How Open Finance Combats Synthetic Fraud in the AI Era

Synthetic identity fraud has become a dominant threat in digital financial services. According to The Deloitte Center for Financial Services, synthetic identity fraud expects to generate at least US$23bn in losses by 2030. 

This surge is being driven by generative AI as fraudsters are no longer just stealing identities – they are manufacturing them at scale. As AI accelerates both the volume and sophistication of these attacks, businesses need new, more dynamic ways to verify identities and protect their customers.  

For fraud, product and compliance leaders, the core issue isn't a lack of fraud tools; it's the absence of high-integrity signals to differentiate genuine financial lives from fabricated ones, as current identity verification relies on static, moment-in-time checks.

Documents can be forged, emails can be created instantly – and device signals alone can’t prove that an identity is real. 

This is where open finance can change the equation: by helping enable secure identity assurance against synthetic fraud, with clearer cross-checks between financial institutions and fintechs, highlighting discrepancies that synthetic profiles can depend on. 

The open finance solution: Truth at the source

Open finance helps enable institutions to verify identity attributes against bank-held records, providing the base for onboarding decisions with verifiable and real transaction history – not freshly generated synthetic profiles.

In an era of increasingly sophisticated synthetic fraud, reliance on static credit bureau data has become a structural weakness. Mastercard is pivoting the industry toward a higher-integrity, evidence-based identity-assurance model, leveraging open finance solutions to move beyond probabilistic risk and towards real-time transparency with consumers at the helm. 

By operationalising open finance, institutions can unify bank-verified attributes with multi-dimensional telemetry – including device, email and IP intelligence. This integrated approach is designed to help strengthen frontline defences, enabling a faster and more accessible method for the detection of synthetic identities.

For institutions, this creates a foundation for reductions in fraud-related losses without compromising the onboarding velocity today’s users demand. Beyond the initial identity check of bank-held records, open finance can help drive significant operational efficiencies by automating the verification of account ownership and real-time balances. 

By transitioning toward these high-integrity data rails, institutions can safeguard their ecosystem while establishing the foundational infrastructure required for seamless, secure account-to-account (A2A) payments.

As AI continues to evolve and lower the barrier for cybercriminals, operationalising consumer-permissioned data and predictive signals is essential to combat the next generation of synthetic fraud threats through a powerful combination of identity insights and open finance solutions.

Redefining the frontline: Beyond static verification

Modern fraud detection has evolved beyond simple rule‑based controls. Today, intelligence‑led onboarding incorporates device risk signals to identify emulators, alongside IP trust indicators that can flag sophisticated proxy masking. 

Furthermore, according to Mastercard, email risk intelligence plays a critical role by analysing the velocity and age of an address – a common weak point for rapidly generated synthetic profiles – while predictive fraud risk management flags suspicious applications for deeper scrutiny before a bust-out can occur.

One of the most significant breakthroughs in helping to combat synthetic identity fraud lies in the adoption of open finance identity attribute verifications, which shifts the source of truth to real-time bank-verified identity attributes. The distinction can be critical – while a fraudster can fabricate a driver’s license, they cannot easily replicate years of legitimate transaction history at a major retail bank. 

Together, these approaches can help enable institutions to stop synthetic identity fraud earlier in the lifecycle – without adding unnecessary friction for legitimate customers. 

Through open finance connectivity, organisations can verify account ownership by securely cross-referencing applicant data against bank-held records. 

The result is a name‑match score derived from account ownership details (name, address, email and phone – where available) from a connected account at a financial institution. This is a premium endpoint that, upon a successful API call, returns a confidence score indicating how closely the customer‑provided owner data matches.

Learn how Mastercard Open Finance can help you stop synthetic identity fraud earlier in the lifecycle at onboarding without adding unnecessary friction for legitimate customers. Speak to a specialist today.