Before the open banking revolution took shape in India, lenders often had to rely on the borrower’s credit score and basic personal details as the primary source of information for extending any amount of credit. After that, with the advent of the open banking revolution, the Indian lenders shifted to cash flow-based underwriting. Yet, both these underwriting methods had serious drawbacks regarding data fidelity. This led innovative lenders to shift to a new method of underwriting called ‘Continuous Underwriting,’ which is based on real-time Employment and Income data, also known as payroll data.
Tartan is one of the first FinTech start-ups in India, offering comprehensive income and employment data verification that can go a long way in enabling effective continuous underwriting for lenders. With our standardized payroll data, lenders can have consent-based access to the verified income and employment data of the borrowers, which could make the underwriting process automated, cost-effective, and efficient.
These are a few of the reasons why payroll data is emerging as a game-changer for lenders using continuous underwriting –
Imagine the risk a lender might face by using inaccurate, outdated and missing payroll data records for underwriting purposes because he might not be able to recover the money he extended as credit to the wrong person.
Tartan’s payroll data is user-consented and extracted from the source of truth i.e employers database which means the data will always be up to date and accurate, leaving little room for error. It is a massive leap compared to the traditional banking data, which usually relies on direct deposit records and may lag by as much as two weeks, leading to the data collected being rendered inaccurate for underwriting.
Tartan’s continuous payroll data enables the lenders to get a detailed and holistic view of the borrower’s fund inflow across 60+ valuable data points such as net pay, taxes, and deductions
Further, the JSON or the Tartan Dashboard can easily access all the relevant data. It enables the lender to conduct a more detailed assessment of the borrower and ensure that the money is being lent to safe hands and is likely to be easily recovered. Further, several people today have multiple bank accounts, making it challenging for traditional banking methods to give a holistic view of a person’s financials. Tartan’s payroll suite solves this problem by collecting user-consented data across various data points to provide updated and accurate income and employment data directly from the verified source.
Tartan provides lenders with a clear view of the borrower’s income and employment history (EPFO) by classifying the records into various categories. All of this data is user-consented and verified at the source of truth i.e employer’s database, which reduces the burden on the lender to cross-check all the data the borrower has provided. This allows the lender to easily find the data they require for the assessment of the credibility of the borrower and fast-tracks the entire process of loan approval, making the entire lending system efficient.
Tartan offers webhooks that help keep track of the borrower’s finances and automatically notify the lender if there is any change in the borrower’s employment or income records. Thus, it enables the lender to have continuous and real-time access to the borrower’s payroll data. Lenders that mandate borrowers to link their payroll data while extending any credit often have up to 3x conversion rates in contrast to lenders who rely on linking the borrower’s bank account.
Traditional banking data fails to provide a holistic view of the borrowers with little or no connection with banking institutes. Similarly, credit score often paints an inaccurate picture of the borrower’s financials. These eventually limit the lender's market scope by limiting it to only the borrowers who are actively integrated within the banking system.
Payroll data overcomes this obstacle by enabling the lender to get the necessary insights to gauge the borrower's financial standing and effectively ascertain the borrower's credibility.
There is an increasing population of borrowers who have traditionally been unable to seek credit owing to the lack of a stable income and verified income histories, such as freelancers, gig workers, and seasonal employees. Tartan’s verification of payroll data enables lenders to expand their scope and integrate non-traditional workers within the financial system. Thus, it helps the lenders in opening up the possibility of tapping into a wider market of borrowers and allows better access to reach those in need of credit.
To conclude, these are some of Tartan's features that help optimize the underwriting process by providing continuous and accurate verification of payroll data.
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