Fighting fraud with digital identity and open finance data

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 2024, there were 1.14 million identity theft cases reported to the Federal Trade Commission (FTC) and fraudsters made an estimated $47 billion from identity fraud and scams combined.   

As the exponential growth of digital finance and services has moved more transactions online, fraudsters’ methods have evolved to take advantage. Suspicious Activity Reports (SARs)  of account takeover (ATO) attacks against financial institutions have gone up 34% in 2024 compared to 2023. 

Fraud risk can increase when consumers are opening accounts and documenting identities digitally. In fact, 13.5% of digital bank accounts opened in 2023 were suspected to be fraudulent. 

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 finance solutions. Mastercard Open Finance allows consumers to safely share their financial data to verify account ownership and facilitate transactions, and now we have integrated open finance with our identity network to help make sure participants in transactions are who they say they are.  

Mastercard can deliver near-instant identity verification, spotting compromised identities that manual verification may miss. Mastercard’s Identity and Open Finance 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 and highlights the relationship between those data elements (i.e. how long has this name been associated with this email, this phone number etc.).  

Open finance 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 

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.

Mastercard’s Open Finance provides a solution that specifically creates and protects the ecosystem and minimizes 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.