In this webinar from April 24, 2024 Tom Carpenter, Senior Vice President of Industry, Policy and Standards Engagement from Mastercard, along with panelists from Sidley and i2c, discussed the potential of CFPB Section 1033 for open banking initiatives with banks. 

They discussed how banks can leverage data sharing to enhance customer experiences, create new product offerings and navigate competition from fintechs. You will also learn about the opportunities represented by the rule and how to develop strategies to capitalize on the evolving landscape. 

Find out why the CFPB Section 1033 rule is crucial in advancing open banking, any potential risks associated with the rulemaking, best practices for compliance with Section 1033 and new opportunities to leverage data sharing to innovate and offer new services. 

You can watch the webinar here. 

In this webinar with the Consumer Bankers Association from April 25, 2024, Mastercard’s Ben Soccorsy and Jenny Ziegler tackled the impact open banking regulation will have on banks and the opportunity having a regulated ecosystem provides. 

From the basics of open banking data and how consumers can access their data from any of their financial institutions to the way that data can be used for lending, financial management, wealth management, and payments. 

You can learn how the regulatory environment is accelerating the shift towards open banking. CFPB Dodd Frank Section 1033 is intended to break down barriers to accessing financial products, jump-start competition between financial institutions and fintechs and provide consumers more control and access to their financial data. 

Regulation will mandate that data providers must share their financial data with third parties or consumers via APIs safely and securely. The compliance deadline varies depending on the size of the financial institution. 

For banks, this means being on top of API enablement, consent management, information security, third party risk management, risk and compliance, data governance and data monetization strategies. 

You can watch the webinar here. 

Today’s consumers’ expectations for their financial interactions are changing. They require a digitally native, seamless, consistent, instantaneous experience with their financial provider right from the get-go. No longer are they willing to wait several days for identity verifications or for microdeposits to clear to start using their account.  

Yet, we know that everyday bad actors are finding new ways to break the system. As more people and businesses enter the digital economy, it’s critical that we keep them secure across all touchpoints with their accounts and beyond. Financial Institutions must protect their customers’ accounts from fraud to ultimately drive primacy, grow deposits and encourage top of wallet behaviors, thus helping them recoup the estimated $450 average cost of acquisition. 

Open banking is the thread connecting the ecosystem to make account opening faster, secure, and more frictionless. 

Here’s a common scenario that financial institutions deal with on a daily basis:  

• ‘John Doe’ opened a new checking account with ‘AcmeBank’ and is ready to fund it with another existing account he has with ‘Partnerbank’  

• How does AcmeBank know that John is the actual owner of the account at Partnerbank? Should Acmebank proceed with posting the ACH file to the Nacha (ACH) network, letting the transaction go through? If John Doe were a bad actor, and Acme bank allowed the payment to go through without doing appropriate checks, John Doe could move that money elsewhere and AcmeBank could get an unauthorized payment return from ‘Partnerbank’, resulting in fraud losses.  

• Similarly, some insurance companies simply ask for account and routing number verification before disbursing funds, not verifying the identity of the receiver. Here, John Doe can impersonate another person, and use his own personal details to re-direct an insurance payout or a payroll disbursement to his account.  

What is the ecosystem doing about it? 

New rules and guidelines are being published by Nacha – operator of ACH payments – that introduce additional risk management frameworks for ACH senders, as well as recipients. Ecosystem participants such as merchants, ecommerce platforms, lenders, and insurance providers may be required to include account verification and identity verification, multi-factor authentication, velocity tracking and KYC/KYB improvements. Mastercard is a Nacha Preferred Partner for Compliance and Risk and Fraud Prevention with a focus on account validation. 

In addition to more thorough fraud checks being conducted by originators, receivers now also must participate in fraud monitoring and flagging to reduce risk. In the above example, Acmebank, the receiving financial institution, will also need to perform additional fraud checks.  

What can you do? 

Mastercard Open Banking helps financial institutions identify, manage and tackle fraud risk on an ongoing basis.  Examples of our solutions include instant account details verification, device and identity verification. When used in conjunction with other customer fraud solutions, they help secure interactions that consumers have with their financial provider. 

Last year, Mastercard debuted Open Banking Identity Verification for the U.S. market and continues to invest in additional functionality that leverage our extensive fraud and identity networks. Before initiating a transaction, financial institutions can verify a number of factors, including: 

• Confirming account ownership information, including name, address, phone and email, in real-time 
• Validating identity profiles and quantifying identity risk  
• Examining the risk level of user activity patterns and associations to detect fraudulent behavior 
• Verifying device authenticity and capturing signals of device fraud 

Beyond Open Banking Identity Verification, Mastercard offers services to streamline account funding, including:  

• Account Owner Verification: A one-time API request that returns the account owner(s) name, address, email and phone number for a select account. This verifies that the bank account being linked is owned by the person opening a new account and complements KYC risk mitigation in real time. 
• Account Detail Verification: Instantly authenticates and verifies account details, including account and routing numbers, to help mitigate fraud, reduce manual entry errors and maximize confidence in payment transactions. 
• Account Balance Check: Easily determines account balance before moving funds to a new account. This ensures that the amount being moved to the new account is available with an accurate, real-time balance snapshot, and reduces costly NSF returns. 
• Payment Success Indicator: A score that predicts a transaction’s likelihood to settle for a specific consumer “today” and up to nine days in the future.  

Now let’s look the journey again with our solutions: 

• Consumer has opened a new checking account with ‘Acme Bank’ and is ready to fund it using existing bank account at ‘Partnerbank’ 
• Consumer agrees to T&Cs and gives permission through Mastercard’s Connect widget for their bank data to be accessed and shared with Acme bank   
• Consumer selects their Partnerbank account and enters banking login credentials (or biometrics where applicable) 
• Consumer selects funding account and amount 
• Acme bank calls our above APIs in the background to check account and identity details in real-time and proceeds with the processing the payment 

Get ahead and get prepared! Check out Mastercard Open Banking developer’s page for technical documentation or reach out to your Mastercard representatives to learn more. 

How is consumer-permissioned data driving the digital evolution in lending? In this video, Mastercard’s Executive Vice President, Open Banking, North America Markets Andy Sheehan and Tearsheet’s Zach Miller get into the details of Mastercard’s lending priorities: inclusion, transparency and security. What do they look like in practice? 

The two discuss Mastercard’s strategy and role in the open banking space, and how Mastercard is building out a new network of consumer-permissioned data as a trusted source for consumers and small businesses. This network works alongside traditional payment networks and identity networks, so that consumers can put their information to work across the ecosystem, accessing the tools to enhance their financial lives.  

Sheehan breaks down how Mastercard is leading the industry in creating next-generation API connections to financial institutions and overlaying its open banking network with Mastercard’s unique capability mix. 

Watch the full session above and learn more about the Mastercard open banking platform. 

Mastercard provides open banking technology to support leading partners across the ecosystem with safe, flexible and secure lending and payments experiences, partnering with leading players across the ecosystem. Our partnerships with Worldpay from FIS, the merchant solutions business of global financial services technology provider FIS, Zip and J.P. Morgan Payments are driving innovation in billing, lending and payment choice as we scale our global network.

Read more here.

J.P. Morgan Payments’ Pay-by-bank solution, which provides billers with the ability to allow their customers to pay bills directly from their bank account, is now live. Leveraging Mastercard’s open banking technology to enhance J.P. Morgan Payments’ ACH capabilities, Pay-by-bank offers payment choice and provides a simple, secure and frictionless experience for billers to offer to their customers.

For consumers, Pay-by-bank elevates the checkout experience, allowing billers to provide their customers with the option for a new, secure way to pay. The solution uses the consumer’s existing authentication protocols with their bank, including technologies such as biometrics, to retrieve all necessary information to execute a payment. As a result, they can securely make payments like rent, utilities, tuition, insurance, and healthcare.

J.P. Morgan Payments is a global leader, processing more than $9 trillion in payments daily, operating in over 160 countries and over 120 currencies.

Read more about this innovative new solution here.

For over 45 million Americans, the weight of unyielding student loan debt is a major cause of stress and anxiety, a barrier to homeownership and can be a lifelong impediment to building wealth. Nationwide, the total student debt level stands at a staggering $1.7 trillion. Managing that debt has proven to be complicated and inefficient for borrowers and lenders alike.

Bottom line: Access to consumer-permissioned student loan data presents a unique opportunity. Innovators can step in and create apps and build better services that leverage student loan data through Finicity’s open banking platform, to help consumers with student loan debt.

Introducing Normalized Student Loan Data

For fintech innovators, lenders, refinancers, employers and institutions of higher education, working with student loan data has been challenging. Until now, the data hasn’t been normalized. Higher learning institutions have used different naming conventions for data fields, making documentation harder to read, compare or translate. Lenders and servicers have to navigate a forest of screenshots, phone calls with lengthy hold times and unsecure paper documents in their efforts to verify loan information.

These time-consuming manual processes incur labor costs to lenders and servicers. This can cause stress, revenue loss, time loss and negatively impact the lender’s operational efficiency.  

Finicity has normalized the data across data fields, vocabulary, naming conventions and applications of rules, resulting in a modernized ecosystem for all stakeholders through its open banking platform. This significantly reduces the time to market for your student loan solutions.

Innovation Platform Using Student Loan Data

Student loan data doesn’t have to be confusing or complicated. With Mastercard Open Banking (some services provided by Finicity, a Mastercard company), an optimized API call can help reduce costs, and is delivered in a formation that doesn’t require additional coding. Our API endpoints can yield the complete loan details, and the full payment details of a student loan account, including up to 24 months of transaction history.

99% Data Coverage 

• Normalized, comprehensive data covering most student loan accounts. It’s delivered through our open banking platform, with connections to student loan accounts that include federal Direct Loans, FFEL & Perkins, and some of the largest private lenders and servicers (e.g. Aidvantage, Navient, Nelnet, Sallie Mae, Discover, Firstmark, Commonbond, LendKey, etc).

Quality of Data

• Extensive Loan Account Details:  API calls to the Finicity open banking platform can yield a primary account, transactions by account, loan payment details, statements, account owner and much more. Data is aggregated at the three largest levels of the student loan hierarchy; student loan, student loan group and student loan account, while also being able to provide customer & institution-level details.
• Transaction lookback period has been extended to one year in order to accurately capture transaction additions or changes. Up to twenty-four months of transactions can be offered for an extended view of account history.
• Complementary data insight solutions with analytics of a borrower’s credits, debits and balances to deliver smarter credit decisioning.
• Reliable Uptime Data Monitoring: Multi-tier data integrity and student loan-specific data monitoring.

Create Winning Borrower Experiences

Innovators can quickly develop and scale new and improved financial services with Finicity’s open banking platform. Student loans are the second-largest debt sector in the United States. There is a massive opportunity to develop new apps and services to help individuals with student loan debt. Through partnering with our clients, Finicity’s open banking platform is powering solutions to help over 45 million Americans who carry student loan balances. 

Some of the ways innovators can upgrade the borrower experience, using permissioned student loan data:

• Create frictionless onboarding and account setup for borrowers to apply for loans, set up accounts, manage repayment and distribute funding to students.
• Better data for better credit decisioning. It’s pretty simple. Student loan borrowers want a better experience. Lenders want the most accurate and real-time data for better credit decisioning. So we’ve combined the best data with smart insights to transform the lending experience.
• Finicity data powers leading personal finance management (PFM) apps. These tools allow borrowers to view, monitor and manage their debt in near real time by pulling smart, categorized and permissioned loan data into the app. If borrowers can easily understand their financial position and repayment options, they may reduce stress and more effectively manage their debt. 
• Attracting and retaining the best talent in today’s job market is a challenge for any company. Leveraging permissioned student loan data, some employers are taking advantage of the SECURE 2.0 Act, creating benefits like 401k accounts that match student loan payments and direct matching of student loan payments back to the student loan.
• By using the account details endpoint, it’s possible to verify that a student is enrolled in at least half-time coursework by the National Student Loan Data System. Using this data, a rich field of possibility opens up for student-specific benefits. Discounts, rewards and loyalty programs can be built specifically for current students.
• Even the more administrative aspects of student loans can be modernized by open banking technology. Student borrowers can be offered the ability to easily and securely apply for federal programs like Public Service Loan Forgiveness or an Income-Driven Repayment plan. No wading through W2s, paystubs and long, frustrating calls to student loan servicers. Quick and secure.

Step Into the Future

Break out of the spider web of paper documents, screenshots, phone calls and mismatched data. Replace countless lost hours of productivity with optimized API calls that offer the comprehensive, relevant, normalized data to build solutions on.

Innovate with us to create knowledge-based services that empower students, so they can manage, consolidate, refinance and repay their obligations with the level of transparency that they deserve. 

Click here to learn more about our Student Loan Data.  If you are ready to see this data in action, click here to request a demo.

A rapidly changing digital landscape

While speed and convenience are crucial in today’s financial innovations, they have to be paired with security. As financial apps and services become more digital, so do the fraudsters who are hard at work trying to pose as legitimate consumers. The spike in identity fraud has become an expensive problem, costing consumers, merchants and financial institutions billions of dollars. In 2021, nearly 42 million Americans fell victim to identity fraud. In that one year, fraudsters made off with some $52 billion through identity scams.  

As the exponential growth of digital banking and services has moved more transactions online, fraudsters’ methods have evolved to take advantage. A recent report published by Aite Novarica, Key Trends Driving Fraud Transformation in 2021 and Beyond, showed that 64% of financial institutions were experiencing higher rates of account takeover (ATO) fraud since the onset of the COVID pandemic. According to a 2021 survey of 110 fraud and loss prevention decision makers at fintech firms, 46% of fintechs report that ATO is their most prevalent problem. 

Fraud risk can increase when consumers are opening accounts and documenting identities digitally. According to research from Aite-Novarica, almost a quarter of checking account applications filed online in the first three quarters of 2022 were fraudulent, as were nearly one in five online credit card applications.  

Open banking and identity networks work in unison to cut down on fraud 

In response, financial service innovators are loading up on new tools capable of spotting and preventing fraud in real time, like the integration of identity and open banking solutions. Mastercard Open Banking allows consumers to safely share their financial data to verify account ownership and facilitate transactions, and now we have integrated open banking with our identity network to make sure participants in transactions are who they say they are.  

Mastercard can deliver instant identity verification, spotting compromised identities that manual verification may miss. Mastercard’s Identity and Open Banking networks deliver deep insights into the customer’s identity by analyzing relationships between and among the individual pieces of account owner data. For instance, identity network analysis keeps track of how often a name is linked to a phone number or email address. 

Open banking also helps providers create low-friction customer experiences. The technology enables them to: 

• Reduce manual paperwork 
• Shorten turnaround times
• Grant instant access to new accounts

Innovations to secure the future of financial services 

For all the promise that the emerging world of consumer-permissioned data holds, none of it will work without trust. Consumers must know that their money and data are safe. Consumers, banks and fintechs must trust that the system is secure and reliable enough to warrant continued investment and innovation.

Open Banking for Account Opening provides a solution from Mastercard to specifically create and protect the ecosystem and minimize identity fraud. By doing so, we’re setting the trusted foundation needed to help our partners create financial services that deliver speed, convenience and security for today’s digital commerce. 

Download our e-book Open Banking Data + Digital Identity: Stronger Together in the Fight Against Fraud to learn more about the trends and solutions in combating fraud. 

Digital payments are everywhere.

Whether we realize it or not, most of us have incorporated technology into our financial lives. According to the Mastercard New Payments Index, which surveyed 35,040 general consumers across 40 markets, 85% of people globally have used at least one emerging payment method in the last year.  

Part of the appeal is choice and simplicity. Consumers can buy a new refrigerator with a credit card, digital wallet or using an automatic buy-now-pay-later program. And they can perform most of their financial transactions from anywhere within a few minutes. 

Yet enabling consumers to bank and pay with ease is anything but simple. Banks and fintechs must carefully conceive and build payment technology stacks that are agile, user friendly and integrated with their organizations’ complex infrastructures. 

Platforms like i2c can help. A global banking and payment processing platform, i2c provides financial institutions and fintechs with “building block” technology to create their own unique consumer and commercial solutions. As a partner, the company relies on Mastercard Open Banking’s consumer-permissioned data to get the right information into the right hands, safely and quickly.  

In a recent conversation at the Tech Innovation Roundtable in New York, Jess Turner, EVP, Global Open Banking and API and i2c CEO Amir Wain sat down with moderator Sherri Haymond, Head of Global Digital Partnerships, to explain how their collaboration works and why it matters: 

What are the key market drivers that are leading to unprecedented demand for digital payments?

Jess Turner: The pandemic changed the way people interact with services and products, as well as the way they interact with each other. That change accelerated digitization faster than we expected, providing an opportunity for innovation. People expect more from their digital payment experience. And because of that, everything we do at Mastercard —whether it’s direct-to-consumer or business-to-business products—must have a best-in-class user experience. 

 Jess Turner and Amir Wain in conversation at the Tech Innovation Roundtable, Master Tech Center, New York

How does the partnership between i2c and Mastercard help deliver a best-in-class experience to fintech innovators? 

Amir Wain: A significant component to the digital payment experience rests in the hands of banks and fintechs. These financial institutions provide consumers with the ability to bank, borrow and buy what they need. To make those services work seamlessly, a lot of connectivity needs to happen between Mastercard and service providers like i2c. Through our platform, banks and fintechs can access Mastercard capabilities —such as digitization, open banking and APIs—to extend those services to their end users.  

How does open banking strengthen i2c’s platform offerings?

Amir: The basic tenets of payments—convenience, security and ubiquity—haven’t changed. Now open banking offers the right tools to keep us up to date with the new underlying digital technology, not to mention the consumer’s desire to interact with their finances differently. Through i2c, our clients can use open banking to help sign on new customers. Like mortgages, opening a bank account has largely been a manual process, one that required a lot of paperwork for banks and customers alike. But with open banking, customers can give permission to share their data digitally.  

Jess, can you share other use cases in which open banking creates opportunities? 

Jess: In addition to digital payments, another powerful example is that people can use open banking to get a loan for the first time in their lives. These are people who have been credit invisible or considered thin credit, perhaps because they have a low income, or they lack a credit history. Now they can share open banking data –such as bank transactions or rent payments— to prove they are creditworthy. And that could help a consumer qualify for a loan or empower a budding entrepreneur to kickstart their idea or a small business owner to invest in its growth. 

Open banking is also precise. At Mastercard Open Banking, we are working with permissioned data that we then must clean and categorize to verify things. So, if someone says they make $12.9 million dollars every year, we can check that quickly and accurately.  

What are you seeing in the landscape of digital payments that you are most excited about? 

Amir: I look forward to seeing consumers benefit from even more payment choice. Different people need different kinds of products that are relevant to them. Cookie cutter products are a thing of the past. Expanding what you know about the totality of a customer through tools like open banking and AI enables the development of more personalized products.  

At i2c, we work with partners like Mastercard to enhance our building block technology that helps banks and fintechs offer differentiated products and elevated customer experiences. 

Jess: I agree with Amir. Right now, these building blocks are critical for innovation because the world is becoming borderless. I am looking forward to seeing how our partnership with i2c will make real innovation happen at scale. 

Move money with confidence. Our instant account owner and balance verification enables accurate, confident payments. Learn more here.

NEWPORT BEACH, Calif.–(BUSINESS WIRE)–FundingShield, a market-leading, cloud-based firm providing fintech solutions to manage risk, compliance and fraud prevention, has entered a partnership with Mastercard to leverage its open banking platform delivered by Finicity, a Mastercard company. FundingShield provides live, source data-based technology products and SaaS solutions that have been used to secure the funds of over $2.5 trillion in mortgage closings.

FundingShield CEO Ike Suri shared, “FundingShield has over 95% coverage of licensed service providers in the real estate, mortgage, closing and settlement space in our live repository. This partnership with Mastercard allows us to leverage its open banking connectivity of over 95% of U.S. based deposit accounts for consumer-permissioned access to real-time, bank-sourced data to expand our B2B and B2B2C payment verification solutions for clients.“

This partnership expands FundingShield’s offering within the real estate, mortgage and title sector with solutions that protect buyers, sellers, brokers, bank and non-bank lenders, warehouse lenders, and title and settlement entities. More broadly, the firm’s solutions provide risk management surrounding payments to vendors, suppliers, and other outgoing fund recipients in markets where cybersecurity experts estimate cybercrime costs to reach over $10 trillion annually by 2025.

Learn more about this partnership here.