USA 2023: Establishing Trust in the Digital Economy for Fintechs

In today’s digital landscape, building trust is crucial for fintech companies to thrive. Ranjita Iyer, Senior Vice President of Cyber & Intelligence Solutions at Mastercard, emphasized the significance of trust during her keynote speech at Fintech Nexus USA 2023 in New York City. Reflecting on her seven-year-old nephew’s app-centric world, Iyer acknowledged the necessity for trust in the financial system.

For her nephew, trust is simple – he relies on people he knows and believes won’t harm him. Iyer underscored that trust and identity are foundational elements of the financial ecosystem, particularly in an era where individuals increasingly engage in the digital economy. Both users and service providers must effectively demonstrate their identities and establish trust, despite the challenges posed by the vast amount of data generated in the digital world.

Iyer highlighted the difficulty of proving digital identities given the immense volume of data, with an estimated 18 trillion digital transactions from 27 billion devices projected by 2025. However, successfully meeting this challenge can lead to personalized services and improved assistance for underserved populations. Mastercard, for instance, aims to connect merchants with customers, shifting its focus from merely protecting transactions to safeguarding the entire ecosystem proactively.

Fintech companies play a crucial role in meeting customer demands, contributing to the anticipated growth of the trillion-dollar marketplace. With 71% of American consumers expressing interest in open banking transactions and 78% desiring mobile banking applications, fintechs have ample business opportunities. The number of open banking customers is predicted to grow eightfold, accompanied by a 3,000% surge in payment flows via open banking. This will empower consumers with more options and creative possibilities in managing their wealth, retirement accounts, banking, and capital through this evolving ecosystem.

Open banking not only enhances optionality and creativity but also improves underwriting models, fosters inclusion, and reduces risk. Furthermore, it enables greater access to capital for small businesses. Mastercard is actively collaborating with fintech partners across 172 countries to deliver innovative and personalized solutions for the underbanked, addressing the needs of the 25% of underbanked individuals and the 21 million Americans lacking access to traditional identification systems.

However, trust becomes increasingly challenging as data breaches become more prevalent, making personal data and fraud tools more accessible than ever before. To counter these risks, Iyer announced Mastercard’s enhanced bank account opening solution, which facilitates real-time customer onboarding and verification for fintechs and financial services institutions. By fostering trust in interactions, businesses can reach more consumers, expand access to financial services, and thrive in the digital economy.

In conclusion, trust is the linchpin for fintechs seeking success in today’s digital economy. Overcoming the obstacles to establishing trust will unlock numerous opportunities for growth, while simultaneously empowering consumers and bolstering the financial ecosystem.