Helping more individuals and small businesses benefit from the digital economy through Mastercard Open Banking

Mastercard is enhancing its Open Banking for Lending program, delivered with Argyle, to streamline the lending process and give consumers more agency over their financial lives. With new features, Mastercard has the ability to provide income and employment coverage to the estimated 95% of the U.S. workforce who receive payments via direct deposit, ultimately powering smarter and more inclusive lending decisions and helping bring more people into the digital economy.

Verifying income and employment with ease 

Securing a loan can be overwhelming, and the challenges are compounded for the 19% of individuals who fall outside of the traditional credit reporting system and therefore face difficulty opening a credit card or renting an apartment. Digitization could make a difference; a recent Mastercard survey of lending trends shows 90% 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.

While consumers are open to connecting their accounts for faster experiences, income and employment verification processes today are manual and can be viewed as laborious. Applicants may waste time and energy gathering paystubs and tax documents while financial institutions expend their resources verifying them. As a result, consumers are more likely to abandon the process completely, and those without steady income streams, including members of the gig economy, face additional challenges in disclosing their payment history.

Mastercard is expanding its Verification of Income and Employment solution to include credentialed payroll, powered by payroll data aggregator Argyle, enabling financial institutions to digitally and seamlessly verify an applicant’s income and employment. Through a single integration to Mastercard’s Open Banking platform, lenders have the flexibility to verify income and employment data through connected bank accounts or via payroll systems with the applicant’s permission. Mitigating the need to collect income documentation and manually review data, the new solution renders an efficient and convenient process for lenders and applicants.

“We’re excited to make digital verification of income and employment widely available through Mastercard Open Banking, balancing our shared priorities of trust and innovation,” said Brian Geary, chief operating officer at Argyle. “These solutions empower all parties to take advantage of frictionless lending experiences and achieve faster and more accurate verification.” 

Unlocking opportunities to prove creditworthiness

Open banking expands pathways to lending decisioning by harnessing comprehensive insights from consumer-permissioned data sources, including income and employment verification, assets, cash flow and balance analytics. Not only does this enable easier and more convenient experiences, but it also opens more opportunities for individuals with thin, subprime or no credit files.

“A personalized and accessible digital experience is not just a nice-to-have, it is table stakes – and lending experiences are no exception,” said Jess Turner, executive vice president and global head of Open Banking & 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.” 

New pathways to secure a loan

Additionally, Mastercard’s Cash Flow Analytics and Balance Analytics solutions enable lenders to use – with an applicant’s permission – their bank account data to holistically view their financial health during the decisioning process. These solutions indicate creditworthiness by analyzing cashflow trends as well as account balances in an individual’s bank account, creating new pathways to obtain credit and secure a loan. For small business owners that give their permission via open banking, lenders can also leverage Mastercard’s APIs to apply those same analytics and insights to improve their financial experiences.

Mastercard’s open banking technology can also use rent payment history to prove creditworthiness, creating opportunities for home ownership for first-time homebuyers who may have limited credit history but boast strong rent payment history. Mastercard works with Fannie Mae and Freddie Mac to provide rent history and cash flow assessment data during the mortgage underwriting process, powering a more comprehensive credit assessment for thin-file and no-file applicants.

Mastercard Open Banking is unlocking a future where everyone has access to the tools to secure a loan and benefit from the digital economy seamlessly and securely.

Solutions for Verification of Income and Employment, Cash Flow Analytics, Balance Analytics and more are available today through Mastercard’s Open Banking for Lending program, provided by its U.S. open banking arm Finicity.