Mastercard Expands Open Banking for Lending program

Mastercard is enhancing its Open Banking for Lending program in partnership with payroll data aggregator Argyle, aiming to simplify the lending process and increase financial inclusion. The upgraded program will allow financial institutions to digitally verify income and employment for an estimated 95% of the U.S. workforce paid via direct deposit. This expansion is expected to facilitate more informed and inclusive lending decisions, particularly benefiting individuals with limited or no credit history.

The move addresses significant challenges in the lending process, particularly for the 19% of consumers outside the traditional credit reporting system who struggle to access credit cards or rental agreements. A recent Mastercard survey revealed that 90% of these consumers are willing to provide secure digital access to their financial accounts if it helps them qualify for a loan.

Current income and employment verification processes are often manual and cumbersome, leading to inefficiencies and an increased likelihood of applicants abandoning the process. Mastercard’s enhanced Verification of Income and Employment solution, powered by Argyle, allows lenders to verify applicant data through connected bank accounts or payroll systems, reducing the need for manual documentation and making the process more efficient.

Brian Geary, Chief Operating Officer at Argyle, emphasised that the new digital verification tools balance trust with innovation, offering a streamlined experience for both lenders and applicants.

In addition to income verification, Mastercard’s Cash Flow Analytics and Balance Analytics solutions enable lenders to assess an applicant’s financial health by analysing cash flow and account balances, with the applicant’s consent. These tools help create new opportunities for individuals with thin or subprime credit files to secure loans. For small business owners, the same analytics can be applied to improve their financial experiences.

Mastercard’s open banking technology also supports first-time homebuyers by incorporating rent payment history into credit assessments, working with Fannie Mae and Freddie Mac to provide a more comprehensive view of creditworthiness.

With these enhancements, Mastercard’s Open Banking for Lending program is unlocking new pathways for consumers to access credit and participate in the digital economy securely and seamlessly.