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Mastercard Turns to Open Banking to Support Struggling Businesses

Mastercard has added advanced analytics to its open banking platform, delivered by its subsidiary, US-based Finicity, in a move to supply small businesses with a more diverse range of credit lines and loans. 

The additional advanced analytics aims to help lenders manage their risk profiles. It also looks to add inclusive credit models for small business loans, alongside ongoing monitoring and expanding credit card lines. The open banking product is currently only available in the US.

Mastercard explained that the move comes as increased costs and market uncertainty continue to challenge small businesses. As a result, a large proportion of these businesses may require extended credit lines and loans to not only grow but to survive.

Market uncertainty and increased costs continue to challenge small businesses, and many will rely on extended credit lines and loans to weather the current environment and grow their businesses.

Mastercard’s ‘Rise of Open Banking Small Business‘ report revealed that 85 per cent of small business owners are looking for more choices that deliver faster and easier access to capital.

Additionally, the ‘Small Business Credit Survey‘ by the Federal Reserve Bank found that the share of small business applicants receiving all the traditional funding they sought fell from 51 per cent in 2019 to 36 per cent in 2020. This number fell further in 2021 to only 30 per cent.

Jess Turner, executive VP for global open banking and AP for Mastercard, said: “Small businesses are increasingly looking for greater choice in how they borrow, pay and manage their finances.

“Open banking provides lenders with the owner-permissioned data and advanced analytics they need to offer more choice in financial services to small businesses, which are the backbone of the American economy.”

‘Expanding financial access’ and improving capital access

Mastercard aims for its APIs to offer lenders the ability to apply balance, payment history and more analytics to transactions.

Silvana Hernandez, executive VP of product and engineering in North America for Mastercard, said: “Responsible lending is the key to growth for many small and medium-sized businesses. Mastercard open banking provides permissioned access to data that fuels new and improved financial experiences for small businesses.”

Mastercard has also partnered with a wide range of fintechs to better its open banking platform. The likes of 800-Accountant, Amount, Codat, GenEQTY, Lendio, Nav, Rho, as well as upSWOT were involved building greater numbers of choices in financial experiences on the platform.

Dionne Gumbs, CEO and founder of GenEQTY, said: “We’ve always worked with a lens toward expanding financial access. By delivering data-driven insights and tools, we can empower providers to meet the financial needs of a broader range of business clients with scale and efficiency, to improve financial performance, business health, and capital access for more SMBs.”

Adam Hughes, CEO of Amount, also explained the potential of open banking, and how Mastercard’s efforts can accelerate the drive towards that: “The ongoing industry shift towards embracing open banking infrastructure has enormous potential to improve the banking experience for consumers and small business owners. We’re excited to team up with Mastercard to accelerate progress – ultimately unlocking better data, faster decisioning, and cost of credit reduction industry-wide.”


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