Mastercard is revolutionizing the lending process through its Open Banking for Lending initiative, a partnership with Argyle that aims to simplify access to credit and empower consumers with greater control over their financial lives. This groundbreaking initiative is designed to drive smarter, more inclusive lending decisions and help integrate more people into the digital economy.
Traditionally, obtaining a loan has been a daunting process, particularly for individuals who lack a traditional credit history. This often leaves them struggling to access credit cards or even rent apartments. Mastercard recognizes the potential of digitization to change this landscape, recognizing that 90% of consumers with insufficient credit history are open to providing secure digital access to their financial accounts for loan applications.
To address the challenges posed by cumbersome manual verification processes, Mastercard is expanding its Verification of Income and Employment solution. This expansion incorporates credentialed payroll data, facilitated by Argyle’s payroll data aggregation technology. This allows financial institutions to seamlessly verify an applicant’s income and employment through a single integration with Mastercard’s Open Banking platform.
With the applicant’s consent, lenders can now verify income and employment data either through connected bank accounts or directly via payroll systems. This eliminates the need for collecting physical income documentation and manual data review, creating a more efficient and convenient experience for both 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.”
Open banking is transforming the lending landscape by leveraging consumer-permissioned data to provide a fuller picture of creditworthiness. This approach goes beyond traditional credit scores, tapping into diverse data sources such as income and employment verification, assets, cash flow, and balance analytics. Open banking creates more inclusive pathways for lending decisions, opening doors for individuals with limited, subprime, or non-existent credit histories.
“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, 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.”
Mastercard is further expanding access to credit with its innovative Cash Flow Analytics and Balance Analytics solutions. With the applicant’s consent, lenders can gain a comprehensive view of financial health by analyzing bank account data, including cash flow trends and account balances. This holistic approach to assessing creditworthiness opens new avenues for individuals to secure loans, especially those who may not have a traditional credit profile.
Mastercard’s open banking technology also offers significant benefits for small business owners. Lenders can leverage Mastercard’s APIs to apply advanced analytics and improve the financial experiences of small businesses, making it easier for them to access the credit they need to grow.
Mastercard is even breaking down barriers to home ownership. Through its open banking technology, rent payment history can now be used to demonstrate creditworthiness. This provides first-time homebuyers with limited credit history but strong rent payment records a better chance at securing a mortgage.
In collaboration with Fannie Mae and Freddie Mac, Mastercard incorporates rent history and cash flow assessment data into the mortgage underwriting process, offering a more comprehensive credit evaluation for applicants with thin or no credit files.
Mastercard Open Banking is driving a future where everyone can access the tools necessary to secure loans and participate fully in the digital economy, seamlessly and securely. Solutions for Verification of Income and Employment, Cash Flow Analytics, Balance Analytics, and more are now available through Mastercard’s Open Banking for Lending program, offered by its U.S. open banking arm, Finicity.
