Understanding Instant Account Verification (IAV)

Instant Account Verification (IAV), also known as Instant Bank Verification (IBV), is a process that is becoming increasingly popular among lenders, banks and financial institutions. IAV is used to validate many things depending on the business using it. Some of the most common uses are to verify a customer’s identity, employment, their ability to repay a loan or approve a property rental agreement. It is a fast and secure way for businesses to verify their customers, making it the perfect tool for underwriting loans, verifying identity and validating financial standing. 

Below, we will go into more detail on what Instant Account Verification (IAV) is, how it works, and how it can benefit both businesses and applicants alike.

How does IAV work?

IAV is a common term in the lending and alternative lending industry, referring to a bank account verification process and typically can be completed in a couple different ways depending on the lender. One version might involve filling out a loan application on the lender’s website. At some point, the borrower will be presented with a screen asking for their bank’s online login credentials. A common next step is to answer any security questions the borrower may have set up with their bank. It could also be an OTP, or One Time Pin, or a “Captcha” requirement. A captcha is a little grid of squares asking, for example, which ones have cars in them or to input the letters and numbers you see in the box. Once this step is complete, the customer has completed the bank verification (IAV) part of the process. Yes, it’s that simple! 

Another way this might be done is the lender will send a customer an email or text message that is clicked on. It will open a new browser window for the user to step through the IAV process with the same steps described above. Still fast and easy.

At this point, the lender receives a read-only version of the applicant’s bank statement. This is a digital bank statement that shows all the balances and transaction history to help make a determination on if, and how much, a lender is willing to lend. 

Similarly, a property rental company may use the digital bank statement to validate that an applicant is employed and receiving regular payroll deposits. It verifies the ability to pay the monthly rental fees they are asking for. 

IAV is an efficient and secure way for lenders to verify bank transactions and virtually eliminate fraud. Using IAV also puts an end to the need for customers to provide hard copy documentation such as a voided check or a routing number to confirm ownership of a bank account. This means that businesses can verify customer accounts in real time and quickly fund new loans.

Businesses can benefit from IAV by streamlining the underwriting process and reducing the risk of fraudulent activity associated with a manual verification process. Additionally, the use of IAV helps to ensure accurate and up-to-date information in customer accounts. Lenders have access to the most recent data related to customer banking accounts including current balances, payment history and transactions made. This helps them make faster and more informed decisions when it comes to underwriting loans or verifying accounts. 

Furthermore, because all of the data is accessed through a secure process, there is virtually no risk of information being compromised during the process. As a result, businesses can reduce their exposure to fraud and costly mistakes that could arise from manually processing data. 

According to a recent survey, over 85% of lenders now use IAV to verify bank transactions. This helps them improve the security of their customers’ accounts, reduce fraud, and protect their investment from financial losses. Additionally, IAV allows for faster processing of payments and funding of new accounts, which can help customers get their money faster.

Customers no longer need to provide documentation or wait for a manual process to be completed to apply for a loan. The elimination of paper-based processes also means that customer data is more secure and less vulnerable to fraud.

OAuth Connections and Instant Account Verification.

OAuth is a technology that allows users to securely connect their bank accounts to a third-party platform, such as an online loan provider, for account verification and loan funding. With OAuth, financial institutions can offer a secure way to connect user bank accounts and process loan applications quickly. 

Instant Account Verification (IAV) takes the secure connection provided by OAuth and adds another layer of security to the process. When a user connects their bank account via OAuth, IAV uses the same connection to perform a deep dive into the user’s financial history. IAV allows lenders to verify the user’s identity, check for any fraudulent activity, and provides valuable insight into the user’s creditworthiness and financial health. 

Multi-sourced Aggregation or “multiple aggregators” is the practice of utilizing more than one data provider for your IAV process. This is a best practice for several reasons. First, it allows continuity of service if your main data provider goes down. Second, it allows you to have the most complete data set from the best source at the time, assuming you have an IAV provider like DecisionLogic that prioritizes data sources by conversion rate. 

Data sources go down, have maintenance windows, lose bank connections; but with multiple data providers, you don’t have to. Your IAV vendor can seamlessly swap out data providers on the back end without any friction or disruption to your customers and more importantly, your business.

DecisionLogic also offers additional benefits beyond IAV. 

Besides the powerful benefits from multi-sourced aggregation, DecisionLogic’s IAV fueled digital bank statements can provide valuable insights into customer behavior and spending patterns, which can be used to improve the customer experience and increase customer loyalty. Additionally, it allows businesses to leverage more data sources without adding additional vendors or expenses for more accurate analysis and better decision-making.

Along with proprietary analytics, custom scoring, industry leading identity verification powered by Experian, and unlimited end-to-end support, DecisionLogic is a partner every lender needs in their arsenal.

Contact DecisionLogic to learn more about IAV and the suite of products we offer at support@decisionlogic.com.