Mastercard has recently introduced new improvements to its Open Banking for Lending program in partnership with Argyle. The goal is to streamline the lending process and provide consumers with more control over their financial lives. With these enhancements, income and employment verification is now accessible for an estimated 95 percent of the U.S. workforce. This advancement aims to make lending decisions smarter, more inclusive, and bring more individuals into the digital economy.
Enhancing Income and Employment Verification
Securing a loan can be challenging, especially for the 19 percent of individuals who don’t fit into the traditional credit reporting system. These people often face difficulties accessing credit cards, loans, or even renting apartments due to insufficient credit history. However, digitization presents a solution. A recent survey by Mastercard indicated that 90 percent of consumers with limited credit history are willing to allow secure digital access to their financial accounts to qualify for a loan.
Despite this willingness, the current processes for income and employment verification remain manual and complex. Applicants are often required to gather paystubs and tax documents, while financial institutions must verify this information, leading to higher abandonment rates. To address this, Mastercard is expanding its Verification of Income and Employment solution to include credentialed payroll powered by Argyle. This upgrade allows lenders to digitally verify an applicant’s income and employment with ease and accuracy, eliminating manual document collection and making the lending process more efficient for both parties.
Creating More Pathways to Creditworthiness
Mastercard’s Open Banking platform utilizes consumer-permissioned data sources to expand pathways for lending decision-making. By incorporating income and employment verification, assets, cash flow, and balance analytics, the platform offers more convenient and inclusive lending experiences, especially for individuals with thin or subprime credit files.
Utilizing New Tools for Loan Security
Mastercard’s Cash Flow Analytics and Balance Analytics solutions enhance the lending process by allowing lenders to analyze applicants’ bank account data with their permission. These tools provide a comprehensive view of an individual’s financial health, including cash flow trends and account balances, offering new ways to assess creditworthiness and secure loans.
For small business owners, these analytics are valuable in improving financial experiences. Additionally, using rent payment history to demonstrate creditworthiness can benefit first-time homebuyers with limited credit history but strong rent payment records. Collaborations with Fannie Mae and Freddie Mac support this initiative by incorporating rent history and cash flow data into the mortgage underwriting process for a more thorough credit assessment.
