In industries like mortgage and auto lending, accurate income and employment verification can directly impact the speed of approvals. Traditional methods, like manual document uploads or phone-based verifications, can lead to delays and errors.
Consumer-permissioned verification provides a more efficient and secure solution. By allowing consumers to grant permission for direct access to their employment and financial data, the process is not only streamlined, but errors are reduced and security is improved. As a result, lenders can make faster, more informed decisions, ensuring a smoother experience for all parties involved.
What Is Consumer-Permissioned Income & Employment Verification?
Consumer-permissioned income and employment verification is an automated method that allows consumers to control the employment or financial data shared with third parties, such as lenders. This verification process simplifies and accelerates approval workflows by providing real-time access to accurate data directly from the source, with the consumer’s permission.q
API integrations play a critical role in this process by securely connecting to payroll providers that hold employment and income records, such as W-2 forms. These integrations ensure that only the necessary data is accessed, improving both the accuracy and speed of verifications. This technology is increasingly used in industries like mortgage and auto lending, where quick and reliable income verification is essential for decision-making.
Traditional Income & Employment Verification Methods
Traditional verification methods rely heavily on manual processes, like document uploads, phone calls to employers, and the use of third-party verification services. Consumers are often required to print and submit documents via fax, mail, or customer service portals, which can lead to inefficiencies and delays. Further, phone calls or written requests to employers and financial institutions can further extend the time required for verification.
The limitations of the traditional approach include increased fraud risk due to the involvement of multiple parties handling sensitive data. Manual processes can also introduce inefficiencies, such as delays caused by outdated or incorrect data, requiring ongoing follow-ups. As a result, traditional verification is often resource-intensive and time-consuming, adding unnecessary complexity and frustration for both consumers and organizations.
Benefits of Consumer-Permissioned Verifications
When compared to manual verification processes, consumer-permissioned verification processes offer several benefits, including:
- Accuracy: Automated consumer-permissioned verifications provide real-time access to data directly from the source. This reduces the risk of errors associated with manual data entry and helps ensure the information is correct at the time it’s received. Manual processes that rely on paper or digital data uploads can cause stale data issues, resulting in denials or other decisions made on incorrect information.
- Efficiency: Automated systems support faster average processing times, which means lenders and other agencies can complete more verifications in the same period. This allows them to serve more consumers without impacting quality or accuracy.
Cost Savings Compared to Traditional Methods
The efficiency and automation associated with consumer-permissioned verification methods result in substantial cost reduction when properly implemented. Some businesses experience a 90% savings compared to instant databases and similar services, and those cost reductions are not limited to the primary verification.
Consumer-permissioned verification also supports lower re-verification costs in processes that may require multiple income or employment verifications.
Increased Customer Acquisition and Satisfaction
The seamless data acquisition processes associated with consumer-permissioned verification increase pull-through rates and enhance customer satisfaction.
For example, say someone is applying for an auto loan. They complete the application online only to be asked to scan and upload bank statements, W2 forms, and other verification information. It may be too much work, so they abandon the process. Or, they may mean to come back to it later and, in the meantime, find another lender that has an automated process with less manual work.
Use Cases in Mortgage, Auto, and Personal Lending
To better understand the benefits of consumer-permissioned verification, consider some income verification use cases and examples:
- Reducing risk in mortgage lending: In traditional income verification for mortgage loans, lenders ask for documents such as tax returns, W2s, paycheck stubs, and bank statements. Handling these papers puts a lot of sensitive data at risk, and the mortgage lender might be liable for any breaches. The manual nature of these verifications also increases the risk of errors and fraud that can lead to inappropriate loan approvals. Consumer-permissioned verification reduces these errors and helps mortgage lenders protect themselves and their customers.
- Improving speed for personal lending: With automated verification processes, personal loans can be approved and funded within the same day or by the next business day. This provides a higher level of customer service and supports consumers with urgent financial needs.
- Increasing closure rates on auto refis: Consumer-permissioned verification is especially helpful for processing auto loan refis. Lenders can use the technology to verify income and employment to approve a borrower faster. Similar technology lets them verify the payoff amount on the current loan to reduce delays and errors in the process.
Femi Ayi, EVP of Operations at Revolution Mortgage, states that the company has taken costs for verifications from 8 basis points per loan to 3 basis points per loan using Truv’s consumer-permissioned service.
Mortgage Investors Group’s EVP of Sales & Production, J.R. Hubert, adds that MIG went from 25% conversion to 50% with Truv. “What we were needing was data accuracy. What we found with Truv in our test cases and our pilot group is […] we get real start dates, we get accurate data. It was a much better return of the information.”
How Truv Leads the Market
Truv’s verification system offers best-in-class coverage and an easy-to-use user experience. Lenders can verify employment, income, insurance, and assets on a single platform with Truv’s API-based system. Learn how Truv compares and what type of savings you can expect by scheduling a product demo.
