Empowering Consumers through Financial Data Control and Permissioning

[Editor’s note: This is a blog post from Finicity. Finicity is a silver sponsor at LendIt Fintech USA 2019, which will take place on April 8-9 in San Francisco. On April 8 at 11:42 a.m., Finicity will discuss its credit decisioning solutions and demo its digital verification products at the Lendit Innovation Demo Hub.]

Digitization has given consumers the upper hand in their relationships and interactions with companies. Consumers are demanding and receiving better experiences because of it, and they have more insight in and control of those interactions. Consumers not only expect better digital experiences and engagement, but aren’t afraid to change providers based on their experience. In fact from age 18-65, consumers are now more likely to switch to a new company because of their digital experience rather than their physical presence.

With advancements in financial data access and control, consumers have become more engaged in providing accurate, insightful data to potential lenders, credit bureaus and Fintech companies.

Such consumer-permissioned data is transformational within financial services and for consumers themselves, providing deeper understanding and control of their financial health. And we’re only at the beginning of the revolution. As innovators and members of the Fintech community, we have the potential to give individuals, families and organizations much greater insight into their finances across accounts and account types. This will lead to a level of financial education and clarity far beyond anything we’ve seen historically. The result will be financial decisions that are highly informed and connected to an individual’s complete financial situation.

While we’re not there yet, the strides made in just the past year are remarkable. One excellent example is the use of consumer-permissioned data in the credit scoring process. Potential borrowers are able to permission use of the data in their bank accounts – transactions and other data types commonly found in bank statements – that can be added to their existing credit history and credit report to improve the accuracy of their score. For tens of millions of consumers, this also means an improved credit score.

The UltraFICO™ Score and Experian Boost™ mark a seismic shift in the credit scoring model. Both leverage consumer-permissioned data to help improve the lending experience for lenders and consumers alike. The UltraFICO™ Score analyzes data from consumer accounts for past financial behaviors that weren’t previously visible to credit scoring systems, but can help paint a more accurate picture of the borrower’s ability and willingness to repay a loan. Experian Boost™ analyzes data from consumer accounts to add different data points to the consumer’s credit history, particularly telecommunications or utility payments.

Both of these new products help consumers by empowering them to choose the data they share and to use that data to give lenders a more complete picture of their financial situation. With new data sources, those that are underscored or even unscorable now become potential borrowers and have access to mainstream financial services and products. Additionally, those that already have scores can have the potential to improve their score, allowing lenders to provide better rates and better suited financial products and services to the borrower.

How does consumer-permissioned data and these types of products improve the customer experience?

A More Engaging Approach

Consumers want to feel in control of their finances. This includes the digital platforms and experiences they use when applying for loans and interacting with lenders, loan officers, or banks. The consumer wants to control their personal experience and be in charge of their data.

Integral to providing that level of control is the ability to have the borrower login to their financial institutions and permission the right accounts for what they’re wanting to do. This shouldn’t need a redirect or a different app but should keep the borrower in the flow of applying for a loan or setting up an app. The consumer can personalize their experience and move along at their own pace and provide the information they desire.

Builds Trust

Providing personal data of any type to a company or organization requires a certain level of trust. Educating a consumer about what data a lender will need and how to provide it safely and securely makes a big difference in the customer experience. Even completely digital interactions can build trust by providing cues for what the customer is looking for like the security implemented, comfort with the lender by using its brand, and an explanation of the benefits of permissioning their data.

Using direct API integrations with financial institutions and continuing to build out better ways to retrieve and use data will also increase consumer trust. Finicity has signed secure data exchange agreements with many of the largest financial institutions, as well as taken a lead role with the Financial Data Exchange, an industry group working to standardize data sharing across the financial services landscape. Establishing a standard consumers can trust will go a long way in helping them know what to look for when sharing their financial data for any purpose.

Simplicity in Credit Decisioning

Consumer-permissioned data makes the verification process simple for the consumer and the lender. It’s a few clicks and logging into their bank accounts and they’re finished. That simple process provides the lender with validated data directly from their bank accounts.

The same process can be used to provide transaction data to FICO and Experian or it can be used to generate verification of income or asset reports. The data from an account can also authenticate the account owner and provide historical data to paint a more complete and accurate picture.

Improved Customer Experience with Consumer-Permissioned Data

Consumer-permissioned data doesn’t require a whole new data engine or origination workflow. It can be incorporated into current lending processes to help further digitize origination and delight borrowers by speeding up and simplifying the process from start to finish.

Empowering consumers with richer customer experiences and more ways to use their financial data to their benefit is occurring all over the financial services landscape. Inserting consumer-permissioned data access into loan origination is one way to meet consumer expectations and improve decisioning.

Finicity provides data access and insights to lenders of all types and financial institutions across the financial services industry. We help provide the data needed to improve financial outcomes through consumer-permissioned data.

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