As more and more business processes are moving to real-time decisioning, financial APIs are quickly becoming a key part of the technology stack for any financial services company.
Specifically in loan underwriting the market is evolving quickly and consumer lenders are faced with a choice:
Stick to traditional underwriting methods, reliant on documents like payslips and teams of underwriters. Neither efficient nor loved by consumers, this often compromises conversions, as potential borrowers drop out of the funnel.
Alternatively, lenders can go with patchy data from credit bureaus or rely on income data solely from bank statements.
Now, there's a new way for lenders to combine best in class data with an intuitive consumer experience, boosting conversion - Payroll and HRIS APIs that deliver real time data directly into the underwriting models.
This novel approach of using payroll APIs can transform how any type of consumer loan is underwritten by lenders.
Real-time access to income and employment data
Unlike bank data, which can be outdated and not account for the latest changes in salary, Payroll and HRIS providers offer a real time snapshot of any employee's income.
Via data APIs like Teal's, lenders can programmatically access this data in seconds and fully digital. Consumers simply have to consent to the data access to their respective payroll provider, saving them valuable time of aggregating the right documents.
For lenders, this also mitigates the risk of making decisions based on outdated or worse, incorrect information. By implementing real time data APIs, lenders can improve their underwriting models and decrease credit risk and losses.
More granular data for better credit decisions
While lenders have often compromised on the amount of data they ask consumers during onboarding to not impact conversion, now it is possible to get all the insights with minimal friction.
Payroll data offers more than just a few months of gross salary. Lenders can see the full breakdown of a payslip, including deductions, additional contributions like pensions, or other data that impact risk levels (such as private health insurance). Historical data goes back until an employee’s first paycheck, providing valuable insights into pay progression.
A better customer experience for higher conversion rates
While all these data insights benefit lenders, there is a real upside for consumers as well.
Sharing data via payroll APIs, the consumer always remains in control of their data. Lenders only get to see the income data that is relevant to them, all transferred securely and fully encrypted. This creates trust with consumers.
It also is drastically more user friendly. Consumers don’t need to gather months of documents, but can simply approve access via a simple click, directly from their phone or desktop. Since all data is transmitted fully electronically, the income verification can be streamlined. Borrowers who would otherwise would face the anxious wait to see their loans approved can now get instant decisions.
This leads to more satisfied borrowers and quicker decision processes, but also helps to boost conversion rates.
Increased underwriting automation to decrease operational costs
Integrating payroll APIs into the lending process can significantly reduce the operational costs of manual income and employment verifications.
By automating these processes, lenders can process loan applications more quickly and efficiently, allowing them to serve more customers without compromising on the quality of underwriting.
Leveraging payroll data for better outcomes
The advantages of real-time payroll data go beyond individual loan applications and income verifications. For lenders, access to real-time payroll data opens up opportunities for ongoing customer engagement, tailored financial products, and proactive risk management.
Unlocking these insights enable lenders to provide better experiences to borrowers and build lasting customer relationships.
As the fintech API ecosystem continues to grow, payroll data is set to become the gold standard of secure and instant income verifications, setting a new benchmark for accuracy, speed, and customer satisfaction.
Visit our Website and learn more about our API to see how Teal can help you realise the power of payroll APIs today!
