Category: Banking

Welcome to our specialized banking category, an expertly curated space where we delve into the exciting world of digital transformation sweeping across the banking industry. Our insightful articles explore a multitude of facets that are actively shaping the future of banking, from the disruptive force of cutting-edge technologies to the shifting paradigms of customer expectations.

As the terrain of the sector undergoes continuous evolution, it becomes increasingly crucial for industry professionals, enthusiasts, and observers to keep abreast of the latest developments and trends. Our in-depth articles serve as a resource, providing valuable insights into how traditional banking institutions are navigating the transition to the digital age, and how emerging fintech companies are spearheading innovative solutions that are redefining the industry’s contours.

Our coverage encompasses a wide array of topics, from the convenience and the ubiquity of digital payments to the transformative impact of regulatory technology and the paramount importance of data security. This comprehensive exploration offers our readers a panoramic view of the digital banking ecosystem. Our overarching objective is to equip our readers with a nuanced understanding of the challenges that lie ahead, as well as the opportunities that digital transformation brings to the fore.

So, immerse yourself in our curated content, enrich your knowledge, spark meaningful conversations, and stay ahead of the curve in this digital banking era. Join us in exploring the captivating world of this sector where the only constant is change. Welcome to the future of banking, with us!

Fintech Startups Or Traditional Banks – Will The New Financial Entities Replace The Traditional Banking Titans

Posted on | by Signzian

There are 6,636 fintech startups in India, which has one of the fastest-growing fintech sectors in the world. The market for Indian fintech is expected to be worth $150 billion by 2025. But while the industry soars, traditional banking is the one that takes the hit. As a result, conventional methods are dropped for improved digital solutions. 

Hence the question arises, “Will fintech startups replace traditional banking?” Well, to answer that, we must fully understand the entire scenario. So let’s have a look at it.

 

Valuing Fintech Startups

The approach used to value fintech businesses relies on various factors, including the industry they serve and where they are in their lifecycle.

Traditional approaches, such as the discounted cash flow method, comparable transaction method, price-to-earnings ratio of comparables, etc., can be used to value mature companies with an established company and stable cash flows.

There are specific approaches that can be used for valuing investments for very early-stage fintechs if they have not yet attained a critical mass or market share in a particular area or niche market. This can be the scorecard valuation method, Berkus method, risk factor summation method, venture capital method, etc.

Specific multiples can be applied for the valuation of a fintech that has visibility based on the business segment. For instance, a fintech business with a loan portfolio can be valued using the enterprise value to loan book ratio. A company involved in payments can be valued using a multiple for transaction value or a comparable ratio of enterprise value to the number of active users. A fintech business in asset management can be valued using the enterprise value to assets under management ratio, etc.

 

Fintech Startups Are Sweeping Into Traditional Banks Territories

According to statistics, traditional banks in India have lost one-third of new revenue due to current fintech startups. Apart from the payments business, which is how the fintech space started, many segments, even in the Indian fintech space, offer solutions in specific financial areas like peer-to-peer lending, insurance, wealth management, and digital payments. All of these have enormous growth potential.

Therefore, for firms functioning in the fintech category, it is not about EBITDA or profitability but instead being in a sector with an addressable market, much like conventional startups.

Because of this, a purely low-margin payment business may not have much value and may not be bought out by businesses looking to create an ecosystem or established companies looking to gain a technological edge. This was the case when Axis Bank bought Freecharge, and Bajaj Finance launched Bajaj Pay while simultaneously launching five marketplace products to become a fintech eventually.

We can also observe that the time of only operating in the payments sector is finished, as many fintech has moved on to creating an ecosystem. Once a fintech has an ecosystem, there is a significant chance to cross-sell due to the big addressable market.

 

Based Valuation For Fintech Startups

The optimum method will be to evaluate these firms on a SOTP (Sum Of The Parts) basis for businesses having varied risks and rewards, depending on the sub-sectors of the industries like payments, lending, investments, etc.

A fintech could represent various sub-sectors, yet under current law, none of these may call for a banking license. In addition, several industries don’t need a banking license, like wealth tech, insuretech, peer-to-peer lending, etc. Therefore, the majority of financial startups are emerging in these industries. For example, consider Cred, a fintech with a fantastic data bank to use the data for cross-selling.

Fintechs provide P2P payment services despite not possessing a banking license; however, this is restricted by the fact that they cannot store customer funds as deposits. On the other hand, banks constantly lose consumers to these fintech companies. Banking as a Service (BaaS), which enables banks to share their infrastructure with these fintech businesses, is thus emerging due to the collaborative atmosphere between banks and fintech players.

We can see why having a banking license could benefit fintech by giving them a technological advantage, allowing them to grow up more quickly, and giving them access to a vast data mine for cross-selling.

 

Where Fintech Banking Is Headed

Several fintech businesses have applied for and been granted licenses to operate as banks during the past couple of years. An instance in point is the recent purchase of a Small Finance Bank by PhonePe and Centrum. The fintech industry aims to challenge the status quo through innovation, agility, and quick decision-making.

Although it may seem illogical for these businesses to choose the traditional banking route, one must keep in mind that these fintechs are disruptive because of the technology they provide, which is precisely what the traditional banking system lacks.

As a result, fintech companies are creating more than just ecosystems. They are also creating marketplace platforms for fintech companies, such as the insurance platform Policybazaar, which recently announced partnerships with Paytm, Ola Financial, private sector lender IndusInd Bank, and a small group of consortium participants. This was to create a New Umbrella Entity (NUE) for a national payments infrastructure company.

 

In Conclusion

As previously stated, many major banks have made attempts to partner with or buy fintech startups to develop their digital products. Meanwhile, fintechs are presently attempting to resemble banks. As a result, we may observe a wide range of fintechs across areas working toward gaining a banking license, from payment businesses to lending marketplaces.

It is important to note that all financial institutions must improve their financial processes. If you represent a financial enterprise, we might be able to help you with quality resources. Signzy’s AI-driven No-code products and services can improve your processes.

 

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

 

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

 

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

 

 

 

AML Compliance Culture: Why It’s Important And 4 Ways To Create It

Posted on | by Signzian

Did you know that the anti-money laundering software market is projected to reach $1.77 billion by 2023? This is primarily because all institutions and governments want to stop money laundering. These illegal activities cost the world 2% to 5% of its GDP.

Although corporate culture has become very popular, the AML Compliance Culture is a new yet essential element in financial companies, which can impact the broader cultural challenges that the firm may face. Businesses must build their AML compliance procedures on a solid culture because there are numerous examples of how a poor compliance culture may harm the company.

What Exactly Is AML Compliance Culture?

AML culture may not have a specific phrase, but the idea is gaining popularity on a global scale. Experts believe that a weak compliance culture in enforcement efforts is the primary cause of weaknesses in the anti-money laundering (AML) and counter-financing terrorism (CFT) frameworks. The values and practices of an organization are expressed in its culture, which underpins how its management and staff interact and conduct business daily. The growing number of business scandals involving sanctions violations, financial misconduct, bribery, and corruption underscores the need for healthy company culture.

It guarantees that a good AML culture has strong support from the top for both ML/TF risk management and implementing integrated controls to satisfy compliance goals. In addition, developing an AML culture requires AML/CFT controls to align with the organization’s broader risk appetite.

Why is AML Compliance Culture Essential?

Companies must have a strong AML culture because failures in AML/CFT have frequently been too weak AML cultures. An organization with a strong AML Compliance culture can identify compliance issues early, reduce risks, and offer practical compliance solutions.

Compliance teams are more successful at detecting and managing risks. In addition, the company is more effective at carrying out AML/CFT initiatives, where AML/CFT efforts are integrated, and there is a strong understanding throughout the enterprise.

The following is said by several regulators who seek to underline the significance of a favorable AML culture:

  • The Advisory to Financial Companies/Institutions on Promoting an AML Culture, published by FinCEN, emphasizes the importance of an organization’s culture to compliance.
  • Financial crime is unacceptable, AML resources are insufficient, and top management has little awareness, according to Financial Conduct Authority (FCA) reviews conducted in the UK.
  • According to AUSTRAC in Australia, compliance mechanisms alone are insufficient to produce good outcomes without a strong compliance culture. Still, the presence of a compliance culture can lower regulatory risk.

A review of major sanctions and enforcement proceedings for AML legislation violations in the US and the UK revealed recurring problems with senior management oversight and compliance culture. This has occasionally caused regulators to worry that some organizations have purposeful blindness to or disdain regulators.

You Can Create A Strong AML and Regulatory Compliance Culture

Some aspects must be prioritized to establish a good compliance culture within a company.

These elements can be summed up as follows:

1. Re-examination of Corporate Governance

The company’s corporate governance will need to be reviewed and improved as a priority. The overall vision and strategy of the companies should be clearly defined. Clear emphasis should be placed on the organization’s mission, target audience, line of business, location, and management style. Everyone involved in the industry should consider regulatory compliance crucial and keep it in their minds. A Code of Conduct and several other pertinent policies should clearly describe and reflect these desirable standards of conduct and general behavior. A well-written and current code of conduct can outline expectations for proper conduct and give management and staff members of an organization a direction.

The boundaries for all significant choices and activities are established by policies, which offer a framework for an organization’s operations. Strong regulatory compliance regulations are necessary, and one such regulation should be the Customer Acceptance Policy.

2. Organizational Structure

Accountability is ensured, and senior management is assisted in delivering the proper messages to all employees to ensure adherence to core values and principles via a robust, transparent organizational structure. The structure should be as straightforward as feasible to provide clear roles, duties, lines of accountability, and alignment of interests throughout the business. It must be open and offer simple monitoring procedures. Additionally, it should establish clear lines of reporting, clarify the allocation of duties among the various members of the organization, and specify the procedures for making decisions.

3. Identifying and Understanding Risk

When identifying risks, evaluating risks, and putting measures in place to reduce those risks, a concerted and risk-based strategy should be used with a focus on higher-risk areas. However, low-risk zones are also crucial, although they come in second.

It is impossible to comprehend the appropriate actions to deal with these risks effectively and efficiently if the stakes are not identified. Therefore, organizations should identify hazards, evaluate the possibility and impact of breaking laws and regulations, rank those risks, and develop the appropriate tools and processes. Businesses must also determine the proper personnel to combat these risks.

When establishing an AML culture, it is crucial to choose the best AML officer who will develop and administer the program, make any required adjustments, and keep key staff members and the board updated on its development. Additionally, they must have appropriate internal controls, impartial review mechanisms, and regular testing of policies and systems.

4. Training

A good AML program and culture of compliance depend on practical training for personnel, management, and AML officers. The employees of a company must comprehend their regulatory compliance responsibilities and the justification for asking them to act ethically. Staff members shouldn’t be inflexible or mechanical in their daily judgment calls or decision-making processes. Instead, they should know what to do when confronted with potential ML or improper behavior, value reason, and document their judgments.

Bottom Line

Developing an AML Compliance Culture starts with adopting newer modes of AML and KYC. For this, you will need a reliable fintech resources provider. At Signzy, we provide state-of-the-art quality API products that are AI-driven without needing a single line of code.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

Lowering The Lending Daze With APIs- A Detailed Look With Top 4 Benefits Of Open API Infrastructure

Posted on | by Signzian

Nearly all organizations now depend on Application Programming Interface (API) technology, and the lending industry is no exception. API technology is a software platform that enables two programs to communicate with one another.

Forbes reports that 85% of companies view web APIs and API-based integration as essential to their corporate strategy and long-term success. Lenders may offer better products, more advantageous loan conditions, and a more effective, seamless customer experience by connecting to third-party data suppliers and aggregators via an open API infrastructure. Intelligent lenders are utilizing this new wave of innovation focused on shared services, allowing them to maintain their emphasis on their core loan goods while using the most recent technological advancements.

However, many firms can feel lost in the jungle and struggle to comprehend how to approach an open API strategy. This does not have to be the situation. You can find success by using the advice and techniques in this blog post.

Why Does Lending Need APIs?

In response to market realities, lenders must act swiftly to present enticing offers to borrowers. Being connected to a network of integrators and providers of third-party data is the finest and most effective way to do this. Simply said, lenders will fall behind if they don’t link to a larger digital ecosystem. Additionally, forward-thinking lenders are learning more about APIs and how they could change the way they provide credit.

Consider the fantastic experiences you have in your life, thanks to app-based platforms. Have you ever used Facebook to log into a service or application, for example? This illustration shows the simplicity of service your loan business can offer its clients by utilizing an open API infrastructure.

The Benefits Of An Open API Infrastructure In Lending

Lenders can change how they provide digital goods and services to all stakeholders, including customers, partners, and staff, by exposing their businesses to APIs and shedding the constraints of their traditional systems.They can essentially transform lending. Among the main advantages are:

  • Accelerated innovation and increased scale- Avoid being overtaken by the competition by having access to reliable partners and data sources that can hasten the release of new goods and services.
  • Boost revenue- by targeting new consumer categories across a more comprehensive geographic range without adding costs or affecting profitability.
  • Integrating credit report and bureau data- into your core lending platform can eliminate manual data entry, reduce margins of error, and enhance laser-focused underwriting. This is by removing the need for paperwork and numerous layers of human approval, which adds time to the underwriting process.
  • Integration of background data and applications- is made more effortless. Data synchronization to and from your back-end systems can be more straightforward if you use standard API services to scale enterprise connectivity and follow best security practices.

However, each lender is distinct and presents borrowers with a different selling proposition. Knowing what functions best for your company is crucial. There isn’t a single universal API strategy. Understand your goals and how to collaborate with the appropriate data suppliers and other third parties to achieve what’s best for you.

Top Tips For Making Your API Strategy A Success

Organizations must take a logical, proven approach to the journey to build API products and participate in the API economy. Steps to take include:

  • Developing your digital strategy- Lack of a compelling digital design could spell doom in an environment of intense competition and virtually daily introduction of new technology. Understanding what you want to achieve with digital technology is crucial and ensuring that it ties in with larger business goals.
  • Align and unite across business units and culture – Ensure everyone is on board and aware of the advantages and how they relate to the company’s goals. You need the entire executive team to back your API strategy; this is not simply the CIO’s or the IT department’s job. There will be a paradigm shift with this for many organizations.
  • Engage a comprehensive digital ecosystem: Senior executives are responsible for expanding the company’s consumer base and enhancing internal procedures. However, they are unable to accomplish this by carrying on as usual. Businesses may identify and seize these opportunities by connecting to external data sources. By putting together (either buying or building) a complete lifecycle API management platform/tools and establishing an API architecture, try to build and nurture your API community. Be sure to implement security best practices.

The Bottomline

Technology, in all its essence, is transforming the lending ecosystem. APIs are the current phase of this. You need to adapt to this amalgamating technology to keep your enterprise in the race. It is impossible to do this alone, so you need a good resource provider.

You can enhance your venture’s processes with Signzy’s resources, including verification and collection APIs designed explicitly for lending and loaning industries. Our products are AI-driven yet do not require any coding. We can find apt solutions for your issues with a fully customizable quiver of options. Check it out here.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Business Growth

Top 10 Must Have API Qualities For Business Growth

Posted on | by Signzian

According to MarketsandMarkets, the API management sector is projected to be worth $5.1 billion by 2023, at a CAGR of 32.9%. The lion’s share of this comes from the investment and financial technology sectors. Although the number of transactions might be relatively low, the amounts transferred are rather high here. That’s where API is revolutionizing the ecosystem.

APIs have long been hailed as the foundation for revolutionizing financial technology in the investment sector. However, not all APIs are made equal, despite their ability to alter how investment data is maintained and moved within the fund sector. Some qualities are essential when looking at an API-first solution for investment management:

1) Security In The Investment Sector

Any modern API will include strong validation, encrypted transmission, and robust authentication (at a bare minimum). In addition, the sensitive customer data that is virtually always stored by investment platforms (such as names, addresses, portfolio holdings, and national insurance numbers) needs to be protected. Errors are unacceptable when it comes to safeguarding your clients’ data.

2) Low Entry Barrier

New API users ought to have a low entrance barrier. We discover that a standard like OpenAPI (also known as Swagger) gives developers a comfortable experience. Shortening deployment times will also be assisted by accessing Software Development Kits (SDKs). A solid SDK will handle the most mundane activities, allowing users to tackle their business growth problems immediately (e.g., building a new asset allocation algorithm or integrating with a new custodian).

3) Apt Documentation

Any API you use should be thoroughly documented and include numerous examples. Both the technical elements of the API and use-cases should be covered in the documentation. For instance, “How do I execute a valuation with a custom price source?” or “What are the minimal field names and data types required to update a trade?”

4) Logical Building Blocks With Synergy

You would want logical and practical abstractions and resources represented via API endpoints. For instance, a different Instruments and Holdings endpoint will be available on practically all investment management platforms. These endpoints ought to operate in unison (we call this composability). For example, you should be able to take the details of the instruments from the Holdings response and use these to call for more information about the instruments from the Instruments endpoint.

5) Adopt Premium Standards

A high-quality API should adhere to internationally accepted standards. The onboarding process for new users is improved when familiar standards are used (and applications). An illustration of this is the REST architectural style, which uses the HTTP standard verbs (GET, POST, etc.). As a result, developers don’t need to carefully read the system documentation to realize that a “PUT holdings” request replaces (rather than changes) all of the holdings in your portfolio. Industry standards can also aid in processing API data by applications and machinery. For instance, we prefer JSON because it is supported by rich libraries in all essential programming languages.

6) Consistent And Persistent Implementation

A top-notch API should apply naming conventions and standard features uniformly across all endpoints. For instance, a Holdings endpoint and a Transactions endpoint might need to deliver a reference to an exclusive instrument in an attribute. To provide the best user experience, that attribute should have the same name (perhaps something like InstrumentId) in both endpoints. Standard features across all APIs should also be consistent. For example, do your APIs have any filtering functionality? If so, the operators and syntax used in those filtering statements across all endpoints should be the same.

After determining the mandatory features in an API-first platform, let’s now look at some of how an API-first solution can give you improved access to your investment data.

7) External Systems Integration

By offering a “common language” for these systems to communicate, an API-first platform should enable smooth integration between various systems in your financial technology stack. For instance, an Order Management System (OMS) and a Portfolio Management System will often have a continuous data flow between investment managers (PMS). Therefore, it is possible to guarantee that both systems are constantly updated with accurate data by using an API-first platform as the foundational integration layer. To ensure that your portfolio managers are constantly making decisions based on the best information, for instance, you might want orders raised from the PMS to reach the OMS promptly and for the PMS to be updated with transactions from the OMS in real-time.

8) Data Access Control

Granular entitlements that are simple to administer will be present on an excellent API-first platform, giving administrators complete control over the data that particular users and groups are permitted to access. With everyone having simple access to the information they require but no one having access to data they shouldn’t, you will be able to achieve the ideal data entitlement.

9) Rapid Data Onboarding

For a client, do you need to onboard a new ESG data set? Or have your data strategists found any further information that could be mined for alpha? Your teams will be able to quickly extract the most value possible from new data if you have a reliable pipeline that pumps it into your ecosystem and has an intuitive API with a flexible data model. This is the evolution in financial technology we seek for business growth.

10) Transparency For End-Users In The Development Process

API suppliers can easily involve customers in the development process thanks to the microservice model of API-first platforms, where loosely connected services are delivered and maintained individually. In addition, users can test new functionality early and take part in the feedback loop during early revisions of an API endpoint thanks to the separation of endpoints into “Production,” “Beta,” and “Experimental.”

Why Choosing An API Provider is Crucial

As the sector deals primarily with large amounts of money, there is no space for even the slightest errors. Mostly these errors are human-made. Thus one of the prerequisites you can have while transforming your processes is to automate the processes with a reliable decision engine. This should be done without compromising the investor’s experience or their safety.

With Signzy’s No-code AI-driven decision engine integrated API that’s fully customizable, you will get the apt resources you seek. In addition, we have a dedicated collection of Investment APIs that includes investor onboarding features, verification processes, and much more. Check it out here.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Employment Verification- Why It’s Primal For Lending?

Posted on | by Signzian

The 2021 Federal Trade Commission (FTC) report states that almost 30% of all financial fraud complaints in the US involved identity theft. This represents a 50% increase from 2020. Among these, loan application fraud was one of the primary sources of complaints, and the identity of the fraudulent buyers and borrowers were usually fake or stolen.

Conventionally, the loaning process for housing has been tedious for both the lender and the applicant. Now add a bit of high fraudulence risk into the mix, and voila, you have the recipe for a potential disaster, a disaster that needs to be avoided. That’s why when the loan application process begins, there is hectic paperwork and back and forth with your lender. The whole deal of underwriting is an intense procedure and includes methods for everyone involved.

One major step in the underwriting process is efficient employment verification. The lender needs to do their due diligence and validate that you are and have been employed to ensure they’re considering all of the user’s income sources. This confirms that the potential borrower can cover their down payment, closing costs, and monthly repayment.

Why is employment verification necessary in lending?

While it seems like just another box to check in the lending process, lenders must verify your employment and all income information to confirm your capability to make your monthly mortgage payment and reduce their risk of giving you the money.

How do mortgage lenders verify their borrowers?

Mortgage lenders verify employment by contacting the concerned borrower’s employer directly. First, they review the borrower’s recent income documentation. These can include an employment verification letter and a recent pay stub. Sometimes it can also have something else that proves an employment history and verifies the income.

Employee verification can take days to weeks if your lender works off of physical forms. However, the process could take mere hours if you work with a lender who requests payroll access for any underwriting.

Are you looking to save time in your mortgage processes? Then, check out Signzy’s resources to innovate and improve them.

When is the employment verification process done for mortgages?

Some lenders verify employment multiple times during the mortgage process:

  • 1)Pre-approval

Working with a lender before you have your dream house picked out in a competitive housing market and learning what kind of mortgage you would qualify for can be a good idea. When you get the preapproval, you may be required to submit information or documents such as bank statements and salary slips to prove your income, the funds you’re using to get the loan, and a credit check.

  • 2)Verifications during the underwriting

Each lender will verify income and employment checks underwriting a mortgage according to their timeline. Generally, it is done anywhere from a few days to a few weeks before your loan is cleared to close. It might be performed again if the timeline to complete was extended to confirm that nothing has altered. 

Experts recommend not making career changes during the underwriting process, finishing another loan payment to avoid impacting your credit score, or getting a new credit card.

To Conclude

Income and employment verifications are a critical part of the home loan process. Still, it can be difficult for those without access to an HR resource to handle the particular paperwork; even when an HR department exists to submit the documentation to lenders, paper forms and conventional PDFs slow down the whole lending process. That’s why the lender’s responsibility is to make the process more convenient and easy.

If you want to make the verification processes easy, then you should avail the services of a good fintech provider. In a world with so many choices, finding the right one is difficult, especially with so many bad options. At Signzy, we ensure that the fintech solution we get you is not manufactured from a blueprint but rather created according to your needs. Our AI-driven API resources help us to customize our way through your problems.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

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