Open banking is transforming the banking industry. This allows third-party fintech companies to access financial data and funds managed by traditional financial institutions (FIs). Doing so could pave the way for the provision of real-time payments. Although consumers appreciate faster payment solutions, financial institutions are reluctant to offer these solutions, especially due to concerns that fraud will increase as payment transfer speeds increase.
Data from PYMNTS Intelligence shows that financial institutions are experiencing increased fraud rates across most payment methods. Half of financial institutions cite an increase in fraud related to real-time payments. As threats increase, financial institutions using machine learning (ML) and artificial intelligence (AI) fraud prevention solutions are increasing their confidence in open banking and real-time payments. For example, 80% of financial institutions say that using AI/ML technology increases their confidence in providing secure real-time payments.
These are just some of the findings detailed in .How fear of fraud impacts financial institutions’ adoption of faster payment solutions,” PYMNTS Intelligence and Hawk AI collaboration. This report examines how growing fraud concerns are impacting financial institutions’ evaluation of open banking and real-time payment solutions. We conducted a survey of 200 U.S. financial institutions from March 29, 2023 to June 16, 2023 to assess the fraud risks and benefits of open banking and real-time payments, and how financial institutions use them. We investigated how people perceive the impact of their technology solutions. scam.
Increased fraud has led to a 26% increase in financial institutions’ aversion to open banking.
46% of financial institutions feel the risks of offering open banking solutions outweigh the benefits. Only 35% of financial institutions believe the benefits outweigh the risks. Smaller financial institutions are comfortable offering open banking, with nearly two in five saying the benefits outweigh the risks. Conversely, more than half of large financial institutions with more than $100 billion in assets under management feel the risks outweigh the benefits.
Most financial institutions are confident in their ability to provide secure real-time payments.
According to PYMNTS Intelligence, 81% of financial institutions report being able to offer secure real-time payments. In contrast to the open banking trend, financial institutions’ trust in real-time payments is higher for institutions with larger assets. Nearly all financial institutions that manage more than $100 billion in assets say offering real-time payments does not compromise security. Only 78% of financial institutions managing $1 billion to $5 billion in assets said the same.
Anti-fraud measures make open banking and real-time payments more reliable.
As fraud and financial crime continue to rise, financial institutions are reluctant to adopt open banking and enable real-time payments. However, data shows that using anti-fraud measures increases financial institutions’ belief in the benefits of offering them. It also increases confidence in your ability to provide secure real-time payments. 41% of financial institutions leveraging cloud-based fraud and financial crime prevention platforms say the benefits outweigh the risks. 79% of these financial institutions report being able to offer secure real-time payments.
To offer open banking and real-time payments, financial institutions Businesses of all sizes must deploy sophisticated tools to win the battle against rising fraud. Download the report to learn how advanced fraud prevention technology can help you balance benefits and risks. Open banking and real-time payments.
