Plaid is the latest company to step into income verification services, in a move to tackle manual processes and speed underwriting for financial institutions.

With Plaid Income, currently in beta, the data aggregator is aiming to make it easier for consumers to verify their income in order to secure loans, qualify for mortgages, rent apartments, and lease vehicles among other financial processes. The new product allows consumers to verify income by authenticating via their payroll provider account or by uploading payroll documents to Plaid’s platform. The San Francisco-based company then returns source documents and structured data to the financial institution.

“Many credit decisions are based on a consumer’s employment status, income, and ability to pay,” according to a company statement. “To get this data, financial institutions often require manual processing and manual review of income and employment information. To a consumer, this adds friction and time to the application process.”

Income verification has been a valuable data point in lenders’ decisioning in the past year, as local shutdowns and economic dislocation continue to rumble employment rates. The U.S. unemployment rate fell by 40 basis points to 6.3% in January, according to February data released by the U.S. Department of Labor. Despite the slight improvement, unemployment remains above pre-pandemic levels; in February 2020, the unemployment rate was 3.5%.

Plaid product lead Kate Adamson said she sees payroll data as the next area of opportunity to enhance customers’ financial experiences. “The past decade of fintech innovation has shown that people can make better financial decisions more easily with better access to and control of their own financial data,” she told Bank Automation News in an email.

Adamson isn’t the only one eyeing the benefits of instant access to payroll data. As financial institutions come to rely more heavily on income and payroll data, more companies and fintechs enter the space.

TransUnion integrated employment and income data into its offerings in October to help lenders more accurately underwrite consumers and forecast risk in their portfolios. “The current process has been cumbersome for too long; consumers often have to provide their own data or lenders subscribe to separate processes,” TransUnion’s chief global solutions officer, Tim Martin, previously told BAN.

Fintechs, too, are expanding into employment and income verification. FormFree, an Athens, Ga.-based fintech, in February enhanced its automated asset, employment and income verification service to integrate with a wider range of U.S. workers. Finicity, a Salt Lake City, UT-based open banking fintech rolled out Finicity Lend in September to provide lenders income and employment data.

Investors also continue to funnel capital into income verification-focused startups. New York-based Argyle, founded in 2018, aims to provide a gateway to employment records. It scored $20 million in October in a Series A funding round and processes tens of millions of employment records monthly. Meanwhile, Pinwheel, an API platform designed for payroll data, raised $7 million in a Seed round in June 2020.

Founded in 2013, Plaid has 11,000 institutions in its network, according to the company’s website, adding that roughly 25% of U.S. consumers with a bank account have used Plaid to sign up for a fintech app. It has raised $309.3 million to date over four funding rounds, according to Crunchbase.

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