PURCHASE, N.Y.—Mastercard reported it is enhancing its Open Banking for Lending program to streamline the lending process and “give consumers more agency over their financial lives.”
With the new features, Mastercard said it has the ability to provide income and employment coverage to the estimated 95% of the U.S. workforce who receive payments via direct deposit.
“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,” Mastercard said in a statement. “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.”
‘Viewed as Laborious’
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, Mastercard stated.
“Applicants may waste time and energy gathering paystubs and tax documents while financial institutions expend their resources verifying them,” according to Mastercard. “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.”
Expanding Verification
Mastercard further said it is expanding its Verification of Income and Employment solution to include credentialed payroll, enabling financial institutions to digitally verify an applicant’s income and employment.