Mastercard Develops Open Banking Lending System to Expand Financial Access

Mastercard has announced enhancements to its Open Banking for Lending program, in partnership with Argyle, aimed at simplifying the lending process and giving consumers more control over their financial lives. The system now offers new features that enable income and employment verification for approximately 95 percent of the US workforce, ultimately driving smarter and more inclusive lending decisions and bringing more people into the digital economy.

Facilitating Income and Employment Verification

Getting a loan can be a daunting task, especially for the 19 percent of people who fall outside the standard credit reporting system. These people often find it difficult to get credit cards, secured loans, or rent apartments because of insufficient credit history. However, digitization offers a possible solution. A recent Mastercard survey revealed that 90 percent of consumers with insufficient credit history are willing to provide secure digital access to their financial accounts in order to qualify for a loan.

Despite this determination, the current procedures for verifying income and employment remain manual and cumbersome. Applicants often find themselves burdened with collecting paystubs and tax documents, while financial institutions must use resources to verify this information. These challenges can lead to high rates of abandonment, especially among gig economy workers and those without a steady income.

To address these issues, Mastercard is expanding its Income and Employment Verification solution to include verified payments, powered by Argyle, a payroll data aggregator. This development allows financial institutions to digitally verify an applicant’s income and employment with greater ease and accuracy. Through a single integration with Mastercard’s Open Banking platform, lenders can now verify income and employment data through linked bank accounts or directly through payment systems, with the applicant’s consent. This digital process eliminates the need for manual document collection, making the loan process more efficient and user-friendly for both lenders and applicants.

Expanding Ways to Get Credit

Mastercard’s Open Banking platform uses consumer-enabled data sources, including income and employment verification, assets, cash flow, and balance analysis, to create new ways to make lending decisions. This comprehensive information enables a simple and comprehensive lending experience, especially for people with small, subprime, or no credit files.

New Loan Protection Tools

Mastercard’s Cash Flow Analytics and Balance Analytics solutions improve the lending process by allowing lenders to analyze applicants’ bank account data, with their consent. These tools provide a holistic view of a person’s financial life by examining cash flow trends and account balances, providing new ways to assess creditworthiness and obtain a loan.

For small business owners, these statistics can be especially important, providing lenders with the information needed to improve the financial experience. Additionally, Mastercard’s banking technology can use rental payment history to show creditworthiness, offering new opportunities for first-time homebuyers with limited credit history but strong payment records. This initiative is supported by a partnership with Fannie Mae and Freddie Mac to integrate rental history and cash flow data into the mortgage underwriting process, allowing a comprehensive credit check for applicants with little or no credit files.