In Data Acquisition, Merchant Acquisition, Operational Efficiency, Partner Spotlight

In this Partner Spotlight, we’re focusing on Finicity, a core bank aggregator and innovator in personal financial management and consumer financial wellness. Finicity also provides secure API connections for finance, and is a member of the Financial Data Exchange (FDX). Richard Kuhn, VP Business Development for Finicity, shares details with us.

Richard Kuhn, VP Business Development

What trends do you see, that joint clients should be thinking about?

Right now, the biggest trend we’re seeing is digitization, and that transformation is being driven by customer experience demands. Consumers want the simplest, quickest experience they can find, and we are focused on providing digital tools and solutions to lenders to help make their processes more efficient and more pleasing to their borrowers.

Another trend is the move towards improving financial inclusion, and one of the best side benefits we provide is access to data that helps expand the lending pool and improve credit decisioning.

What else are you seeing in the market?

Both consumers and financial institutions are looking to digital channels for security and interoperability. But without a standard approach to secure data delivery, companies are facing mounting technical debt to capture, interpret and act on financial data.

With that in mind, we are actively pursuing the development and implementation of an industry-wide standard for data sharing. We have taken a lead role in the Financial Data Exchange and are working to develop the FDX API. This API will work in combination with specific frameworks governing data sharing, secure authentication, data semantics and syntax.

This approach shares some of the same conceptual ideas of Open Banking currently promoted in the European Union – namely providing standardization that will make it easier and safer for consumers to use financial data and apps to make good decisions.

Why did you choose to partner with Zoot?

Zoot’s platform is a natural place for Finicity. Lenders and other organizations that are processing transaction data can access Finicity through the platform and integrate that data into the decisioning process. Joint clients can use this information to contribute to their unique decisioning, loan origination and fraud prevention initiatives.

What specific issues does Finicity address?

Finicity enables consumers and businesses to access their transaction and account data from their financial institution to facilitate loan applications, origination,  ACH and account owner verification. And equally as important, we provide a means for consumers to grant permission for their data to be used.

With Finicity, consumers can simply and quickly allow access to this kind of data, rather than involving lenders and borrowers in the process of tracking down documents and emailing or faxing them to where they need to be.

How does it work?

Finicity provides connections to thousands of US and Canadian financial institutions via our API.  Those connections allow third parties to access data – once it has been permissioned by an account owner via the Finicity Connect widget – which can live in an online flow or be initiated via email.

Once a consumer grants permission, the data is pulled using tokenized access from the financial institutions and either provided to the lender or analyzed and put into a verification or other report. Finicity also supports business lending and merchant account validation.

What makes your solution unique?

Our solution is unique because of our data access, data quality and role as both a core aggregator and a Consumer Reporting Agency. Finicity owns and manages all of its connections with financial institutions, which allows us to control what data we receive.

Ninety-five percent of our data is formatted for the specific purposes our lenders and clients need. We have signed Secure Data Exchange agreements with many of the larger financial institutions, which improves both security and data access. And this applies to consumer, small businesses and merchant accounts – really any account information that a lender might want.

Finicity is also the only aggregator that is also a Consumer Reporting Agency. We provide a dispute and disclosure process for any consumers who need to dispute or update data to ensure fair reporting of their credit.

What problems does Finicity solve?

At its core, Finicity solves the problem of user-granted permission for data use. Finicity enables the account owner (business or consumer) to permission their data. This can be done for consumer or business loans, to verify account ownership, confirm existing account balances or verify cash flow.

With consumer-permissioned data and a robust Zoot platform, lenders can speed up their decisioning. That improved velocity in the origination process helps borrowers get the money they need faster, and our precise data helps lenders make informed decisions.

Lenders can now use data directly from a potential borrower’s bank account, which helps augment the profiles of these users when making decisions to lend to that borrower. This data hasn’t been typically used but is now part of expanding the credit pool.

Who is a good fit for Finicity?

Our best fits include any lender who has a need for a more digital process or who needs consumer-permissioned data directly from banks. Really, though, anyone who needs a quicker verification of income or assets report can benefit from adding Finicity into their Zoot platform.

What is the main benefit that joint clients will see?

There are three main benefits. The first is access to account owner-permissioned data, which provides insights and alternative data that lenders couldn’t previously access.

The second is immediacy. Finicity allows lenders to immediately access usable data in ways that will make their origination process more efficient and delight their borrowers.

Finally, the quality of the data is another key benefit to joint clients. Anyone in the industry knows that good data is crucial to good decision making, and our high-quality data makes it easy to accomplish the goals of each unique use case.

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