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Instant Bank Verification for Improved Credit Decisioning

Instant Bank Verification for Improved Credit Decisioning

Inflation is the worst it's been in over 40 years; consumer debt across all categories totaled $16.9 trillion - up about $1.3 trillion from 2022; mortgages, auto loans, and credit card delinquencies are on the rise. These daunting statistics don't bode well for lenders who want to feel confident when approving a loan applicant. Thankfully there are tools that can help businesses cut through the data and reach the right decision.

Over the past five years, the U.S. saw a nationwide decrease in delinquencies due to COVID-19. But as the world recovered from the pandemic, so has the number of consumers who have failed to pay their debt. There are many reasons for this, but it can largely be attributed to the Federal Reserves' (Feds) aggressive rate-hiking campaign. And while there has been some successful deflation, according to Bankrate, there is still a high probability Feds will increase rates again.

Given this information, lenders need to find new ways to mitigate their exposure to risk from borrowers while seeking new growth channels. Thankfully, MicroBilts' Instant Bank Verification allows lenders to access recent trends in bank deposits, bill payments, and other important indicators to help businesses make informed lending and crediting decisions.

What is Instant Bank Verification?

Financial institutions and lenders use instant bank verification (IBV) to quickly and securely confirm the validity and details of a bank account. This process is conducted electronically and in real-time to streamline financial operations, enhance security, and improve customer experience.

How Does Instant Bank Verification Work?

The process of instant bank verification can be broken down into four simple steps:

  • User Authorization: The account holder consents to the verifying party (such as a lender, payment service, or financial institution) to access their account information for verification purposes. This authorization is often granted through secure authentication methods, such as online login credentials or API integrations.
  • Data Retrieval: Once authorized, the verifying party securely retrieves relevant account information directly from the account holder's bank or financial institution. This information may include the account holder's name, account number, routing number, and account balance.
  • Real-time Verification: The retrieved data is cross-referenced with the information provided by the account holder during the application process. If the information matches, the account is considered verified. The verifying party may prompt the user to correct the information if there are discrepancies or errors.
  • Confirmation: The verification process typically results in confirming the account's validity. This confirmation can be used for various purposes, such as initiating fund transfers, confirming the account holder's identity, or processing loan applications.

Who Uses IBV?

Regardless of industry, businesses of all shapes and sizes can benefit from using instant bank verification to minimize the risks of defaults and delinquencies.

Businesses that utilize equipment and other leasing options or are involved in underwriting business loans must ensure they're working with borrowers who can repay their balances. If you're a business that needs to make a bank call or obtain statements for a particular customer, IBV verifies the following:

  • A borrower's ability to repay a loan.
  • Income.
  • Current and available account balances.
  • Other financial obligations and loans.

This information goes beyond what you can access with traditional credit reports from the major reporting agencies. That means businesses have more tools at their disposal to use when making vital lending, leasing, and crediting decisions.

Why Should You Use Instant Bank Verification

IBV provides several vital data points, making it an essential piece of any decisioning process. Although its primary function is to confirm the individual's identity through their account information, it also provides a number of additional benefits as a result. Below are some of the advantages instant bank verification provides:

  • Risk Assessment
  • Loan Repayment
  • Regulatory Compliance
  • Operational Efficiency
  • Fraud Prevention
  • Funds Disbursement

Why MicroBilt's Instant Bank Verification is Unique

MicroBilt's Instant Bank Verification (IBV) provides lenders with real-time transactional data and access to over 15,000+ financial institutions in the U.S. and Canada. Through the enhanced cloud architecture, MicroBilt processes and reports billions of transactions for consumer lending and credit companies, business lenders, and mortgage and loan providers. 

It's also important to consider the speed of the service. Although "Instant" is in the name, not all services provide high-quality results while maintaining the speed lenders need to prevent loan applicants from moving on to different, faster lenders. MicroBilt's IBV gives businesses information immediately, without all the hassles of using paper, helping lenders maintain a competitive edge. 

In addition to accuracy and speed, MicroBilt was selected as a Nacha Preferred Partner for its role in providing accurate and timely verification of bank account information, enabling businesses to reduce risk and improve transaction quality.

With the current state of things and so many decisions up in the air for the rest of 2023 and beyond, it's more important than ever to have accurate, up-to-date information available at a moment's notice. Contact one of our specialists today to learn more about using this product.