Mastercard is advancing its Open Banking for Lending initiative, in partnership with Argyle, to simplify the lending process and empower consumers with greater control over their financial lives. With new enhancements, Mastercard can now offer income and employment verification to approximately 95 percent of the U.S. workforce who receive payments via direct deposit. This innovation is set to drive smarter, more inclusive lending decisions and help integrate more people into the digital economy.
Obtaining a loan can be daunting, particularly for the 19 percent of individuals who are not part of the traditional credit reporting system and struggle to access credit cards or rent apartments. Digitization has the potential to change this landscape; a recent Mastercard survey on lending trends revealed that 90 percent of consumers with insufficient credit history are willing to provide secure digital access to their financial accounts to secure a loan.
While consumers are generally open to faster, digital processes, current methods for verifying income and employment are often manual and cumbersome. Applicants typically spend significant time gathering paystubs and tax documents, while financial institutions must allocate resources to verify this information. This burdensome process can lead to applicants abandoning their loan applications altogether, especially those without consistent income streams, such as gig economy workers.
To address these challenges, Mastercard is expanding its Verification of Income and Employment solution to incorporate credentialed payroll data, facilitated by Argyle’s payroll data aggregation technology. This allows financial institutions to digitally and seamlessly verify an applicant’s income and employment. Through a single integration with Mastercard’s Open Banking platform, lenders can now verify income and employment data either through connected bank accounts or directly via payroll systems, with the applicant’s consent. This streamlined process eliminates the need for collecting physical income documentation and manual data review, offering a more efficient and convenient experience for both lenders and applicants.
Open banking is revolutionizing the lending landscape by leveraging consumer-permissioned data to provide a fuller picture of creditworthiness. By tapping into diverse data sources such as income and employment verification, assets, cash flow, and balance analytics, open banking creates more inclusive pathways for lending decisions. This approach not only simplifies and enhances the user experience but also unlocks new opportunities for individuals with limited, subprime, or non-existent credit histories. Through this innovative use of data, more people can now access the financial opportunities they need, regardless of their credit background.
Mastercard is expanding access to credit with its innovative Cash Flow Analytics and Balance Analytics solutions. With the applicant’s consent, lenders can now gain a comprehensive view of financial health by analyzing bank account data, including cash flow trends and account balances. This holistic approach to assessing creditworthiness opens new avenues for individuals to secure loans, especially those who may not have a traditional credit profile.
For small business owners, Mastercard’s open banking technology offers similar benefits. By leveraging Mastercard’s APIs, lenders can apply these advanced analytics to improve the financial experiences of small businesses, making it easier for them to access the credit they need to grow.
Mastercard is also breaking down barriers to home ownership. Through its open banking technology, rent payment history can now be used to demonstrate creditworthiness, providing first-time homebuyers with limited credit history but strong rent payment records a better chance at securing a mortgage. In collaboration with Fannie Mae and Freddie Mac, Mastercard incorporates rent history and cash flow assessment data into the mortgage underwriting process, offering a more comprehensive credit evaluation for applicants with thin or no credit files.
Mastercard Open Banking is driving a future where everyone can access the tools necessary to secure loans and participate fully in the digital economy, seamlessly and securely. Solutions for Verification of Income and Employment, Cash Flow Analytics, Balance Analytics, and more are now available through Mastercard’s Open Banking for Lending program, offered by its U.S. open banking arm, Finicity.
