Tag: digital verification

In the fast-paced world of lending and financial services, digital income verification processes play a crucial role in assessing customer eligibility and mitigating risk. However, not all verification methods are created equal. Let's delve into the differences between instant, permissioned, and manual income and employment verification, and their unique characteristics, benefits, and drawbacks. Instant verification: Real-time insights for seamless decision-making Instant employment and income verification is a game-changer in the lending industry. It provides immediate insights into a customer's financial information, allowing lenders to make real-time decisions. This real-time access to data streamlines the decision-making process, enabling lenders to deliver a seamless and frictionless customer experience. The advantages of instant employment and income verification include: Speed and efficiency: Instant verification eliminates the time-consuming process of manually gathering and analyzing data. This enables lenders to expedite loan approvals, reducing customer waiting times significantly.  Enhanced user experience: By delivering real-time results, instant verification enhances the overall customer experience. Customers can complete their applications quickly and effortlessly, leading to increased satisfaction and higher conversion rates.  Reduced risk: Real-time verification allows lenders to assess applicant information promptly, maintaining the security and integrity of lending processes.  Permissioned verification: Empowering customers in their digital experience  Permissioned verification gives customers the ability to grant access to their financial information directly from their payroll or bank accounts. This method is valuable because it keeps customers within their digital experience, eliminating the need for manual document submission or authentication. The benefits of permissions verification include: Convenience and speed: By granting permissioned access, customers can automate income verification and avoid the hassle of uploading or submitting pay stubs manually. This saves time and effort, resulting in a faster verification process.  Increased coverage and reduced abandonment: Permissioned verification ensures a higher coverage rate by minimizing the potential for customer abandonment during the application process. Since the information is retrieved seamlessly, customers are more likely to complete the application without frustration.  Privacy and control: Customers retain control over their data by explicitly granting permission for access. This enhances transparency and empowers individuals to manage their financial information securely.  Manual Verification: A last resort with high friction  Manual verification is a traditional method that involves time-consuming and costly processes. It requires lenders to manually collect, review, and verify documents provided by the customer. This method should be reserved as a last-ditch effort when instant and permissioned verification options are not feasible. There are several drawbacks to manual verification, including: Time-consuming: Manual verification involves significant manual labor, which leads to longer processing times. This delays loan approvals and can negatively impact the customer experience.  High cost: The labor-intensive nature of manual verification incurs higher operational costs for lenders. These costs can potentially trickle down to customers in the form of higher fees.  Increased friction: Customers must go through the inconvenience of gathering and submitting physical documents, potentially hindering the overall loan application process.  Level-up your verification experience The differences between instant, permissioned, and manual verification are important to understand. As technology continues to evolve, instant and permissioned verification methods are poised to become the norm, transforming lending processes and fostering greater efficiency and customer satisfaction. Lenders must embrace these innovative verification methods to stay ahead in the competitive financial landscape and provide an exceptional digital income verification experience for their customers.  To learn how Experian can help you transform your verification experience, visit us as experian.com/verify.   *This content has been created by an AI language model and is intended to provide general information.

Last year, my wife and I decided to take advantage of Experian’s remote-work policy and move back to my hometown, so we could be closer to family and friends. As excited as we were, the idea of selling and buying a home during the market frenzy was a little intimidating. Surprisingly, finding a home wasn’t our challenge. We lucked out and found what we were looking for in the exact neighborhood we wanted. Our biggest challenge was timing. Our goal was to sell our current home and immediately move into the new one, with no overlap of payments or having to put our belongings in storage while we temporarily stayed with family (or in a short-term rental). Once we sold our home, we had exactly 30 days to close on our new home and move in. Since this wasn’t our first rodeo, I felt confident all would go smoothly. Things were on schedule until it came time to verify our income and employment. Who knew something so simple could be so hard? Let me share my experience with you (crossing my fingers you have a smoother experience in place for your borrowers): Pay statements — I was initially asked to provide pay statements for the previous two months. Simple enough for most borrowers, but it does require accessing your employer payroll system, downloading multiple pay statements and then either uploading them to your lender portal or emailing them to your loan officer (which no borrower should be asked to do). This took me less than 30 minutes to pull together. Verification report — After reviewing my pay statements, my lender told me they needed an official verification report on my current and previous employers. At the time, Experian had just acquired Corporate Cost Control (now part of Experian Employer Services), a company that offers verification-fulfillment services for employees, employers and verifiers. I told my lender I could provide the verification report via Corporate Cost Control and they agreed it would be sufficient. This took me several days to figure out. HR information — Just when I thought we were good, I received an email from my lender asking for one last thing — the HR contact information of my current and previous employers. Obtaining this information from Experian was easy, but I didn’t know where to start with my previous employer. I ended up texting some former colleagues to get the information I needed. This too took several days to figure out. Finally, I got the call from my lender saying everything checked out and I was good to proceed with the underwriting process. Whew! What I thought would take 30 minutes ended up taking a full week and threatened our ability to close on time. And not to mention was a massive headache for me personally. This isn’t how you want your borrowers to feel, which brings me to the title of this blog, it’s 2022, why is mortgage employment verification so painful in today’s digital age? Other industries have figured out how to remove pain and friction from their user experiences? Why is the mortgage industry lagging? Mortgage employment verification made easy If it’s lack of awareness, you should know there are tools that can automate verification decisions. Experian Verify™ is a perfect example where mortgage lenders can instantly verify a borrower’s income and employment information (both current and previous employers), without needing to ask the borrower to track down pay statements or HR contact information. You can literally verify information in seconds — not hours, days, or weeks.  And the service supports Day 1 Certainty® from Fannie Mae — giving you increased peace of mind the data is accurate and trusted. This not only improves the borrower experience but increases efficiency with your loan officers. Tools like Experian Verify are a win-win for you and your borrowers. So, what are you waiting for? Modernize your experience and give your borrowers (like me) the frictionless experience they deserve, and if we’re being honest, are starting to demand. Learn more about income and employment verification for mortgage    

Mortgage lenders are no stranger to income and employment verification. Leveraging a third-party solution provider for automated verifications is a standard practice in mortgage underwriting. Yet many lenders still struggle with time-consuming and complex verification experiences, which can be manual, inefficient and painful for borrowers. Since introducing Experian Verify™ to the market, we’ve had countless conversations with key players in the industry – from the largest banks to small independent mortgage brokers and everything in between. Through these conversations, we’ve learned quite a bit about some of the dos and don’ts when it comes to implementing a successful strategy for income and employment verification for mortgage. Lead with instant verification Digital transformation has forever changed borrower expectations for online experiences. The first key to a successful verification strategy is starting your workflow with an instant verification solution. This allows you to verify information in real time, delivering a completely frictionless experience for you and your borrowers. Consider building a waterfall process For instances when a borrower’s income and employment information is unable to be verified through an instant verification solution, add a consumer-permissioned (bank or payroll) option as a backup. Cascading from one digital solution to the next will ensure you can verify borrower information in seconds or minutes, as opposed to days or weeks. The goal is to prevent as many borrowers as possible from going through a costly manual process. Tap into unique data sources Many verification solutions in market today tap into the same data sources, which can make it difficult to differentiate between solutions and measure additive benefits. When evaluating options, look for verification solutions that leverage unique and exclusive data sources – allowing you to optimize hit rates and maximize value. Avoid a “one-size-fits-all” approach There is no silver bullet. Every market is unique and every lender has different needs. Your verification requirements are likely specific to your business, which means you need to leverage verification solutions that offer flexible options and enable you to build a verification experience that works best for you and your borrowers. Find a solution provider who’s all in It’s important to find a solution provider where income and employment verification isn’t just a “side hustle,” but is core to their business strategy. Find a provider who is fully committed – delivering new innovations, investing in key partnerships, maximizing accessibility through leading LOS / POS technology providers, and offers eligibility for key industry programs, such as Day 1 Certainty® from Fannie Mae. Challenge the status quo Many lenders have an existing relationship with a third-party solution provider. But it’s important not to put all your eggs in one basket. If your existing provider is not meeting all your needs, challenge the status quo. Consider adding a second provider to the top of your waterfall to help contain costs and tap into unique data that is not available from your existing provider. Ready for further insight? Learn more about income and employment verification for mortgage.

“I saw an opportunity to create change instead of asking for it.” Day 2 was charged up with new technology; new ideas; and new, clearer visions of where we can drive change across our industries. Jeff Softley, President, Direct to Consumer, Experian Consumer Services, illustrated how the consumer is at the center of Experian’s business with countless statistics and how our consumer advocacy drives our focus, growth and mission. Wil Lewis, Global Chief of Diversity, Equity and Inclusion; Hiq Lee, President of Business Information Services; and Alex Lintner, Group President, Consumer Information Services, engaged in a panel discussion centered on reimagining inclusion.         Keynote: Allyson Felix Allyson Felix, five-time Olympian and most decorated Track & Field athlete, kicked off the day with an inspiring keynote touching on her athletic career, taking challenges head-on and using our platforms to make an impact. Felix, who is racing in the first race of her final season this weekend, is a tireless advocate, life-long learner, who seeks to empower others. “We can all start where we are,” she said. “Small things turn into big things.”       Day 2 session highlights From the breakout sessions, the theme of disruption was evident. We dove into how prescreen and prequalification have evolved, a demand that many must adapt to deliver in the post-pandemic world. Financial inclusion was a topic covered across the board, as were the strategies to be enacted to bolster these financial inclusion drivers. One such area addressed was how the rapidly growing buy now, pay later industry advances financial access and inclusion efforts. And speaking of evolution, retention must evolve as well — we heard how retention, recapture and risk strategies are transforming, particularly in the mortgage servicing space. Rapid Model Development and Deployment - Feedback from businesses reflects organizations’ desires for flexible deployment options, flexible integration with existing tech stacks, open source technology and the ability to incorporate multiple data providers. Today’s solutions address that feedback as well as solve for the most rampant market challenges in new, innovative ways.   Strategy optimization with Artificial Intelligence and Machine Learning - Over 50% of financial institutions surveyed are using AI/ML in at least one department. Challenges include data management, operation, evolving the analytics program. ML/AI starts with proper data management. For optimization, templatizing ML frameworks is a necessity.   ID Verification, Authentication and Fraud - There were $56B in identity fraud losses in 2020, $13B of which were traditional identity fraud losses and $43B related to identity fraud scams. Leveraging strategies is necessary to maintain the critical balance required for identity verification and fraud – mitigating losses and risk exposure, drive optimal customer experience, maintain regulatory compliance.   Maximizing Customer Value - The monthly data refresh is a thing of the past. When reimagining account review for risk and marketing purposes, remaining agile is key with increased data freshness for operational efficiency. Keynote: Ashton Kutcher The energy, insights and ideas have been reverberating throughout the venue for the past 48 hours, which set the stage for Ashton Kutcher’s closing keynote. The Chicago Bears fan talked about his career, how hard work wasn’t an option when he was growing up and how part of his assessment process for potential investments – determining whether they create efficiencies in the market – he sometimes thinks of a long-standing, personal benchmark – the air nailer. He talked about his philanthropy efforts, the mission behind his company Thorn, and the ability for people to impact change and achieve "a sense of agency" over the outcome of the future. “That’s the human spirit. That’s the spark that exists – that people understand that you can sit in despair, or you can do something,” he said. It has been an amazing two days – we can’t wait for Vision 2023!

In today’s digital-first environment, fraud threats are growing in sophistication and scope. It’s critical for credit unions to not only understand the specific threats presented by life online, but to also be prepared with a solid fraud detection and prevention plan. Below, we’ve outlined a few fraud trends that credit unions should be aware of and prepared to address. 2021 Trends to Watch: Digitization and the Movement to Life Online Trend #1: Digital Acceleration As we look ahead to the rest of 2021 and beyond, we expect to see adoption of digital strategies nearing the top of credit unions’ list of priorities. Members’ expectations for their digital experience have permanently shifted, and many credit unions now have members using online channels who traditionally wouldn’t have. This has led to a change in the types of fraud we see as online activities increased in volume. Trend #2: First-Party Fraud is On the Rise First party fraud is on the rise – 43% of financial executives say that mule activity is up 10% or more compared to attack rates prior to the pandemic, according to Trace Fooshee, Senior Analyst for Aite Group, and we expect to see this number grow. The ability for credit unions to identify and segregate the “good guys” from “bad guys” is getting more difficult to discern and this detail is more important than ever as credit unions work to create frictionless digital experiences by using digital tools and strategies. Trend #3: Continual Uptick in Synthetic Identity Fraud We expect synthetic identity fraud (SID) to continue to rise in 2021 as cybercriminals become more sophisticated in the digital space and as members continue with their new digital habits. Additionally, fraudsters can use SIDs to bring significant damage and loss to credit unions through fraudulent checks, debit cards, person-to-person and automated clearing house (ACH) transactions. More and more, fraudsters are seen opening accounts and remaining very patient – using an account to build and nurture a trusted relationship with the credit union and then remain dormant for two years before ensuing in any sort of abuse. Once the fraudster feels confident that they can bypass authentication processes or avoid a new product vetting, oftentimes, they will take that opportunity to get easy access to all solutions credit unions have available and will abuse them all at once. There are no signs of fraud slowing, so credit unions will need to stay vigilant in their fraud protection and prevention plans. We’ve outlined a few tips for credit unions to help protect member data while reducing risk. The Fight Against Fraud: Four Key Tips Tip #1: Manage Each Fraud Type Appropriately Preventing and detecting fraud requires a multi-level solution. This can involve new methods for authenticating current and prospective members, as well as incorporating synthetic identity services and identity proofing throughout the member lifecycle. For example, credit unions should consider taking extra verification steps during the account opening process as a preventative measure to minimize SID infiltration and associated fraud losses. As credit unions continue down the path of digitization, it’s also important to add in digital signals and behavior-based verification, such as information about the device a consumer is logging in from to heighten defenses against bad actors. Tip #2: Be Resourceful In the wake of the COVID-19 pandemic, many have asked, “How should credit unions approach fraud prevention tactics when in-person contact is limited or unavailable?” In some cases, you might need to be willing to say no to requests or get creative and find other options. Sometimes, it takes leveraging current resources and using what’s readily available to allow for a binary decision tree. For example, if you’re suspicious of a dormant account that you think could be synthetic, call them, and ask yourself these questions: Did they answer? Was the phone still active? Send the account holder an email – did you get a reply? Is this a new member? Is this a new channel for the member? Could they have logged on to do this instead of calling the call center? Tip #3: Empower Members Through Education Members like to know that their credit unions are taking the necessary steps and applying the right measures to keep their data secure. While members might not want every detail, they do want to know that the security measures are there. Require the use of strong passwords, step-up authentication, and empower members with alerts, notifications, and card controls. Additionally, protect members by providing resources like trainings, webinars, and best practices articles, where they can learn about current cyber trends and how to protect their data. Tip #4: Trust Data Many credit unions rely on an employee’s decision to decide when to take action and what action to take. The challenge with this approach comes when the credit union needs to reduce friction for members or tighten controls to prevent fraud, because it’s extremely hard to know exactly what drove prior actions. A better alternative is to rely on scores and specific data. Tweaks to the scores or data points that drive actions allow credit unions to achieve the desired member experience and risk tolerance – just be sure to leverage internal experts help figure out those policies. By determining what conditions drive actions before the actions are taken (instead of doing it one case at a time) the decisions remain transparent and actionable. Looking for more insights around how to best position your credit union to mitigate and prevent fraud? Watch our webinar featuring experts from around the industry and key credit unions in this Fraud Insight Form hosted by CUES. Watch now Contact us

Since 2002, lenders have been aware of the importance of Know Your Customer (KYC) and the associated Customer Identification Program (CIP) requirements. As COVID-19 has changed procedures and priorities for businesses and consumers across the board, it’s more important than ever for institutions to ensure their CIP process includes ongoing monitoring of identity risk.   What is CIP?   Standard KYC programs include a Customer Identification Program to verify and validate identities along with due diligence to assess the risks associated with each identity.   CIP defines the process by which a business collects data to establish a reasonable belief that the identity is valid, and that the individual is eligible to participate in our financial system. While this process works in conjunction with other fraud mitigation tactics, they serve different purposes. A good CIP program emphasizes the customer experience, regulatory compliance, cost control, and smart growth. Fraud mitigation focuses on ensuring that an eligible identity is being presented by its true owner, rather than as part of a scheme to acquire goods and services with intent to default on repayment obligations.   Businesses who focus on solely on fraud mitigation rather than complying with KYC and CIP regulations run the risk of potential harm to business reputation, and of course, financial penalties. Fenergo found that as of the end of 2019, global penalties for AML and KYC non-compliance totaled $36 billion.   CIP vs. Fraud Mitigation Many financial institutions equate a CIP program with efforts to mitigate fraud. It’s understandable, as both processes include emphasis on the accuracy of an identity as it’s presented by a consumer. It is assumed that only the true owner of the identity would possess the detailed information necessary to meet CIP requirements and therefore would not likely be committing fraud.   There was a time—prior to large scale thefts of stored information, personal details shared through social media and other behavior changes that made personal information very public—when this would have been true. Unfortunately, those days have passed and even an amateur criminal with limited experience and resources could find current, accurate identity information for sale online, information good enough to pass the CIP test and be considered a legitimate consumer.   The real challenge is that when they go through CIP, many real consumers may inadvertently provide true information that doesn’t meet the verification standard. This is a result of consumer lifestyle changes outpacing the sources of data used to verify the information they’ve provided. It makes sense; in most years roughly 13% of American adults change their address. New homes, job changes and changes in marital status impact a large number of people every day. Adding to the confusion—it’s life’s changes that prompt people to borrow and purchase. The result is that many of the people that are more likely to fail CIP verification are the very people trying to legitimately access financial services.   The result is that CIP verification often isn’t a challenge for those intending to commit fraud, but it can be for genuine consumers.   The challenges of CIP In a recent internal study, Experian reviewed the ability to pass a standard CIP strategy that assessed the accuracy of the name, current address, date of birth and Social Security number provided by a large sample of consumers. We then compared legitimate consumers to those later confirmed to have been identity thieves impersonating a victim. Consistently, the identity thieves were at least as proficient at passing CIP as their true-consumer counterparts.   In a second step, we applied a fraud score that looked for identity theft by assessing the past uses of the identities, their consistency, velocity and many other characteristics unrelated to the accuracy of the data. The difference between CIP verification and a fraud risk assessment was striking. Across the entire range of fraud risk, the percentage of records that passed CIP verification remained the same.   That said, CIP still plays a very important role in risk mitigation. In fact, CIP and fraud prevention are inextricable in financial services. Just as a CIP verified identity can still be fraud, a record that may appear to be low fraud risk may not pass CIP. Since both processes have existed side by side for nearly two decades, each presumes that the other is in place and both are necessary to detect and prevent fraud.   Striking a balance   CIP verification and fraud mitigation strategies are both necessary and important to protecting assets and the broader financial system from fraud. It’s important to leverage a layered approach where both eligibility and risk are assessed, and next steps for verification include resolution of identity discrepancies alongside verification that ensures an identity is not being misused for fraud.   Experian can help you confidently verify customer identities, understand and anticipate customer activities, and implement ongoing monitoring. If you’d like to set up a review of your current strategy or learn more about how we can help you with CIP and fraud mitigation to strengthen your ability to know your customer compliantly, let us know. Contact us

The COVID-19 pandemic and resulting rush to transition to a remote lifestyle made it clear that many businesses need a refreshed digital authentication and fraud prevention strategy that includes an investment in technology and provides consumer assurance. This is particularly important when it comes to identity, as many of the standard in-person verification methods and tools are currently unavailable. The meaning of identity is growing and shifting Technology trends are intersecting with social trends to create heightened awareness, and a whole new public conversation has emerged around customer trust and privacy. Attitudes and ideas are changing—even to the point of what we mean by “identity.” An identity is no longer just a name, date of birth, and SSN. Now, there are digital manifestations everywhere you look: screen names, email addresses, mobile phone numbers, device identifiers, and the other “exhaust” we leave behind as we travel the internet. This leads to concerns about what an identity is, who owns it, and who manages and protects it. Businesses have to be able to prove to their ability to protect their customers’ identities through investment in technology and a robust fraud strategy. Consumer attitudes are changing Several years ago, consumers were excited by all the new digital capabilities and the speed, ease, and convenience they provided. Last year, Experian found that consumers still wanted those things, with 70% willing to provide more information to businesses if there was a perceived benefit. However, they also wanted more security in the balance. In Experian’s most recent Global Identity and Fraud Report, we found that 74% of consumers say that security is the most important factor when deciding to engage with a business. Consumers are particularly more tolerant of friction during the enrollment process—as a means of building trust. But, when they return to the app or website, they want to be recognized. This means achieving a balance by using layered technologies, some of which are active and visible to the consumer, and some of which are invisibly working in the background to confirm the identity of returning consumers. Consumer attitudes vs. regulatory pressure The drivers behind the business changes are twofold: shifting consumer attitudes and regulatory changes. While regulations are becoming stricter on a national and global level, they’re not keeping pace with technology and social change. The digital world is evolving at a rapid pace, opening up more new ways for companies to collect information about consumers and use it to identify and verify, and also to target goods and services. With all of this data available, it’s important for businesses to use the tools in the market to help protect identity information. Next steps in technology The bottom line is, businesses can’t wait for regulations to dictate how best to protect information. Instead, they should be looking to technologies like physical and behavioral biometrics to help provide identity authentication and protection – layering those solutions with information from the user and from third parties to give a holistic consumer view. Businesses should adopt a platform approach for identity and fraud in order to be able to adapt quickly, whether to incorporate new kinds of technology or to prevent emerging types of fraud. By investing in technology now, even in the midst of the COVID-19 pandemic, businesses can build the flexibility needed to respond to future crises and help offset future fraud losses. In turn, those fraud-loss savings can then be used to help grow the business in the future. Learn more about Experian’s commitment to helping businesses maximize their investment in technology to safeguard against fraud. Learn more

For most businesses, building the best online experience for consumers requires a balance between security and convenience. But the challenge has always been finding a happy medium between the two – offering enough security that won’t get in the way of convenience and vice versa. In the past, it was always believed that one would always come at the expense of the other. But technology and innovation is changing how businesses approach security and is allowing them to give the maximum potential of both. Consumers want security AND convenience Consumers consider security and convenience as the foundation of their online experience. Findings from our 2019 Global Identity and Fraud Report revealed approximately 74 percent of consumers ranked security as the most important part of their online experience, followed by convenience. In other words, they expect businesses to provide them with both. We see this with how consumers are typically using the same security information each time they open a new digital account – out of convenience. But if one account is compromised, the consumer becomes vulnerable to possible fraudulent activity. With today’s technology, businesses can give consumers an easier and more secure way to access their digital accounts. Creating the optimal online experience More security usually meant creating more passwords, answering more security questions, completing CAPTCHA tests, etc. While consumers are willing to work through these friction-inducing methods to complete a transaction or access an account, it’s not always the most convenient process. Advanced data and technology has opened doors for new authentication methods, such as physical and behavioral biometrics, digital tokenization, device intelligence and machine learning, to maximize the potential for businesses to provide the best online experience possible. In fact, consumers have expressed greater confidence in businesses that implement these advanced security methods. Rates of consumer confidence in passwords was only 44 percent, compared to a 74 percent rate of consumer confidence in physical biometrics. Consumers are willing to embrace the latest security technology because it provides the security and convenience they want from businesses. While traditional forms of security were sufficient, advanced authentication methods have proven to be more reliable forms of security that consumers trust and can improve their online experience. The optimal online experience is a balance between security and convenience. Innovative technologies and data are helping businesses protect people’s identities and provide consumers with an improved online experience.  

  The journey to a mortgage is complex and expensive, so of course the transaction will require more than a few swipes on a smartphone. The U.S. existing home median sales price in October was $274,000 – not cheap. Still, with advancements in digital verification, lenders can dramatically accelerate the process, providing benefits to both their own operations and the consumer mortgage experience. Underwriting a sizeable loan can take weeks with the task of collecting income and asset documents to analyze and verify. In fact, one source from the Mortgage Bankers Association says the average mortgage application has ballooned to 500 pages. The consumer is typically asked to find, print and scan papers revealing insights around employment status and wages, bank and retirement accounts, debts and beyond. The good news is that this process can be handled digitally, and I’m not talking about simply scanning and emailing. Verification solutions exist to enable consumers to grant limited and secure access to digitally verify assets and income. As lenders evaluate verification solutions, one of the key differentiators to seek is Fannie Mae Day 1 Certainty, which claims to slash the average cycle time for income validation by 8.1 days, employment validation by 11.9 days, and asset validation by 6.1 days. * Fannie Mae features a list of approved vendors who provide Fannie Mae-approved verification reports. This group of authorized suppliers receive freedom from representations and warranties for more efficient risk management, and additionally receive the benefit of a more streamlined process through Fannie Mae’s Desktop Underwriter® (DU®). DU’s latest enhancement leverages a verification of asset report derived from aggregated bank account data, something Finicity (an Experian partner) is approved to utilize. Building on Day 1 Certainty, Finicity is participating in a new single source pilot with Fannie Mae to validate income, assets and employment. While it will take time for lenders to embrace this new technology – and consumers will need to feel comfortable granting the digital access and understanding how the process works – the thought is the mortgage journey will become faster and offer an optimized borrower experience. Like so many other aspects in our lives, mortgage is bound to go digital. *Average days saved reflects data captured between January 2017 and June 2017.

It was two years ago when I found myself sitting cross-legged on my home office floor, papers strewn about as I organized piles of tax returns, W-2s, pay stubs, 401k and bank statements, and previous escrow docs. My task? Sort through it all, scan them (if I couldn’t access them digitally) and then upload/email them to a site for my mortgage broker to print and package for my refinance application. For a girl accustomed to Amazon Prime, mobile banking, social media and smart TVs, this monumental financial task seemed utterly archaic – even in 2015. Fast forward two years later, and the mortgage space has failed to make much progress. Clearly, the financial meltdown and Great Recession placed more regulation and compliance stresses on financial institutions. Verification steps and requirements needed to be strengthened – and that made sense. We want to make sure people are capable of paying for those sizable mortgage payments, right? Even now, I get flashbacks to scenes from The Big Short. Still, the hunt for paper, the endless scanning, the emailing, the document uploads required? In an era where the smartphone rules, how has the mortgage industry failed to evolve in the digital age? It’s no secret the financial services industry is typically slow to adopt the latest in technology advancements, but consumers are pushing. A 2016 Accenture survey reveals online banking is now the top choice of consumers at 28%, followed by branch banking at 24%. In the mobile banking space, there has additionally been a significant increase. From 2011 to 2015, mobile banking doubled (22% to 43%) and rose from 43% to 53% for smartphone users in particular. But what about mortgage? Finally, it seems, shifts are underway. In a recent Oliver Wyman paper titled Digital Mortgage Nirvana, the authors state, “Gone are the days when the only way to properly underwrite a mortgage was with long application forms and tall stacks of documents.” Once easy to carry in one hand, the average mortgage application file has ballooned to 500 pages, according to David Stevens, CEO of the Mortgage Bankers Association. And while the application may not shrink, portions of the application process can be digitized and automated. Today, lenders have the ability to partner with data aggregators to verify a consumer’s assets and income with online solutions. In fact, lenders can take this a step further, feeding the data into their automated decision engines, providing the consumer with an approval, decline or conditions that must be met in order to clear the loan process. Nonbanks have been picking off business and disrupting the onerous mortgage process for the past several years. Think Quicken, LoanDepot and GuaranteedRate. But all mortgage lenders have the ability to speed up consumer verification and decisioning by partnering with data aggregators and leveraging solutions like Experian’s digital verification suite. Are we talking a one-click shopping experience? No. This is a mortgage after all, not your average online purchase. But banks now have the opportunity to dramatically enhance the mortgage experience for consumers. The question is whether they are ready to finally embrace a digital journey in the mortgage space in 2017, or will they let another year pass them by?

Experian recently acquired a minority stake in Finicity, a leading financial data aggregator enabling innovation in the FinTech industry through its modern RESTful API and Finicity Aggregation Platform. Steve Smith—chairman, CEO and co-founder of Finicity—has a passion and experience in developing innovative and disruptive technology, products and services that leads to efficiency for markets and, ultimately, improvements for consumers. Here he shares his thoughts about disruptive technology in the lending space and its benefits to lenders and consumers. Q: Finicity has said its objective is to take a loan application approval from weeks to minutes using its technology. That sounds pretty great, but how is that possible? How does this play out behind the scenes? A: Well, we’re living in a world where we, as consumers, expect very user-friendly experiences and we expect things to happen at digital speeds. The loan process is no exception. To deliver the experience consumers are expecting requires us to leverage the technology trends of digitization, mobility and big data. Finicity plays a foundational role by leveraging thousands of digital connections across financial institutions to aggregate consumer-permissioned account data. Once we have this data, we’re able to deliver real-time insights into an individual's financial health. This financial health assessment includes income and assets, two critical components to the loan approval process. All that’s required is the borrower to permission use of the data. Once that’s done, we’re able to gather all appropriate data across multiple accounts, rapidly analyze it and send a verification report to the lender. No papers. No multiple requests. No questions on the validity of the data. All done in minutes, not weeks. Q: This is very disruptive technology. What are the benefits for lenders? Consumers? A: Well, as we discussed, one of the major benefits is the speed to a loan. Furthermore, this reduces cost for the lender by maximizing loan officer’s time, while also freeing up loan capital as they can move through loans more quickly with a higher quality assessment. Another benefit for lenders is reduced fraud. Our information on income and assets is coming from real-time bank validated information. This eliminates the possibility of altered data. For consumers, it’s a dramatically simplified process. No need to chase down multiple documents. There are virtually no second requests for information, which we often see in the process. And they’re always in control of their information. All in all, it’s a dramatically better experience for both the lender and the borrower. Q: What sets this solution apart from others in the market? A: A few things set Finicity apart in delivering the quality of insights required. First, we are an industry leader in the number of financial institutions we connect with, ensuring broader access for more customers. Second, 95 percent of our integrations provide access to formatted data, something that’s critical to credit decisioning solutions. In these cases, we’re not screen scraping. This enhances our ability to collect bank validated transactions; we provide the financial institution transaction ID. This provides assurance of data quality. Finally, is our ability to categorize and analyze the transactions. This allows us to identify income streams and assets. Through this process, we’re also able to flag unusual transactions, like large deposits, that may skew actual assets. Q: The future of financial technology is still evolving. What lies ahead? A: We’re very excited about the future of financial technology and the impact that aggregation will have. Whether it’s financial management, digital payments or credit decisioning, real-time data will improve the experiences and the outcomes. As we’re talking about lending, this is one of the spaces that could see significant disruption. Our ability to generate a richer view of an individual’s or organization’s financial health will more accurately determine their ability to repay a loan. This will be a great benefit for those that have thin file or no credit history. We see a world where suitability for a loan will be driven by their actual financial life independent of their use of credit. One of the largest markets in the US is millennials. However, for consumers under 30, two-thirds have subprime or non-prime credit scores and one-third of millennials don't have any credit history. This is just one group underserved because legacy models don’t leverage the full extent of data available. Q: Is there anything else you can tell us about Finicity and its role changing customer experiences across financial service? A: For us, it all comes down to one thing: enabling individuals and organizations to have the information and insights they need to make smarter financial decisions. The data is there. We’re helping to unlock the potential of that data by working with innovative partners like Experian. To learn more about Experian and Finicity's account aggregation solutions, visit www.experian.com/finicity