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Q&A: Finicity releases a first-of-its-kind verification solution (Includes interview)

Finicity’s VOIE solution will speed up borrower verifications and further advances the industry in its shift to become fully digital. After extracting a borrower’s pay statement data from their pay stub, the VOIE solution then cross-verifies it with their transactions from their financial institutions.

To understand more about the new solution, Digital Journal caught up with Steve Smith, CEO of Finicity.

Digital Journal: What is the Finicity Verification of Income and Employment (VOIE) solution?

Steve Smith: Finicity’s Verification of Income and Employment with TXVerifyTM product is digitizing what has historically been a mostly manual process of borrower verifications for loan applications. As a result, it becomes a radically faster and more accurate process, resulting in a better lender and borrower experience.

The VOIE solution extracts a borrower’s pay statement data from their paystub and then cross-verifies it with their income transactions from their bank accounts.

The solution leverages the high-value data – direct from banks – along with a scan, photo or PDF of a borrower’s paystubs. The result is a fully digital and detailed vetting process that creates a real-time picture of an applicant’s income and employment for fast, accurate reports.

DJ: How does the new development differ from legacy VOIE solutions?

Smith: Legacy VOIE solutions have low coverage and success rates. These solutions rely on payroll data supplied by employers who report information infrequently and typically only represent large enterprise – not taking into account the majority of people who work at small and mid-sized businesses. Finicity’s VOIE solution uses direct deposit payroll data, which represents over 90% of American workers – dramatically improving the coverage for an automated income and employment verification.

As mentioned above, the success rates of legacy automated solutions are typically low – hovering around 15-25%. Finicity’s VOIE solution is anticipated to have a success rate of more than 70% – triple that of legacy solutions.

DJ: How did you go about developing the technology?

Smith: We have been successfully delivering verification of asset reports for the past couple of years. However, we understood that the broader credit decisioning industry was in great need of a digital income and employment verification process that worked. The attitude around existing solutions was an expectation of failure due to the infrequency of successful automated report returns.

We also realized that the solution would have to be simple to use for lenders from mortgage to personal and beyond. As a digital enabler, we already had a head start on understanding how to access and leverage data that would readily identify income and employment. After looking at all data sources we realized we could take transaction data and cross-verify it with extracted paystub data through our patent-pending technology TXVerifyTM. Through these two data sets, we’re able to see net, gross, employer and many other key data points that help a lender make a more rapid and accurate decision.

One of the best aspects of this solution is that it can now be paired with Finicity’s pre-existing asset verification product so lenders can do all three verifications through a single process flow.

DJ: How will the VOIE solution speed up borrower verifications?

Smith: Again, most income and employment verifications are done manually which dramatically slows down the process. With our VOIE solution, the whole process is digital and from start to finish and takes up to 10 minutes, give or take. Specific to mortgage lending, Finicity’s VOIE solution shaves off an average of anywhere from 12-14 days of the entire process.

DJ: How have you assessed the efficiency?

Smith: The efficiency of the tool is assessed on how much of the population it can serve. The paystub provides detailed income information and with direct deposits covering 93% of the American workforce, there is wide coverage.

The national average time to close is still over 40 days, yet some of our partners have cut closing time down to two weeks or less and are pushing it even shorter. There are a lot of processes going on concurrently when originating a mortgage, but our VOIE solution is one that creates a significant efficiency where one didn’t exist before. Research has also shown that delayed closings can often be tied to income and employment verification issues. Additionally, working with GSEs is important to take advantage of their rep and warrant relief programs. VOIE is already receiving positive feedback from major market players like Experian and Quicken Loans, and the product is already in use with Freddie Mac’s asset and income modeler (AIM) program.

DJ: Which types of businesses are you targeting?

Smith: Finicity’s VOIE solution is available to lenders servicing all credit decisioning markets such as auto, personal loans and credit cards. However, the solution was designed initially with the mortgage market in mind. We did this intentionally as the U.S. mortgage market provides the highest levels of scrutiny and stringent requirements for verifications. Because this market involves high dollar decisioning, strict regulatory oversight, and demanding investors – including government-sponsored enterprises (GSEs) – it is considered the ultimate proving ground for credit decisioning processes and products.

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Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, business, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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