences – it allows lenders to securely collect financial data digitally, conduct more comprehensive assessments of an applicant’s financial health, and make more informed loan decisions. To meet consumer demands and streamline the lending process, Mastercard has collaborated with U.S. government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac in connection with certain digital verification of asset, income and employment solutions. These new mortgage solutions are driving more demand for Open Banking and alternative data sources in lending.  

• A2A payment flows are becoming a more common way to pay. While there are multiple payment options available to consumers and businesses today (credit cards, debit cards, BNPL, cash, etc.), A2A payments are the second-most preferred payment choice for bill payment in the U.S. and are increasingly being adopted worldwide. On a global level, A2A payments for e-commerce are expected to grow at a 14% CAGR (compound annual growth rate) through 2027. Government-led schemes for A2A are proliferating its usage in countries including India (Unified Payments Interface), Brazil (PIX) and Thailand (PromptPay). Open Banking-powered A2A payments can transform the A2A experience by making it a seamless and secure way to pay – in particular, we’re seeing Open Banking powered payments pick up in verticals like bill pay, disbursements, recurring payments – where paying by ACH (traditional A2A method) has already been popular in the U.S., for example. Recognizing this market demand, we are partnering with players like JPMC and Worldpay in the U.S. to scale A2A for their customers. We are also continuing to explore innovative solutions that would enable the scaling of A2A globally – for example, Mastercard’s approach to Open Banking helps protect the ecosystem to make OB-enabled A2A payments seamless and secure. 

• Fraud and identity risk are top of mind. While Open Banking will provide new opportunities, like with any exchange of personal data online, there are also risks. As more people use digital channels for financial experiences, there is the possibility for fraudsters to find new ways to attack businesses and consumers. It is estimated that the worldwide costs of cybercrimes will reach $12T in 2025 and 94% of consumers surveyed say that it’s important that financial institutions keep consumer financial data secure. To ensure consumers feel safe using Open Banking and the experiences it powers, fraud mitigation plays a significant role – for example, leveraging identity verification and device intelligence at account opening, multi-factor authentication at sign in¹, and predictive risk signals for payments. At Mastercard, we remain committed to maintaining best-in-class security and data privacy for our Open Banking assets. This is why we are leveraging our rich network of global identity insights and device verification, and integrating them with our Open Banking offering. We believe Open Banking and fraud mitigation will continue to go hand-in-hand as the ecosystem matures.  

Spotlight on A2A Trend 

What are A2A Payments? 

• Account-to-Account (A2A) payments are electronic money transfers from one bank account to another.​ A2A payments can be initiated in two ways, either as a push payment — initiated by the party making the payment — or as a pull payment — initiated by the party collecting the payment. Many consumers already use A2A payments by simply sending money between their own bank accounts or transferring money to someone using platforms like PayPal or Cash App. The 4 main use cases for A2A are Bill Payments, Me2Me, Person to Merchant (P2M), and Person to Person (P2P): 

Growth in A2A is being driven by a number of factors:  

However, A2A payments are still experiencing some challenges to widespread adoption: 

• Suboptimal A2A checkout process:  A2A payment methods have either required consumers to input bank account numbers or login to their bank’s portal for each purchase, which can be time consuming and error prone. In countries where A2A has gotten more traction (e.g., India, Brazil), it has been primarily through QR code which is a suboptimal experience.  

• Inadequate consumer purchase protections compared to card:  Many A2A payment methods lack the same protections that card payments have, and that both consumers and merchants want. 

• Lack of trust: There is a lack of trust from some consumers towards A2A payments, because they have a familiarity with methods like credit and debit payments and are accustomed to their reliability and ubiquity.  
• Lack of scaled use by merchants: Merchants face certain risks with traditional A2A payments, including declines due to insufficient funds, unauthorized returns, etc.  

How does Open Banking enhance A2A?  

Without Open Banking: Traditional A2A is a clunky experience, as consumers need to either initiate bank transfers through their bank account directly or manually enter their banking account and routing number through a suboptimal checkout experience. In some markets, there is also limited transparency in payment settlement timing and risk of payment, for merchants/billers who are offering A2A to their customers. For example, merchants must manually verify customer bank accounts with micro-deposits, and there may be a multiple day delay for a successful A2A payment. Lastly, traditional A2A lacks the rich data insights to verify identity, and to prevent fraud/ non-sufficient funds returns.  

With Open Banking: Open Banking makes A2A payments seamless for consumers. Instead of the error-prone process of finding and manually entering account details – consumers can now leverage the latest technology to easily share their bank data. Powered by Open Banking, A2A payments can be made quickly, with extremely rich insights – such as account owner verification, balance checks, risk indicators, tokenization and fraud signals. In any market, Open Banking makes A2A payments easier, faster, and convenient. Additionally, Open Banking can help in the fight against fraud. For example, when a consumer initiates an account-based payment from their bank account, Mastercard enables account validation to confirm account ownership and validate identity details in real-time through Mastercard Open Banking, drawing on the safe exchange of consumer-permissioned data to facilitate frictionless and secure payments. 

Illustrative US A2A Payments flow (powered by open banking)²

What will it take to make A2A payments more mainstream?  

We believe that there is a positive trajectory for A2A payments. For A2A adoption to scale in use cases like ecommerce, it is important that consumers feel as secure using A2A as they do with other payment methods. Consumers also prefer a more user-friendly and streamlined user experience which removes friction from the A2A journey. Merchants and digital players are looking to provide consumers with a range of payment options, so helping to integrate A2A payments into their existing platforms will improve merchant acceptance and be vital in adoption. Lastly, we believe the scaling of A2A payments will be contingent on value-added services, which leverage consumer data (with consent) to create a secure and seamless payments ecosystem. We believe Open Banking can power many of these enhancements to A2A, to help scale.  

Looking Ahead 

In addition to A2A, there are a number of market forces and themes that we think will be prominent in the Open Banking landscape over the next 12-24 months. A few are highlighted below –   

• There is untapped potential in Open Banking use cases for small businesses. We believe more small businesses will use Open Banking to easily and safely share their banking information, paving the way for an easier lending process and customized financial recommendations to help them with their cashflow.  92% of businesses surveyed believe that it is somewhat to very important to have the latest technology for risk decisioning and credit scoring. Mastercard already offers a comprehensive solution set for small businesses – including real-time business account data, rich cash flow and balance analytics, smarter credit decisioning, etc. and we are continuing to enhance based on what is priority for SMBs.³  

• Use cases for AI in Open Banking will continue to evolve, enabling more personalized financial services experiences. For example, Generative AI can power financial assistants that can make investment recommendations, help with data categorization to give a comprehensive picture of finances, enable more inclusive lending processes, as well as power smarter payments systems with predictive capabilities. We believe AI is a powerful tool for Open Banking, and this is why we’ve been leveraging it to categorize and extract insights from transaction data, which feed into downstream AI models that power our payments and lending solutions. We’ve also partnered with players like bunq, the second largest neobank in Europe, to power spending insights for users – leveraging AI. However, we recognize that data transparency, security, and protecting against bias will become even more important, as Open Banking and AI are intertwined to solve for new and innovative use cases. 

• Real-time payments (RTP) will accelerate, led by the launch of FedNow in the U.S., and the SEPA Instant Payments Mandate in Europe. RTP has already seen strong success in other countries around the world like PIX in Brazil, UPI in India, etc. For consumers, RTP provides the option for swifter bill payments and near instant payouts, especially important for gig economy workers. Businesses are afforded faster settlements, improved payroll, and reduced disputes due to more efficient reconciliation and refunds. Bank adoption and use of RTP rails in the U.S. are still emerging, due to issues such as coverage/interoperability, irrevocable funds, and fraud risk. ​However, government pushes for RTP in Europe and the U.S. may catalyze adoption. Open Banking providers have an opportunity to build out use cases that accommodate RTP and mitigate the fraud risks that come with it. For example, Open Banking can provide risk insights and recommendations around the timing of payment and rail choice. In the U.S., Mastercard Open Banking is providing merchants, fintechs and banks rail agnostic risk signals, enabling payment decisioning across payment methods, and supporting consumer choice and flexible merchant usage.  

• Open Banking will move towards Open Finance, as more expansive datasets are used to offer more personalized and actionable insights and value-added services for consumers. Open Finance moves beyond Open Banking by covering more financial data inputs (e.g., payroll, insurance, investment/brokerage data). The European Commission is working to establish an Open Finance framework that would outline clear rights and obligations to manage customer data sharing in the financial sector beyond payment accounts. In Australia, the CDR is expanding to Open Finance with non-bank lenders and BNPL product providers set to be brought into scope in early 2025 (with first compliance obligations to commence in mid-2026). We believe regulation and consumer demand will serve as a foundation for the expansion into Open Finance, and will create further innovation for services like employee benefits, wealth advisory, etc. Mastercard is already supporting Open Finance in the U.S. – we have connections to payroll and investment data, as well as mortgage data and auto loan data, and are continuing to expand datasets.  

Mastercard’s role in the Open Banking journey 

Our vision in Open Banking is driven by many of the trends we’re seeing in the market and enabling enhanced financial experiences for our customers. We remain diligent in advancing our four primary use cases: payments, account opening, lending, and small business, while leveraging the broader Mastercard ecosystem to provide incremental value to our customers. We are enabling an Open Banking future that empowers consumers and small businesses to share their data for their own benefit and allows all parties in the ecosystem to thrive. To learn more about our Open Banking solution set – please click here. You can also see how Mastercard Open Banking creates priceless possibilities for all here. 

Footnotes

1 – Strong customer authentication (SCA) under the EU’s Second Payment Services Directive (PSD2), mandates multi-factor authentication (MFA) to prevent unauthorized access (link); MFA is not mandated in the US, but FI’s can implement MFA according to their own discretion; Australia’s CDR governs MFA.

2 – Mastercard partners with companies to enable A2A payments in the US; payments flow shown may be supplemented with additional steps from Partner.

3 – Mastercard US Open Banking for Business solutions (illustrative, not comprehensive).

To be competitive in an era of accelerating consumer expectations, deploying a seamless application experience for personal lending, mortgage, tenant screening and other use cases is a must. Slower, resource-laden manual processes invite higher consumer drop-off rates, introduce inefficiencies and can be vulnerable to fraudsters.  

Mastercard Open Banking, provided by Finicity, a Mastercard company, is equipping its customers with the capabilities to deliver smarter and more efficient digital lending experiences.  With the expansion of its Verification of Income and Employment (VOIE) solution to include credentialed payroll, Mastercard Open Banking enables consumers to permission access to their payroll account data, mitigating the need to collect income documentation.  

A more efficient digital experience within the loan application process is precisely what open banking customers need – and credentialed payroll delivers a seamless, secure income and employment verification process, and reliable data at speed. The latest VOIE innovation populates consumer-permissioned data directly into the correct fields, creating a fast, secure digital experience that can boost profitability while making life easier for your applicants and employees.

*Update, September 23, 2024: Credentialed payroll data continues to enhance the digital mortgage process

Freddie Mac has enabled the use of Finicity, a Mastercard Company’s credentialed payroll data for submission to Loan Product Advisor® (LPA^SM) asset and income modeler (AIM).  The capability to submit the data to be assessed through LPA will be effective on September 21, 2024, providing the additional benefit of potential income rep and warranty relief eligibility from Freddie Mac to mortgage clients ordering verification reports from Finicity.

*Update, July 30, 2024: Credentialed payroll data gets a boost

Fannie Mae has authorized the use of Finicity, a Mastercard Company’s credentialed payroll data, sourced from Argyle, for Day 1 Certainty® eligibility. The data will be enabled through the Desktop Underwriter® (DU®) validation service July 30, 2024, providing the additional benefit of rep and warranty relief on validated components to our mortgage clients.   

Strong partnerships that drive industry-leading innovations 

Mastercard Open Banking teamed up with industry-leading payroll data aggregator Argyle to power this expanded VOIE solution. With 90%+ coverage of the U.S. workforce, financial institutions can now digitally verify an applicant’s income and employment in just moments.  

“We’re excited to partner with Mastercard Open Banking to make digital verification of income and employment widely available through our trusted network of consumer-permissioned connections,” said Brian Geary, COO at Argyle. “Together, we are creating smarter lending experiences, free from time-consuming manual touchpoints while achieving faster and more accurate verification​s​,” he added. The combined capabilities of Mastercard Open Banking and Argyle are driving VOIE to be an efficient, flexible solution that comes in at a much more affordable price point than other income and employment verification options, poised to benefit financial institutions and consumers alike. 

“Mastercard Open Banking’s new credentialed payroll enhancement was one of the simplest product launches we have done,” said Josh Cilman, EVP at Intercoastal Mortgage. “The new experience integrated smoothly into our existing processes with no impact to loan processing workflows and an efficient borrower experience. We are excited to digitize our loan application experience with a much more cost-effective way to verify income and employment.” 

Multiple verification solutions to fit your business 

Credentialed payroll is just the latest addition to Mastercard Open Banking’s growing list of digital income and employment verification solutions for smarter and faster decisioning. 

Mastercard Open Banking’s Deposit Income verification solution analyzes direct deposit streams from the consumer’s permissioned bank account data to identify an applicant’s income.  

Freddie Mac launched Loan Product Advisor® (LPASM) asset and income modeler (AIM) for income using direct deposits in March 2022 with Mastercard Open Banking as an initial service provider. In March 2024, Fannie Mae announced general availability of Deposit Income as part of their Desktop Underwriter (DU®) validation service. These solutions help streamline the mortgage origination process for lenders and homebuyers while expanding opportunities for home ownership. 

Mastercard Open Banking solutions are used by financial institutions and decision makers in varied use cases, including mortgage lenders, tenant screeners, personal lenders, credit card issuers and more.  Credentialed payroll and Deposit Income solutions provide financial institutions with the high conversion, affordable income, and employment solutions they seek.  

Bank account and payroll account data can be used independently or in combination to enhance the customer experience depending on the institution’s needs and workflows. 

Partner with Mastercard to create better consumer experiences 

The Mastercard Open Banking platform delivers next-generation financial experiences that delight consumers. The platform serves as a one-stop shop for digital verifications, with the capabilities to verify assets, balances, income, employment, cash flow and much more, seamlessly and at scale. Credentialed payroll and Deposit Income solutions are available today through Mastercard Open Banking’s lending solutions. 

The next generation wants control over their data for a more transparent lending experience

Having grown up with the internet, smart phones, and social media, young Millennials and Gen-Z borrowers are particularly savvy about using their digital footprints for their own benefit.  

They embrace technology to streamline everyday tasks and they want to make informed decisions about transactions. As they increase their presence in the workforce, they are becoming the generations poised to drive the future of lending.  

When Mastercard surveyed 7,600 consumers across the United States, Canada, the United Kingdom, Australia, France, Germany and Spain about their recent financial experiences, young people’s voices came through: They want a more transparent, simpler, digitally-enabled lending process.  

And open banking can make this a reality. Using secure APIs, advanced data analytics, and machine learning, open banking technology allows consumers to safely share their financial data, giving a more up-to-date and holistic view of their ability to repay a loan or afford a line of credit.

Most borrowers are already on board. According to our survey, 77% of those ages 45 to 60 and 68% of those over 60 are willing to grant access to their banking data to secure a credit or loan. Among respondents 18 to 29, the number shoots up to 84%.   

Nearly 60% of younger customers have already linked their accounts while applying for a loan. And, as digital natives, nine out of ten would prefer a loan option with a digital application or approval process.

The consumer base is changing, opening a window for the industry to evolve in step. Today’s borrowers are calling for a new, digital-first era of lending, giving applicants more control over the information used to determine their creditworthiness.   

By allowing consumers to share access to their financial data, open banking can provides a current view of their ability to repay a loan or afford a line of credit for more transparent lending decisions – and a more financially inclusive economy.

Younger borrowers are embracing digital lending

Read more about the future of lending in Mastercard’s Lend Report here.  

How open banking paints a more nuanced picture of borrowers 

Even in the best economic circumstances, loans are often a necessity, especially for critical purchases like homes and cars.   

 For some insight into the lending landscape, Mastercard surveyed 7,600 consumers across the United States, Canada, the United Kingdom, Australia, France, Germany and Spain about their recent financial experiences.   

The upshot: 89% have been adversely affected by economic pressures, and nearly half are struggling to get the loans and credit they need.  

Traditional credit scores do not always reflect an applicant’s ability to make payments. Individuals with thin or no credit history can struggle to qualify for credit. Young adults on their own for the first time, gig workers who deal mostly in cash, new Americans and retirees with a single credit card and no loans can struggle to qualify for leases, credit cards and mobile phone contracts. 

To most consumers, change is overdue — 87% believe the decisioning process should make it easier for responsible borrowers to prove their ability to repay. 

Open banking could help provide that missing piece. By choosing to share their bank account data, applicants can paint a more complete picture of who they are. Real-time insights into their accounts — such as a thin credit borrower’s biweekly deposits, cash flow or consistent payments for bills like utilities — offer an up to date, more comprehensive view of their financial health.  

This shift in consumer mindset opens new horizons for lenders, allowing them to champion more inclusive processes.  

Open banking has the potential to accommodate millions of thin-credit applicants who have previously had difficulties accessing the benefits of the financial system. Consumers have spoken. They want the next evolution of lending to prioritize transparency, accessibility and empowerment for consumers worldwide to build a more inclusive digital economy where everyone thrives.  

Digital lending is on the rise

The data revealed in Mastercard’s Lend Report shows global consumer support for a more transparent, digital-first approach to lending. Read more about the future of lending in Mastercard’s Lend Report here.

The future of digital finance is evolving, and it’s happening just in time

Over the last few years, the move to digital finance has accelerated. Consumers are adopting emerging financial apps and services, empowering them to take control of their financial health. The same technological leaps that are enhancing payments, financial management and banking are also changing lending for the better, and they couldn’t have come at a more opportune time. 

That’s because consumers are feeling the impact of economic uncertainty and worry about the effect that it may have on them. In a 2023 survey, Mastercard spoke to 7,600 consumers across the United States, Canada, the U.K., Australia, France, Germany and Spain about their recent financial experiences.  

 Over 89% of respondents say that they’ve been negatively affected by economic uncertainty.  

At the same time, whether they’re making big purchases like homes or handling everyday needs like transportation or food, consumers worry that they won’t be able to borrow what they need.  

Open banking data can help consumers get to the bottom of these challenges.   

For starters, open banking allows consumers to permission access to their bank account, allowing lenders to augment their credit decisioning models with real time information that gives a better view of the consumer’s ability to repay a loan. That’s important because 95% of those who have been denied a loan in the past two years want more insights into the lending process. People are willing to share secure access to their bank account data, if it means better interest rates, instant approval for a loan, improved chances of being approved for a credit card or to secure an increase in the limit on a credit card.    

Lenders benefit, too. By augmenting traditional credit models with open banking, they can improve operational efficiencies, lower costs and create innovative new lending models that can give consumers the credit they deserve, when they need it.   

The world is going digital

The data revealed in Mastercard’s Lend Report shows global consumer support for a more transparent, digital-first approach to lending. Read more about the future of lending in Mastercard’s Lend Report here.

Give consumers a priceless asset: more time. Endless errands, work tasks and countless obligations big and small chip away at their free time and fill their schedules. Applying for a loan shouldn’t add to that.   

To power a faster, better mortgage experience for consumers, Freddie Mac’s Loan Product Advisor asset and income modeler (AIM) continues to evolve, now including paystub data in addition to direct deposit data for income assessment. These cost-saving efficiencies provide increased rep and warrant coverage while continuing to meet Freddie Mac’s strong credit underwriting standards.

Open banking drives new mortgage capabilities

Using consumer-permissioned data from trusted third-party providers like Mastercard (with some services delivered through Finicity, a Mastercard company), direct deposit plus paystub increases the confidence in income calculations by matching digitized paystub data to borrower direct deposit history sourced from trusted providers. 

Mortgage Verification Service (MVS) supports this new AIM capability by providing direct deposit transaction data paired with digitized paystub data to fuel this innovative, data-driven approach. It identifies the income stream that matches the paystub, delivering accurate risk assessment results.  

Assets, income and employment verifications are vital to mortgage lenders looking to verify borrowers’ finances. However, between unreliable results, miscommunications and paperchases, verifying assets, employment and income can be cumbersome. MVS helps borrowers get faster approvals with fewer conditions up front, allowing them to close and move into their homes faster.  

“Partnering with Mastercard ensures we can deliver the best tools and insights the industry has to offer. This collaboration will assist lenders with quickly and easily obtaining income verification.”

Daniel Miller, Freddie Mac Single-Family Director of Strategic Technology Partnerships

MVS can help lenders: 

• More easily assess borrower capacity/automate income calculations
• Reduce frustrations caused by paper submissions and re-asking for documentation to verify assets, income and employment
• Remove subjectivity and manual errors in processing and underwriting
• Lower risk and probability of fraudulent activity
• Increase referrals by providing a better borrower experience 

Efficient assessment 

AIM leverages consumer-permissioned data from open banking providers like Mastercard to better identify pay deposits using accurate and verifiable data that meets Freddie Mac’s underwriting standards. Lenders can automate the manual processes of assessing borrower assets, income and employment. This can improve the success rates for identifying income and employment by reading information provided on a paystub and verifying income transactions within a borrower’s bank account. 

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

How it works 

Previously, direct deposits to a consumer’s bank account would qualify for rep and warrant assessment. With enhanced direct deposit and paystub capabilities, a borrower or a loan officer can upload a paystub and the technology will match the data on that paystub with the deposits from the borrower’s asset report, boosting the rep and warranty success rates and income gross-up.

The asset report can include 24 months of direct deposit transactional history and also includes income streams identified by the open banking platform. Now, with the added paystub capability, Mastercard can add a paystub report that can provide greater success assessing income through direct deposits.  

The paystub report generated through MVS has two sections; the top section includes digitized paystub information. The bottom section is up to 24 months of income stream credit transactions only. These income streams are reconciled with the deposits shown on the asset report.  

As an added bonus, the reduced cost of implementing MVS is reflected directly in the balance sheet. On average, up to 7 days can be cut off the processing time for each loan. The hours formerly spent by loan officers chasing down borrower documents are invested in higher-return work activities such as marketing and sales to drive additional loans. The new AIM capability will be available to Freddie Mac-approved Sellers using Loan Product Advisor beginning June 7, 2023. MVS is available via direct integration and ecosystem integrations including SimpleNexus & ICE Technology and Order Reports Service in the Client Hub today. 

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

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

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

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

Andy Sheehan, EVP, US Open Banking, Mastercard. 

Read more about this partnership here.

Today, Mastercard is announcing that it has added advanced analytics to its Open Banking platform delivered by its subsidiary, Finicity in the U.S. These analytics can help lenders manage their risk profiles while also adding diverse and inclusive credit models for small business loans as well as ongoing monitoring and expansion of credit card lines.

“Small businesses are increasingly looking for greater choice in how they borrow, pay and manage their finances,” said Jess Turner, Mastercard’s Executive Vice President for Global Open Banking and API. “Open Banking provides lenders the owner-permissioned data and advanced analytics they need to offer more choice in financial services to small businesses, which are the backbone of the American economy.”

Read more about Open Banking for Business and how we’re innovating with our partners here.

Mastercard has partnered with upSWOT, a U.S.-based white-label embedded financial platform, to add data for small businesses on upSWOT’s platform.

With the addition of owner-permissioned data from Mastercard’s open banking platform, upSWOT now gives small and medium-sized businesses (SMBs) the ability to link financial data to 200 API-enabled apps. These include accounting, enterprise resource planning (ERP), payroll, ecommerce, Customer Relationship Management (CRM), marketing, and POS business applications.

With this partnership, Mastercard and upSWOT will be able to provide SMBs with a smooth and effective approach to run their operations.

Read more about this innovative partnership here.

OPEN, EMBEDDED, MODULAR, AND ON A PLATFORM

The rapidly-evolving space of open banking, embedded finance, modular banking and banking as a platform is driving innovators with an API mindset, and the future will see more and more public-facing consumer brands embrace APIs across many industries.

A new report from Mastercard Data & Services looks at the relationship between BaaS and open banking, an aggregated approach to BaaS as it evolves into hosted marketplaces and ecosystems and how banks and fintechs can enable BaaS at scale.

Read the full report here.