Original text here from Patrice Bernard (LinkedIn)
Gradually, project by project, Mastercard's foray into the world of open banking, which began in 2020 with the acquisition of Finicity, is finding its place within its core activities. Its latest announcement offers U.S. debit and prepaid card issuers a way to streamline their account opening processes.
The "Open Banking for Account Opening" program is available at no additional cost to all of the brand's partners. It allows them to add an optional step in their customer enrollment process for both individuals and small businesses. This step involves linking to a bank account, which instantly authenticates the account holder's identity, validates the information provided, and confirms the availability of funds.
The advantages of such an approach are well recognized. Besides the increased responsiveness for the end user, who can use their account immediately, the provider gains efficiency with largely automated control processes, reliability with end-to-end digital transactions reducing the likelihood of human error, and improved risk management through upfront verifications, including checks against insufficient funds.
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This solution is particularly well-suited to debit and prepaid cards since these are typically linked to a bank account. This feature should encourage its use among the targeted audience, as implementations of open banking mechanisms in similar settings have already shown high adoption rates. For issuers, its seamless integration into Mastercard’s offerings represents a significant advantage.
While it takes time for such initiatives to mature, the position taken by payment networks (with Visa pursuing a similar approach) in an area that seems competitive with their original business—and which was long developed independently—eventually aligns with a strategy of convergence that is gradually making more sense. However, these initiatives are inherently national or, at best, regional, which poses challenges for global players.
