Finicity is part of the Mastercard family. Our open banking platform provides the financial data you need.

Open Banking

Fighting fraud with digital identity and open banking data 

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: 

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.