Data Facts Lending Solutions Blog

Why Consumer-Permissioned Data is the Future of Lending

by Matt Holmes

Feb 17, 2020 9:02:00 AM

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Living through the smartphone revolution, we’ve all been amazed at how technology has made it exponentially easier to obtain the information we need. Gone are the days of walking down to the library to grab an encyclopedia. And although it took a little bit longer, now gone are the days of sitting in your local credit union waiting to apply for a loan. How did mankind manage to make mortgage lending so simple? There are so many ways technology is changing the game for lenders, and one of these is the increase in access to consumer-permissioned data.

So what is consumer-permissioned data?

Consumer-permissioned data is personal data that a consumer grants permission for a business to access on their behalf. A win-win for consumers and lenders alike, consumer-permissioned data helps prevent a lot of headaches during the application process. It gives lenders the ability to make faster, more accurate decisions, and gives consumers the ability to disclose financial data without the hassle of chasing down hard-copy bank statements.

Are consumers warming up to the idea?

At a glance, the idea of consumer-permissioned data might make borrowers cringe, but research has shown that many are warming up to the idea. According to an Experian study, about 56% of consumers agree that giving lenders the ability to access their financial data would be more convenient than offering hard-copy bank statements.

And the process is more secure than you might think. Steve Smith, CEO of Finicity points out that retrieving consumer-permissioned data is actually safer than traditional transactions, because the data is pulled straight from the source. “Obtaining the same data through other methods such as email, fax or snail mail is much less secure and offers more opportunities for error,” says Smith.

This level of trust has been shown by GSEs as well, which now offer rep and warrant relief when these types of digital verifications are made.

Of course, the more power given to the consumer, the safer they’ll feel, which is key. Empowering them to control what data they share and who they share it with is important because it establishes trust with your institution. According to Finicity, 49 percent of consumers will go on to tell friends and family about their positive experience with an organization once trust is established.

Consumers want the application process to be accurate and seamless, and they want to be in the driver’s seat with their financial data. With consumer-permissioned data coming onto the scene, this vision can become a reality.

See how Data Facts can help you leverage the power of consumer-permissioned data with GSE-approved VOA solutions.

Sources:

https://www.finicity.com/financial-data-security/

https://www.experian.com/assets/consumer-information/white-papers/alternative-credit-data-paper.pdf

https://www.mba.org/publications/insights/archive/mba-insights-archive/2019/steve-smith-of-finicity-on-consumer-permissioned-data?_zl=F6295&_zs=LRJdN1&hss_channel=tw-274790757

 

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