Mastercard Incorporated MA collaborated with the payroll and merchant connectivity solutions provider, Atomic, in a bid to introduce two Open Banking solutions, which are likely to be available from 2024 as part of MA’s Open Banking platform. Its shares gained 0.3% on Jun 7.
The new solutions, Deposit Switch and Bill Pay Switch, intend to provide an extensive suite of account opening and funding solutions through open banking, payroll and merchant data connections, which in turn, aims to streamline the online banking experience for consumers.
Eliminating the hassle of switching direct deposits, Mastercard’s Deposit Switch is embedded directly within a financial institution’s app or website. It allows consumers to bypass manual paperwork and automatically route payroll deposits to a new or existing bank account. Deposit Switch leverages Atomic’s TrueAuth technology and lets consumers securely establish a link with the top U.S. payroll systems without the need to share credentials with third parties. This, in turn, enables real-time updates or redirections of deposit allocations. The solution will empower financial institutions to boost deposits, establish primary customer relationships and lower acquisition costs.
Mastercard’s Bill Pay Switch simplifies the process of updating payment credentials at regular merchants and billers, such as subscription providers, utilities, telecoms and insurance companies. Utilizing TrueAuth technology, Bill Pay Switch completes the verification process directly with each provider before updating the payment credential on file without requiring users to depart from the mobile application or online banking environment that they are using. Therefore, this solution can be offered by financial institutions as part of their digital banking experience, which in turn, will drive customer engagement and top-of-wallet spending.
The recent partnership reflects one of Mastercard’s most important endeavors, which is to deepen its presence in the open banking space. The immense growth scope of the open banking market justifies MA’s strategy of harnessing growth prospects prevailing in the space. The company has been resorting to continuous efforts in the form of collaborations or acquisitions to sustain its position in the space.
Also, increased utilization of Mastercard’s Open Banking solutions is expected to fetch higher revenues from its value-added services and solutions suite, through which along with open banking solutions, MA offers cyber and intelligence solutions, data and services solutions, processing and gateway services and digital identity solutions. Value-added services and solutions net revenues improved 16% year over year in the first quarter of 2024.
Additionally, the latest move seems to be a time opportune one as well, since a study on mobile account opening revealed that automated deposit switching is the top priority for consumers. Meanwhile, financial institutions are prioritizing deposit growth and achieving primary customer relationships. Therefore, providing streamlined processes for time-consuming tasks like rerouting direct deposits and paying bills, which are expected to be made possible through the two new Mastercard solutions, is likely to enable consumers to better manage their finances on the back of a modernized digital account journey and subsequently, boost account primacy for financial institutions.
Shares of Mastercard have gained 19.9% in the past year compared with the industry’s growth of 17.6%. MA currently carries a Zacks Rank #3 (Hold).
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Stocks to Consider
Some better-ranked stocks in the Business Services space are Duolingo, Inc. DUOL, Aptiv PLC APTV and FTI Consulting, Inc. FCN. Duolingo currently sports a Zacks Rank #1 (Strong Buy), and Aptiv and FTI Consulting carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Duolingo outpaced estimates in each of the trailing four quarters, the average surprise being 115.22%. The Zacks Consensus Estimate for DUOL’s 2024 earnings is pegged at $1.74 per share, which indicates a nearly five-fold increase from the year-ago reported figure. The same for revenues indicates year-over-year growth of 37.8%. The consensus mark for Duolingo’s 2024 earnings has moved13% north in the past 30 days.
Aptiv’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 12.18%. The Zacks Consensus Estimate for APTV’s 2024 earnings indicates an improvement of 23.7% from the year-ago reported figure. The same for revenues implies growth of 5.2%. The consensus mark for Aptiv’s 2024 earnings has moved 0.7% north in the past 30 days.
The bottom line of FTI Consulting outpaced estimates in each of the last four quarters, the average surprise being 27.82%. The Zacks Consensus Estimate for FCN’s 2024 earnings implies an improvement of 6.6% from the year-ago reported figure. The same for revenues indicates growth of 6.5% from a year ago. The consensus mark for FTI Consulting’s 2024 earnings has moved 0.9% north in the past 60 days.
Shares of Duolingo and FTI Consulting have risen 20% and 10.8%, respectively, in the past year. Meanwhile, the Aptiv stock has declined 20.4% in the same time frame.
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