Fighting fraud at scale: How open finance is reshaping risk management

Fraud rings are savvy, global and quickly expanding, feeding the accessibility of stolen credentials on the dark web. One in 10 financial institutions experienced more than 10,000 fraud attempts in 2024, from tactics such as synthetic identities, account takeovers and identity theft. Financial institutions find themselves in a race to stay one step ahead of these increasingly sophisticated criminal tactics.

Mastercard Open Finance[1] is working to help businesses counter these emerging threats with a suite of products designed to prevent fraud at scale in a way that reduces user friction while keeping financial institutions secure.

Identity theft remains the most common fraud type, with 69% of consumers experiencing multiple incidents of this crime. Account takeovers, in which attackers hijack legitimate accounts using stolen credentials, are another major threat, and likely to account for up to $17 billion in losses globally in 2025. Meanwhile, the fastest-growing crime in today’s financial world is fraud via synthetic identities — fabricated or partially real personas. 

These sophisticated threats are so difficult to manage because the internet is awash in stolen data. Criminals can purchase personal information or credentials online and use bots to automate credential-stuffing attacks. Organized fraud rings share resources and build transaction histories to disguise fraudulent accounts as genuine.  

In the face of these growing threats, risk teams previously insisted on extremely robust customer identity checks to protect networks. But this process often sours a legitimate customer experience by creating too many frustrating hurdles.  

Additionally, the typical methods of ensuring security are falling short in this increasingly complex environment. Multi-factor authentication, which has long been a mainstay of fraud prevention, is one such example. While it is still helpful, researchers have found that it can be circumvented and disabled with access to the account’s email address on file. 

The solution to these challenges for financial institutions is to institute new, more advanced methods of verifying account owners’ identity. These are systems that operate behind the scenes to identify users quickly, accurately and seamlessly.  

That’s why Mastercard Open Finance offers a networked product suite that applies consumer-permissioned data, device intelligence and predictive scoring to fight fraud at scale. The Open Finance network covers more than 100 million connections with financial institutions, which represents 95% of U.S. deposit accounts. The network is highly secure, featuring authentication with multi-layered fraud protection, and has built-in compliance and government-grade security standards.

The key step financial institutions take to reduce Automated Clearing House (ACH) fraud and other types of fraud is to ensure that the account owner’s identity information provided by an external bank is consistent with the customer’s account profile. Enter Mastercard Identity Network[2], which comprises more than 8 billion elements of compliant, authoritative, global identity data, such as names, emails, phone numbers, IP addresses and device information. The network offers users insights into global patterns based on more than 25 billion digital interactions and 2.5 billion device-level metrics. 

Financial institutions utilize Identity Network information through Mastercard Open Finance’s Account Owner Verification (AOV) system. This system confirms that data provided by banks, such as a customer’s name, address, email and phone number, matches the business’s records when a customer links a third-party bank account during sign-up or onboarding.

This straightforward due diligence measure lowers the risk of fraudulent transactions occurring during account funding, disbursements and bill payments. Even when companies don’t require a full identity match, gaining visibility into account owner data enables them to more confidently arbitrate approvals, streamline onboarding and secure money movement pathways.

That transparency enables massive savings: For example, one financial institution experiencing elevated levels of fraud reduced its fraud losses by $100,000 within three months of instituting AOV[3].

For organizations that want an extra level of security in identity verification, Mastercard’s Account Owner Verification+ (AOV+) system validates new account applicants’ identities via two avenues: bank-provided information and user identity signals. The bank provides user details, such as name, address, email and phone number, while AOV+ adds data, including the user’s IP address and device user-agent.

This multi-layered defense triangulates various identity factors to help partners confirm account ownership during onboarding, validate identity profiles, quantify risk and detect fraudulent behavior through device and activity patterns. 

Another way Mastercard reduces companies’ risk, both from fraud and non-sufficient funds transactions, is by using machine learning to analyze balance history, deposit patterns and transaction behaviors. Mastercard Open Finance’s Payment Success Indicator (PSI) offers two settlement risk scores per transaction with a unified API:

• Insufficient funds scoring predicts the likelihood of settlement and optimal payment timing, forecasting up to 10 days.
• Unauthorized fraud scoring assesses whether the payer is legitimate and flags first- or third-party fraud.

PSI returns numeric scores and reason codes that help companies identify settlement risk, optimize payment timing and reduce unauthorized returns. For example, one large digital bank leveraged PSI to cut unauthorized fraud returns by 46%[4]. By integrating PSI into onboarding and payment flows, companies can proactively reduce risk while maintaining an excellent customer experience.

Fraudsters’ strategies are evolving fast, but so are financial institutions’ toolkits for fighting these types of crime. Mastercard’s Open Finance infrastructure offers powerful, scalable defense for organizations operating in today’s threat-heavy digital landscape. 

Contact us today to learn how our specialists can help you get started with identity verification and risk-reduction solutions.