Leading Firms Collaborate with Mastercard to Further Secure Open Banking EcosystemJuly 2, 2020 | By Philipp Bruchert
Mastercard announces three key financial firms as the latest companies to start using Mastercard Open Banking Protect, safeguarding organisations who manage customer accounts against compromised or unauthorised third-party providers (TPPs).
Aion, DiPocket and Modulr have all signed agreements to use the Protect solution, which is a key component of Mastercard’s Open Banking Solutions™ portfolio of market-leading applications and services to underpin, enable and safeguard the open banking ecosystem across Europe.
PSD2 legislation in Europe allows TPPs to access bank accounts, with a customer’s consent, to provide new products and services; however, the account holding institutions remain liable for the funds. It is therefore important for financial institutions quickly to verify open banking requests from TPPs, with whom they may have no prior relationship, and that robust systems are in place to detect warning signs of potential fraud early on.
Mastercard Open Banking Protect is designed to improve the ability to combat fraud in open banking and increase the confidence of financial institutions when approving third-party requests. It offers two key services:
- Licence and certificate validations - swift verification of TPP certification and registration status against all relevant directories.
- Fraud Monitoring - uses network-level data on a given TPP to spot trends and changes to regular activities through behaviour monitoring in order to stop potentially fraudulent requests.
The partners announced today include a wide range of use cases - from a digital bank powered by AI (Aion), to a wearable pre-paid tech provider (DiPocket), and the leading payments as a service alternative to wholesale and commercial transaction banking for businesses (Modulr).
All of these companies are collaborating with Mastercard through Open Banking Protect to enhance their ability to identify fraud in a new ecosystem and better protect their business and their customers against unauthorised third-party providers.
Jim Wadsworth, SVP, Open Banking, Mastercard comments: “While there is strong momentum in the open banking ecosystem, financial institutions, TPPs and users continue to be concerned about the potential for fraud and security breaches. Mastercard Open Banking Solutions™ draws upon our considerable expertise in operating and supporting global banking and payments systems to help ensure the open banking ecosystem works seamlessly with security at its core. We designed Protect to offer enhanced safety and security features for financial institutions and TPPs using open banking, including TPP verification and market-leading fraud monitoring.
“Collaboration is key to building a resilient open banking market, and we are delighted that Aion, DiPocket, and Modulr are the latest in a series of partnerships for Mastercard as we work to create an even safer system for all participants. This is a significant milestone for the wider ecosystem and opens the door to even greater adoption of open banking across Europe.”
Cyrus Wadia, Payments Strategy Director, Modulr comments: “In our bid to eliminate the hidden inefficiencies that have traditionally proved costly to UK businesses, we are pleased to work with Mastercard to supercharge our efficient, secure and accessible payment service, so our customers can make the most of open banking.”
Fedele Di Maggio, CEO, DiPocket comments: “Investing in fraud prevention now is incredibly important to ensure that we are safeguarding the open banking ecosystem for the benefit of our customers. Through Open Banking Protect, we are doing just that by providing a service that is not only low cost and transparent, but also secure and protected.”
Recent Mastercard research amongst European financial institutions confirmed that their number one concern is fraud risk and loss1 in the backdrop of a complicated marketplace where numerous regulators, 31 National Competent Authorities and up to 90 QTSPs are make verifying third parties a significant challenge for financial institutions2.
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Notes to Editors
Mastercard’s Open Banking Solutions
Protect is one of four solutions in Mastercard’s Open Banking Solutions™ portfolio of market-leading applications and services to underpin, enable and safeguard the open banking ecosystem. The four solutions, designed to support both financial institutions and third-party providers (TPPs) in crafting their open banking futures, are as follows:
- Open Banking Connect – A single, universal connection to financial institutions’ Open Banking functionality, providing third parties with scale, resilience and speed to market.
- Open Banking Protect – immediate verification of third-party registration and certification status, and fraud monitoring combined with behaviour monitoring to flag potentially fraudulent requests in real time.
- Open Banking Resolve – A centralised inquiry and dispute resolution service to provide clarity, consistency and transparency for all participants in the Open Banking ecosystem.
- Open Banking Consulting Services – Professional advice and hands-on support to help financial institutions define and execute a strategy to thrive in the Open Banking ecosystem.
1 Mastercard open banking research “Delivering on the Promises of Open Banking” amongst 40+ financial institutions across Europe conducted by Ovum 2019.
2 Mastercard Open Banking Tracker, Q1 2020 https://www.vocalink.com/news-insights/stories/q1-2020-open-banking-tracker/
About Mastercard (NYSE: MA), www.mastercard.com Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.
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About Aion Bank
Aion Bank is a digital bank powered by artificial intelligence, designed to help members maximise their money. Aion combines the best features of traditional banks with the newest technological advancements in banking today. Aion’s services are reshaping the relationship between a bank and its customers, making services beyond day-to-day banking and investment accessible at the push of a button, and without any extra fees. Aion uses cutting-edge technology, including A.I., and the latest market insights to give customers easy access to the best deals, fair and transparent pricing, financial advice and personalised tools and recommendations – all to make customers’ lives easier, and without hidden commissions, costs, fees or other surprises.
Aion is backed by global investment firm Warburg Pincus, is managed by seasoned international senior executives with extensive expertise in growing financial institutions, has a full banking license and is supervised by the National Bank of Belgium. www.aion.be/en/
DiPocket is a pre-paid tech B2B2C provider offering turnkey white labelled payments solutions ranging from financial apps for loyalty and customer acquisition, to cards for disbursements (e.g. loans, gig economy, employee benefits) to wearables for casthess events. A principal member of Mastercard, DiPocket offers tokenizable cards in most European currencies. www.dipocket.org
Modulr is the leading Payments as a Service alternative to wholesale and commercial transaction banking. It integrates into any product or system. Modulr’s new type of payment accounts are built for businesses that need a faster, easier and more reliable way to move money. Businesses can automate payment flows, embed payments into their platforms and build entirely new payment products and services themselves. All managed in real-time, 24/7 from one API.
Modulr’s API makes it easy for businesses to streamline existing services, launch new products and scale more efficiently. Modulr Finance Limited (FRN: 900699) is registered with the Financial Conduct Authority as an EMD Agent of Modulr FS Limited (FRN 900573). Modulr FS Limited is an Authorised Electronic Money Institution, regulated by the Financial Conduct Authority.
For further information – please go to www.modulrfinance.com