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Revolutionizing lending in today's digital world


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Imagine a world where the lending journey is streamlined and aligned with today's innovative technologies. A world where income and asset verification happen real-time. No need to return to your customers and request even more paperwork to support their ability to pay. This presentation dives into how lenders can now bring financial data aggregation into the mainstream. With a simple interface, lenders can verify income and assets in minutes vs. days, leading to reduced processing times, improved revenue streams and higher customer satisfaction.

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Revolutionizing lending in today's digital world

  1. 1. Revolutionizing lending in today’s digital world March 23, 2017
  2. 2. About our speakers: Laura DeSoto Senior Vice President, Experian Steve Smith CEO, Finicity Reshma Peck Moderator, Experian
  3. 3. 1. Today’s lending landscape 2. The role of account aggregation 3. Industry use cases 4. A look at Experian’s Digital Transaction Solutions 5. Q&A Agenda
  4. 4. • Understand the opportunity to reimagine lending • Learn how to apply it to various industries • Discover the power of Experian’s Digital Transaction Solutions Objective
  5. 5. Partnering to provide innovative solutions User-permissioned Access to Data Robust Analysis and Insights Integrated Decisioning and Delivery Better Customer Experience & More Efficient Business Processes Experian and Finicity Partnership + + =
  6. 6. Today’s lending landscape
  7. 7. Trends defining the banking industry in 2017 and beyond “Long term, banks without legacy overhangs of branch networks and heavy ties to paper-based processing will be advantaged, as those assets will be increasingly less valued.” SOURCE: utm_campaign=email_article/#1-onerous-carl-compliance-audit-risk-and-legal-costs-abate-1
  8. 8. • Verification is time consuming • Relying on proof documents Challenge: Assessing ability to pay MORTGAGE INCOME FRAUD RISK 12.5%FROM Q2 2015 TO Q2 2016 SOURCE: CoreLogic 2016 Mortgage Fraud Report September 2016 • Increases risk of fraud • Drives up operational costs • Slows down application and funding process • Burdens consumers • Negatively impacts customer experience • Results in higher abandonment rates
  9. 9. With the rise of “mobile financial services” consumer’s expect to be able to complete their financial transactions at the click of a button. Challenge: Shifting consumer expectations 53%Smartphone owners using mobile banking 28%Smartphone owners using mobile payments SOURCE: Federal Reserve, Consumers and Mobile Financial Services March 2016 94% 58% 56% 65% 42% 33% Checking balances or transactions Transferring money between accounts Receiving an alert Paying bills Purchasing remotely Purchasing in a store
  10. 10. “Let me state the matter as clearly as I can here: We believe consumers should be able to access [their financial] information and give their permission for third-party companies to access this information as well.” - Richard Cordray, Director, CFPB at Money 20/20, October 2016 Challenge: Regulatory pressure SOURCE:
  11. 11. • Financial Institutions/service providers must create a hassle-free customer experience. • To do this they will need to invest more heavily in digital capabilities and in technology that removes paper from the process. Lenders are forced to adapt “Digitization is driving transformation, rewriting the model as consumer expectations change”
  12. 12. We need to be connected ... very connected Legacy Business Model Risk Management Inertia Innovation Weary Increased Margins Tailored Customer Experiences Speed of Innovation Digital Laggards Digital Innovators Cloud - Mobility - Big Data Digital Divide
  13. 13. The role of Account Aggregation What’s new?
  14. 14. A method that involves compiling information from different accounts. What is account aggregation? • Bank accounts, credit card accounts, investment accounts, other consumer or business accounts, into a single place • FIs and accounts are chosen by the consumer • Permission is given by the consumer to the aggregator
  15. 15. vs. Account Aggregation Credit Reporting • Pulled from a resting database • May be viewed without consumer’s knowledge • Data provided by “furnishers” • Real time data collection • User permissioned for every access • Consumer is owner of data
  16. 16. Benefits of Account Aggregation • Automated, paperless verification process reduces processing times • Relies on consumer’s permissioning of data and true aggregation technology • Verification via real-time access into financial systems versus customer provided paperwork or third-party systems • Easy-to-use transparent interface for online and mobile experiences
  17. 17. Why our solution is different • FCRA compliant and delivered by registered and mature CRAs • Integrated with best in class Decisioning as a Service platform • Unparalleled data quality with 100% formatted data sources and comes with a Financial Transaction ID
  18. 18. Use Cases
  19. 19. • Lenders require that borrowers income and assets be verified which takes days sometimes weeks • Current verification process is tedious and time consuming for the borrower • Borrower intervention increases risk of false documentation and inflated reporting Mortgage
  20. 20. Verification of Asset Pilot • Freedom from paper-based processes for validation of assets for first mortgages • Freedom from representations and warranties • Greater speed and simplicity, enabling an improved borrower experience
  21. 21. • Lenders often have income threshold stipulations (STIPs) for borrowers with credit scores< 625 • Dealers often required to verify car buyers income to meet lender stipulations (STIPs) • Consumer overstates or understates income at time of application • Consumer provides fake or altered paystubs • Employment verification often required to meet lender stipulations (STIPs) Automotive
  22. 22. • Lenders require verification of borrowers income which takes times to gather and verify • Current verification process is tedious and time consuming for the borrower • Borrower intervention increases risk of false documentation and inflated reporting Personal loans
  23. 23. Helping organizations across a wide range of industries Home Loans Card & Personal Loans Small Business Screening Eliminate paper to move towards an all-digital mortgage underwriting process More precise ability to pay assessment Deeper understanding of cash inflows and outflows Improved insight into prospective employees and tenants Auto Loans Reduced manual verification and stipulations
  24. 24. New Products • Income Verification • Asset Verification • Cash Flow • Scores and Attributes Improved Outcomes • Increase consumer satisfaction • Reduce risk • Broaden loan availability • Accelerate loan underwriting Account Aggregation will power new consumer insights and digitize the application and lending process ACCOUNT AGGREGATION API Auto Loans Home Loans Card & Personal Loans Small Business Screening Digital Identity Employment Data DDA Savings Credit Accts Investment 401K
  25. 25. Experian’s Digital Verification Solutions
  26. 26. • Historical transaction data (typically 12-24 months) • Income report containing attributes: - Direct deposit income - Other income - Average monthly income - Frequency of income deposits - Payor • Verification of account owner Verification of Income
  27. 27. Verification of Assets • Account balance query across various types: - Checking (credits and debits) - Savings/CD’s - 401K, brokerage account • Historical transaction data details (typically 90 days) • Account balance attributes (typically last 90 days) - Average account balance and trend - Min and max account balance • Verification of account owner
  28. 28. Prequalification Use across the lifecycle of a lending relationship Underwriting/ Decisioning Verification Credit Risk Modeling Account Review/ Monitoring
  29. 29. Data flow Multiple Integration Options Checking Investment Account Savings Real-timeAccount Aggregationprocess Access via Modern API, NetConnect, or ATB Report ID Loan Application Consumer
  30. 30. 555-1313 ************ ****
  31. 31. Jones
  32. 32. What makes us different? Broad Coverage • 80% certified coverage • Full spectrum of account types High Quality Data • 100% formatted data • Auditable FI Transaction ID’s Compliant Solutions • Delivered by registered CRA • Robust security
  33. 33. Reimagining Lending Crosses the credit lifecycle; the uses and benefits are wide-ranging: Decisioning Verification Credit Risk Modeling Account Review Prequalification • Increases consumer satisfaction and loyalty • Reduces credit and fraud risk • Broadens loan availability • Accelerates loan underwriting • Improves ability to match consumer to right offer
  34. 34. Q&A
  35. 35. To learn more about Experian’s verification of income and verification of assets solutions: - Reach out to your account executive - Call 1-888-414-1120