How Credit Unions Can Choose the Right Income Verification Provider
Building operational resiliency
With 97% of credit unions concerned about competition from fintech companies, the pressure is on to streamline operations while still providing industry-leading customer experiences.
The key is finding that “just right” approach, where you can streamline operations and work more productively while also improving the application experience for every borrower. Finding the right income verification provider for your credit union is an effective way to level up your operations in order to meet fintech lenders head on.
Understanding the many differences between verification providers, however, is key to making the right choice that will benefit both your business and your borrowers.
Some providers only offer one verification method, which often means you will need to build and maintain relationships with several different vendors in order to process all verifications.
Luckily for credit unions, some platforms now offer a multiple-method approach, meaning lenders can access an assortment of different verification strategies all from a single vendor.
This approach makes it easier to consolidate providers and streamline income verification efforts. Plus, deploying multiple verification methods from a single platform helps increase verification coverage and reduce operational costs.
In order to find the best vendor for your business, you'll still need to find the solution with the right amount of coverage, automation, and flexibility to help you maximize efficiency and reduce costs without having a negative impact on the borrower experience.
Here, we’ll cover the main income verification methods, what to look for in a provider, and how credit unions can use Truework to optimize for efficiency, cost, and customer experience.
Types of income verification solutions for credit unions
A few years ago, credit unions had two main income verification options: instant data providers or manual verification services. These services were separate at the time, as the instant providers maintained exclusive datasets, while the manual verification vendors helped verify every other employee.
This system required loan processors to leverage multiple providers in order to access the right income and employment data to verify each applicant. Relying on multiple providers created processing inefficiencies, delays, and even applicant drop off.
Today, income verification solutions have evolved beyond the instant vs. manual framework, and the differentiation between providers is harder to understand.
Credit resellers, e.g. those offering tri-merge credit reports along with other data solutions, have begun offering income data as well. Additionally, the rise of user-permissioned solutions like Truework Credentials, now gives credit unions access to data that was once exclusive to a single verification provider.
These shifts create major opportunities for credit unions to rethink their loan processing workflows in order to maximize cost-savings and efficiency while finding the right amount of automation.
Here are the three categories of income solutions for credit unions today:
Single-method verification providers
Multi-method verification providers
Data resellers operate as mediators between lenders and the primary data source, which is typically a third party verification provider. The primary benefit of working with resellers is convenience, as many credit unions rely on data resellers for credit reports.
When it comes to income verifications, however, resellers tend to be more expensive and less efficient.
Since you’re working with a third party, there’s a price premium you will pay on every verification. Additionally, finding the right level of customer support and service can prove difficult with data resellers because lenders no longer maintain a direct relationship with the data providers. Fixing critical issues when they arise can be frustrating and take multiple days to resolve, resulting in a negative borrower experience.
Achieving full automation with data resellers is also difficult because you’ll need to switch between different providers for each different data source. While resellers may offer multiple data sources, oftentimes they function separately and are disconnected, leaving your team scrambling to find the right tool.
Single-method verification providers
Single-method solutions give you access to an individual income verification method, such as instant data, document uploads, user-permissioned data or manual verifications.
While these solutions give you more direct access to data sources and services, they also require more manual work for your team. For instance, if the income information or employment status you need isn’t available through one provider, your team will have to manually submit requests across multiple other systems until you have the right information.
Switching between different providers can limit your team’s productivity and introduce unnecessary risks to your business. In particular, working with certain manual verification providers can be less efficient and increase the risk of errors such as failure to detect income fraud.
Using multiple, single-method providers can become expensive as well. It is challenging and time-consuming to coordinate and connect workflows across different providers in order to provide your team with streamlined access to several verification methods.
Still, single-method providers have remained popular in recent years due to instant data exclusivity. Until solutions like Truework Credentials became available to lenders, credit unions were forced to pay high fees for exclusive data.
Multi-method verification providers
Multi-method income verification solutions combine every major income and employment verification method into a single platform. This approach significantly reduces the manual work required from your team while increasing verification coverage and lowering verification costs.
Currently, Truework is the only provider that gives credit unions streamlined access to every verification method. The Truework platform automatically selects the most efficient verification method for each applicant to accelerate completions and lower costs.
For example, if a borrower works for a franchise like Starbucks, instant data is almost never available for this group of employees. Therefore, Truework will automatically route the verification to the next best method, without any other work required from your team.
Instead of spending hours submitting the same verification across different providers or asking your borrower for documentation, your loan team can increase productivity and spend more time helping every borrower through the process.
With Truework, credit unions don’t need to spend time submitting verification requests through multiple providers and applicants don’t have to spend time digging through files to find past pay stubs and tax forms
By deploying a multi-method approach, the Truework Income platform allows credit unions to verify income for 95% of all applicants through a single solution. Truework helps teams increase productivity and efficiency by automatically orchestrating each request across multiple verification methods until you get the information you need for every borrower.
Additionally, one-stop platforms like Truework offer unique flexibility, empowering credit unions to choose which income and employment verification methods to use for different lines of business.
For instance, if you want a faster turnaround for personal loans, you can limit verification methods to instant and user-permissioned data. That said, underwriting for mortgage loans may require a more comprehensive approach. As such, you can easily add additional verification methods in just a few clicks.
With multiple integration options, Truework is designed to fit your business without causing any operational disruptions.
How to choose the right income verification provider for your credit union
So, how do you choose the right mix of income verification solutions for you? At the end of the day, you want to optimize operational efficiency while still ensuring an excellent customer experience.
To achieve that, credit unions can focus on five key criteria:
“Coverage rate” refers to the percentage of applicants that are eligible to use a given verification tool. Ideally, you want verification coverage to be as close to 100% as possible in order to maximize efficiency and reduce costs. One way to optimize coverage is by looking for a multi-method verification platform offering user-permissioned data.
An important detail in understanding coverage, however, is that coverage rate is not equivalent to success rate. Success rate is the percent of requests that result in a completed and accurate verification.
For instance, user-permissioned data methods often cover 90% or more of applicants, but success rates tend to be around 50%. One of the main reasons why success rates are lower is that applicants can drop out of the application process before completing their verification.
Truework Credentials offers several features to improve success rates, including customizable messages and co-branding. These features create trust with applicants and ensure verification messages arrive in the right inbox so customers stay engaged until the verification is complete.
When assessing a verification provider’s coverage and success rates, you will also want to consider verification sources with income and employment information for both W-2 employees and gig workers. Over 70 million workers in the U.S. earn all or part of their income from freelance and gig work.
Multi-method, one-stop solutions like Truework provide higher overall coverage because they give you access to several verification methods and data sources all from one platform.
When choosing a verification provider, you’ll want to consider the number of manual tasks you can eliminate through automation. Some credit resellers give you access to multiple data sources, which improves coverage, but they fail to automate verification requests across different providers.
As a result, your team once again has to navigate multiple, single-method providers instead of increasing efficiency with one comprehensive solution.
Full automation maximizes efficiency by eliminating error-prone and redundant manual tasks. This can only be achieved when you use a verification solution that orchestrates each request across multiple methods without any additional work required from your team.
By taking advantage of full automation, your team can dedicate more time to answering questions, helping borrowers through the loan process, and building stronger relationships with clients.
If you want to reduce your verification of income costs and optimize your borrower experience, choosing a provider that offers transparency is crucial. Without transparency, you can end up paying for redundant and unnecessary verifications.
For instance, say you have multiple loan processors working on the same application file, and two of those processors run the same verification because they lack visibility into each other’s workstreams. Suddenly, your costs have doubled because you’re paying twice for the same verification.
Truework allows managers to share requests across their processing team, providing crucial visibility to eliminate duplicate orders and costs.
In addition to internal visibility, processing teams must have insight into what’s happening with each verification request in order to help their applicants through the process if they ever get stuck.
That’s why Truework provides detailed and real-time status updates for each request. With this level of visibility, your team can reduce duplicate requests, achieve faster turnaround times, and improve the borrower experience.
When looking at costs, credit unions should consider the price per initial verification as well as the total cost per applicant. Knowing the total cost per applicant helps you understand how much you’re paying for verifications across a loan file, including reverifications and redundancies.
If you want to keep the total cost per applicant low, you can look for providers offering discounted reverifications. Unlike legacy verification providers, Truework offers discounted reverifications in order to help keep costs low.
When assessing a data reseller for income verifications, be sure to read the fine print to avoid price markups that occur if data is accessed through third party providers.
Lastly, you’ll want to consider flexibility and customization when choosing your income verification provider. Ideally, you will find an income verification solution that fits into your process with minimal operational disruption.
Here are some helpful questions to consider when assessing customization capabilities:
Do I have the ability to turn features on and off as needed?
Does the solution easily integrate with my current tech stack?
How many hours will this save my team?
When evaluating flexibility, remember you may have different needs for each line of business. For instance, mortgage underwriting may require three years of income history while personal loans only need one. You’ll want to implement a flexible solution that can work well for every line of business.
Truework for credit unions
Truework is the only provider that orchestrates each verification request across multiple methods to optimize turnaround times and maximize completion rates while keeping costs low.
As a result, Truework’s one-stop platform can help your credit union optimize for all five key evaluation areas:
- Coverage: Truework can verify income for 95% of applicants when the full platform is utilized. With Truework, credit unions receive access to otherwise exclusive records through our user-permissioned verification solution, Truework Credentials.
- Automation: Truework orchestrates each request across every major verification method until the report is complete. Our platform checks for accuracy while automating fraud detection on manual requests.
- Transparency: Credit unions that use Truework get real-time status updates and internal visibility on each verification request, improving the borrower experience and reducing costly duplicate verifications.
- Cost: As a one-stop platform, Truework reduces the need to maintain multiple providers and lowers your cost per applicant. Our platform shares over 37 million instant records with The Work Number at a fraction of the cost, while offering discounted reverifications.
- Customization: Truework offers seamless integration options, including our web app, loan origination system (LOS), or directly into your application flow through the Truework API. Credit unions can turn verification methods on or off in just a few clicks.
Financial institutions now have better options when it comes to income verification. One-stop solutions like Truework help lenders accelerate loan processing while operating more efficiently.
By applying a modern approach to the income verification process, credit unions reduce costs, streamline operations and maintain industry-leading borrower experiences.
To see how Truework can help your business, speak to a member of our team today.
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