Smart Solutions: Mastercard and Alloy on Fraud Prevention
A streamlined onboarding solution has been launched by Mastercard and Alloy to encourage prevention of fraud in its earliest stages.
Mastercard’s global digital identity verification capabilities will be leveraged by Alloy, in addition to its open finance-powered account opening solutions.
The collaboration aims to support fintechs and financial institutions in managing fraud and identity risk.
Institutions will be able to claim secure account funding for customers, backing them throughout their financial lifecycle.
Executive Vice President and Global Head of Identity at Mastercard Dennis Gamiello says: “Fraud continues to be a significant challenge for financial institutions and consumers alike, underscoring the urgent need for robust fraud prevention measures.”
“This joint onboarding solution will be a game-changer in the fight to reduce fraud and deliver a seamless and secure customer experience.”
Already used by over 700 companies to access actionable intelligence, Alloy is a global identity and risk prevention platform that bolsters companies to act against fraud, credit and compliance risks.
To ensure seamless deployment, Mastercard products will now be pre-integrated within the Alloy platform.
In addition to these tools, customers can now gain access to Alloy's full suite of over 200 risk and identity solutions, helping them increase conversion rates, reduce manual reviews and achieve comprehensive coverage. Parilee Wang, Chief Product Officer at Alloy, says:
“Successful fraud prevention starts with a holistic approach to understanding identity. 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,”
The State of Financial Fraud
The solution comes on the back of Alloy’s recently published State of Fraud Report.
The report states that in the US, 60% of financial institutions and fintechs have reported an increase in fraud.
The highest fraud growth has been reported by enterprise banks, with nearly 70% of enterprise banks reporting an increase in fraud over the past 12 months.
The majority of fraud attempts are attributed to organised crime rings.
AI in the rise of ID Fraud
Sophisticated identity theft tactics are on the rise.
Alloy’s report states that 99% percent of financial organisations are currently utilising some form of machine learning or artificial intelligence (AI) to combat fraud.
Application fraud is the act of using stolen or fabricated information to illegally apply for financial services, most commonly credit products like loans and credit cards.
Alloy also reports that 93% of respondents believe that AI will revolutionise fraud detection.
Companies such as Visa and TYSY are already leveraging AI in the uphill battle against fraud.
A report from AuthenticID earlier this year stated that AI is a deepening sector threat, with rates of AI fraud rising by 32%. Deloitte predicts fraud losses caused by generative AI have the potential to reach US$40bn in the US by 2027, an increase from US$12.3bn in 2023.
Nearly a third of financial organisations experienced direct fraud losses exceeding US$1m, which is an increase from a quarter of organisations in the previous year.
Over a third of respondents reported that the investment with the greatest impact on reducing fraud rates was identity risk solutions.
A 64% majority of respondents in the Alloy survey intend to invest in identity risk solutions within the next year.
