Payments giant Mastercard is enhancing its open banking programme, delivered in partnership with direct-source income and employment data provider Argyle, to streamline the lending process for consumers.
Mastercard is introducing new features to its ‘Open Banking for Lending‘ programme, enabling it to provide income and employment coverage to the estimated 95 per cent of the US workforce who receive payments via direct deposit. It explained it hopes the move will power ‘smarter and more inclusive lending decisions’ and help bring more people into the digital economy.
Around 19 per cent of individuals fall outside of the traditional credit reporting system, meaning they face significant difficulties when trying to do anything from obtaining a credit card to renting an apartment.
A recent Mastercard survey also found that 90 per cent of consumers who do not have sufficient credit history to qualify for a loan are willing to grant secure digital access to their financial accounts to obtain one.
Now, Mastercard is expanding its Verification of Income and Employment solution to include credentialed payroll, powered by Argyle, enabling financial institutions to digitally verify an applicant’s income and employment.
“These solutions empower all parties to take advantage of frictionless lending experiences and achieve faster and more accurate verification,” explained Brian Geary, chief operating officer at Argyle.
Mastercard explained that by leveraging open banking technology, it can harness comprehensive insights from consumer-permissioned data sources, including income and employment verification, assets, cash flow and balance analytics. This means it can offer more opportunities to individuals with thin, subprime or no credit files.
“A personalised and accessible digital experience is not just a nice-to-have, it is table stakes – and lending experiences are no exception,” said Jess Turner, EVP, global head of open banking and API. “Our robust suite of lending solutions powers seamless decisioning to help more people benefit from the digital economy and take control of their financial futures.”
Supporting larger numbers of customers
Mastercard’s Cash Flow Analytics and Balance Analytics solutions also enable lenders to use bank account data to holistically view their financial health during the decisioning process. These solutions indicate creditworthiness by analysing cash flow trends as well as account balances in an individual’s bank account, creating new pathways to obtain credit and secure a loan.
When using existing solutions, consumers are more likely often abandon income and employment verification processes completely, and those without steady income streams, including members of the gig economy, face additional challenges in disclosing their payment history.
Mastercard’s open banking technology can also use rent payment history to prove creditworthiness, creating opportunities for homeownership for first-time homebuyers who may have a limited credit history but still possess strong rent payment history.
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