The collaboration will see the companies develop a solution for banks and FinTechs that employs identity verification and open finance to streamline customer onboarding while combating fraud, according to a Wednesday (Aug. 20) press release.
“Successful fraud prevention starts with a holistic approach to understanding identity,” Alloy Chief Product Officer Parilee Wang said in the release. “Our partnership with Mastercard will allow more financial institutions and FinTechs to evaluate customer identities holistically. The end result for those companies will be a better digital experience and less fraud risk, allowing their businesses to grow effectively.”
Alloy plans to use Mastercard’s digital identity verification capabilities and open finance-powered account opening solutions to help financial institutions and FinTechs prevent fraud and identity risk and secure account funding throughout the customer lifecycle. Mastercard products will be “integrated and pre-configured” in Alloy, per the release.
“Fraud continues to be a significant challenge for financial institutions and consumers alike, underscoring the urgent need for robust fraud prevention measures,” Dennis Gamiello, executive vice president and global head of identity at Mastercard, said in the release. “This joint onboarding solution will be a game changer in the fight to reduce fraud and deliver a seamless and secure customer experience.”
The partnership is happening at a time when identity verification has become more important than ever due to agentic artificial intelligence.
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“Distinguishing legitimate transactions from increasingly sophisticated fraud attempts places FinTech companies, with their digital-first infrastructure and seamless consumer experiences, at the vanguard of the ongoing battle against identity theft and financial deception,” PYMNTS wrote Friday (Aug. 15).
The PYMNTS Intelligence report “How FinTechs Are Fighting Identity Theft and Identity Fraud” examined the challenge faced by digital financial entities in dealing with fraud.
Among all suspicious activities encountered by financial institutions, 42% are related to identity fraud, with dark web ID data dumps and advanced artificial intelligence tools helping fraudsters execute their schemes.
Around a third of FinTechs reported recently experiencing fraud, in keeping with a broader uptick in the financial industry, where U.S. financial institutions suffered a 65% increase in fraud losses, rising to an average of $3.8 million last year.
