Tag: income verification

It's one thing to make a corporate commitment to financial inclusion, but quite another to set specific goals and measure outcomes. What goals should lenders set to make financial inclusion a reality? How can success be quantified? What actionable steps must be taken to put policy into practice? The road to financial inclusion may feel long, but this step-by-step checklist can help you measure diversity and achieve goals to become more inclusive as an organization. Step 1: Set quantifiable goals with realistic outcomes Start by defining what you plan to achieve with a financial inclusion strategy. When setting goals, Alpa Lally, Experian's Vice President of Data Business at Consumer Information Services, recommends organizations "assess the strategic opportunity at the enterprise level." "It is important that KPIs are aligned across each business unit and functional groups in order to understand the investment opportunity and what the business must achieve together," said Lally. "The key focus here is 'together', the path to financial inclusion is a journey for all groups and everyone must participate, be committed and be aligned to be successful." Figuring out your short- and long-term goals should be the first step to kickstarting a financial inclusion strategy. But equally important is driving towards outcomes. For instance, if the goal is to increase the number of loans made to previously overlooked or excluded consumers, you may want to start by examining your declination population to better understand who is being left out. Or if financial inclusion is tied to a wider strategy or vision on corporate social responsibility, your goals may include an education component, community outreach, and a re-examination of your hiring practices. No matter what KPIs you're using, here are relevant questions to ask in four key areas – which will help draw out your organizational goals and priorities: Organizational awareness: What action is your organization taking to enhance Diversity, Equity and Inclusion and embrace Corporate Social Responsibility (CSR) around financial inclusion? If you already have financial inclusion programs in place, what are the primary goals? Barriers: What barriers prevent the organization from pursuing equity, diversity and inclusion programs? Education: How do you create awareness and education around financial inclusion? Which community or third-party organizations can help you reach consumers who aren't aware of ways to access financial services? Markers of success: What benchmarks will your organization use to measure and analyze success? Step 2: Do a financial inclusion audit Before developing and implementing a robust financial inclusion program, Lally recommends conducting a financial inclusion audit – which is a "detailed assessment of where you are today, relative to the goals and results you've outlined". In a nutshell, it allows you to assess your current systems and results within your financial institution. According to Lally, a financial inclusion audit should address the following key areas: Roadmap: What are your strategic priorities and how will financial inclusion fit within them? Tracking: Track the actual volume and distribution of different underserved populations (e.g., young adults, low-income communities, immigrants, etc.) within your book of business. Look at the applications and the approval rates by segment. In addition, assess the interest rates these consumers are offered by credit score bands for each group: “Benchmarking is critical. Understanding how they compare to national averages? How do they compare to the rest of your portfolio?" said Lally. Hiring practices: Is diversity, equity and inclusion (DEI) central to your talent management strategy? Is there a link between a lack of DEI in hiring practices and the level of financial inclusion within an organization? Affordability and access: Determine if the products and services you offer are easily accessible, can be understood by a reasonable consumer and are affordable to a broad base. Internal practices: What policies exist that influence the culture and behavior of employees around financial inclusion? Partnerships: Identify outside organizations that can help you develop financial literacy programs to promote financial inclusion. Advertising: Does your advertising promote equal and diverse representation across a wide range of consumer groups? Tools to measure: Are you financially inclusive as a company? How can you improve? The Bayesian Improved Surname Geocoding (BISG) method used by the Consumer Financial Protection Bureau (CFPB) predicts the probability of an individual's race and ethnicity based on demographic information associated with the consumer's surname. Lenders can use this type of information to conduct internal audits or set benchmarks to help ensure accountability in their diversity goals. Step 3: Tap into technology New technology is emerging that gives lenders powerful tools to evaluate a wider pool of prospective borrowers while also mitigating risk. For instance, scoring models that incorporate expanded FCRA-regulated data provide greater insight into 'credit invisible' or 'unscorable' consumers because they look at a wider set of data assets (or 'alternative data'), which allows lenders to assess a larger pool of applicants. It also improves the accuracy of those scores and better assesses the creditworthiness of consumers. Consider these resources, among others: Lift Premium™: Experian estimates that lenders using Lift Premium™ can score 96 percent of U.S. adults, a vast improvement over the 81 percent that are scorable today with conventional scores relying on mainstream data. Such enhanced scores would enable six million consumers who are considered subprime today to qualify for “mainstream" (prime or near-prime) credit. Experian® RentBureau®: RentBureau collects rent payment data from landlords and management companies, which allows consumers to leverage positive rent payment history similarly to how consumers leverage consistent mortgage payments. Clarity Credit Data: Clarity Credit Data allows lenders to see how consumers use alternative financial products and examine payment behaviors that might exist outside of the traditional credit report. Clarity's expanded FCRA -regulated data provides a deeper view of the consumer, allowing lenders to identify those who may not have previously been classified as "at risk" and approve consumers that may have previously been denied using a traditional credit score. Income Verification: Consumers can grant access to their bank accounts so lenders can assess their ability to pay based on verified income and cash flow. In addition, artificial intelligence (AI) and greater automation can reduce operational costs for lenders, while increasing the affordability of financial products and services for customers. AI and machine learning (ML) can also improve risk profiling and credit decisioning by filling in some of the gaps where credit history is not available. These are just a few examples of a wide range of cutting-edge solutions and technologies that enable lenders to promote greater financial inclusion through their decisioning processes. As new solutions are introduced to the market, it is imperative that lenders look into these technologies to help grow their business. Step 4: Monitor and measure Measuring your progress on financial inclusion isn't a one-and-done proposition. After you've set your goals and created a roadmap, it's important to continue monitoring and measuring your progress. That means your performance to gauge the impact of financial inclusion at both the community and business levels. Lally recommends the following examples: Compare your lending pool to the latest population data from the United States census. Is your portfolio representative of the U.S. population or are there segments that should have greater access? How does it compare against other lenders competing in the same space? Keep in mind that it has been widely reported that certain populations were undercounted, so you may want to factor this reality into your assessments. Work to understand how traditionally underserved consumers are performing in terms of their payment behaviors, purchase patterns and delinquencies. Measure the impact of financial inclusion on your company's overall revenue growth, ROI and brand reputation. Conduct an analysis to better understand your company's brand reputation, how it's perceived across different groups and what your customers are saying. Last word Financial inclusion represents a big step towards closing the wealth gap and helping marginalized communities build generational wealth. Given the prevalence of socioeconomic and racial inequality in our country today, it's a complex issue that disproportionately impacts marginalized groups, such as consumers of color, low-income communities and immigrants. Adopting more financially inclusive practices can help improve access to credit for these groups. For financial institutions and lenders, the first step is to identify realistic, quantifiable goals. A successful financial inclusion initiative also hinges on completing a financial inclusion audit, tapping into the right technology and continually monitoring and measuring progress. "It is paramount that financial institutions hold themselves accountable and demonstrate their commitment to make these practices a part of their DNA." - Alpa Lally. Learn more

For credit unions, having the right income and employment verification tools in place helps to create an application process that is easy and low friction for both new and existing members. Digital first is member first The digital evolution created an expectation for online experiences that are simple, fast, and convenient. Attracting and building trusted, loyal relationships and paving the way for new revenue-generating opportunities now hinges on a lender's ability to provide experiences that meet those expectations. At the same time, market volatility and economic uncertainty are driving catalysts behind the need for credit unions to gain a more holistic view of a member’s financial stability. To gain a competitive advantage in today’s lending environment, credit unions need income and employment verification solutions that balance two often polarizing business drivers: member experience and risk management. While verified income and employment data is key to understanding stability, it’s equally important to streamline the verification process and make it as frictionless as possible for borrowers. With these things in mind, here are three considerations to help credit unions ensure their income and employment verification process creates a favorable member experience. The more payroll records, the better Eliminate friction for members by tapping into a network of millions of unique employer payroll records. Gaining instant access into a database of this scale helps enable decisions in real-time, eliminates the cost and complexity of many existing verification processes, and allows members to skip cumbersome steps like producing paystubs. Create a process with high configuration and flexibility Verification is not a one-size-fits-all process. In some cases, it might be advantageous to tailor a verification process. Make sure your program is flexible, scalable and highly configurable to meet your evolving business needs. It should also have seamless integration options to plug and play into your current operations with ease. The details are in the data When it comes to income and employment verification, make sure that you are leveraging the most comprehensive source of consumer information. It’s important that your program is powered by quality data from a wealth of datasets that extend beyond traditional commercial businesses to ensure you are getting the most comprehensive view. Additionally, look to leverage a network of exclusive employer payroll records. With both assets, make sure you understand how frequently the data is refreshed to be certain your decisioning process is using the freshest and highest-quality data possible. Implementing the right solution By including a real-time income and employment verification solution in your credit union’s application process, you can improve the member experience, minimize cost and risk, and make better and faster decisions. To learn more about Experian’s income and employment verification solutions, or for a complimentary demo, feel free to contact an expert today. Learn more Contact us

As quarantine restrictions lift and businesses reopen, there is still uncertainty in the mortgage market. Research shows that more than two million households face foreclosure as moratoriums expire. And with regulators, like the Consumer Financial Protection Bureau (CFPB), urging mortgage servicers to prepare for an expected surge in homeowners needing assistance, lenders need the right resources as well. One of the resources mortgage lenders rely on to help gain greater insight into their borrower’s financial picture is income and employment verification. The challenge, however, is striking the right balance between gaining the insights needed to support lending decisions and creating a streamlined, frictionless mortgage process. There are three main barriers on the path to a seamless and digital verification process. Legacy infrastructure Traditional verification solutions tend to rely on old technology or processes. Whether a lender’s verification strategy is centered around a solution built on older technology or a manual process, the time to complete a borrower verification can vary from taking a day to weeks. Borrowers have grown accustomed to digital experiences that are simple and frictionless and experiencing a drawn out, manual verification process is likely to impact loyalty to the lender’s brand. Stale employment and income data The alternative to a manual process is an instant hit verification solution, with the aim to create a more seamless borrower experience. However, lenders may receive stale borrower income and employment data back as a match. Consumer circumstances can change frequently in today’s economic environment and, depending on the data source the lender is accessing, data may be out of date or simply incorrect. Decisioning based on old information is problematic since it can increase origination risk. Cost and complexity Lenders that use manual processes to verify information are adding to their time to close and ultimately, their bottom line by way of time and resources. Coupled with pricing increases, lenders are paying more to put their borrowers through a cumbersome and sometimes lengthy process to verify employment and income information. How can mortgage lenders avoid these common pitfalls in their verification strategy? By seeking verification solutions focused on innovation, quality of data, and that are customer-centric. The right tool, such as Experian VerifyTM, can help provide a seamless customer experience, reduce risk, and streamline the verification process. Learn more

Experian recently announced its expansion into Employer Services and the release of a new suite of real-time income and employment verification products, Experian Verify™. The COVID-19 pandemic amplified lenders' need for deeper insights into a consumer's financial situation. At the same time, employers were flooded with record-breaking unemployment claims, while managing stay-at-home orders, income and employment verification fulfillment requests, and more. "We're committed to helping employers, businesses, lenders, and consumers on the road to recovery from the pandemic and beyond," said Alex Lintner, Group President Experian Consumer Information Services. "To support this, we're building two businesses: Experian Employer Services and Verification Solutions. These businesses will create meaningful change and provide our clients with competitive options to achieve their verification needs while helping improve access to credit for consumers." With Experian Verify, lenders can quickly and easily create a more complete picture of a consumer's financial situation by verifying an applicant's income and employment status. Powered by our growing network of payroll and proprietary employer data, Experian Verify offers lenders flexible and secure access to income and employment records. With a consumer's consent, lenders can request the information from Experian and an income and employment report can be delivered to lenders through an API, online Experian dashboard, or paired with an Experian credit report. "As we begin to recover from the COVID-19 pandemic and employers are reopening their doors, we're confident we have assembled the best-of-the-best to help employers overcome their toughest challenges. We're committed to leveraging our combined capabilities and focus on high-touch customer service to deliver secure, scalable and transparent services to employers," said Michele Bodda, President of Experian Mortgage, Employer Services and Verification solutions. Visit us for more information on Experian Verify and Experian's Employer Services. Contact us

  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.