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Robbing fraud of its power


In financial services, 2018 focused significantly on attracting and retaining business customers. This makes sense. Today’s financial institutions enjoy a massive opportunity to attract more businesses and address their financial needs, such as protecting cash flow. And as more companies fell to fraud, according to AFP’s Payments Fraud and Control Survey, financial institutions stand to offer even greater value to these customers.

Thus, we expect to see more financial institutions approach business customers with Treasury Management services. These include Automated Clearing House (ACH) and Check Positive Pay; Electronic Data Interchange (EDI) translation and ACH return; and Notification of Change (NOC) presentment to business customers.

Taking control of competitive edge

The need to be more competitive will encourage much of this demand. In fact, current treasury management systems likely cost financial institutions a competitive edge as they lose customers and revenue. What explains this?

First, most business customers fail to see any value when their institution monitors transactions and reaches out to verify potential fraud. In fact, they view this as an outdated and often inconvenient method marked by intrusive calls to ask whether a transaction is valid.

Second, if the system proves too complicated and time-consuming, it loses its effectiveness and will combat fraud. As a result, customers choose other institutions with more streamlined, convenient systems. Only now have banks begun to realize this.

Fraud tech fails to keep up

While customer expectations change and institutions need to seek a more competitive edge, the payments landscape also requires change to engage effective fraud prevention.

With modern technology and the latest solutions, transactions can move at the seeming speed of light. And yet, the technology behind monitoring fraud has not kept pace. As transactions accelerate, the time frame to check for all potential fraud shortens. For example, credit-based ACH payments are now settled within a day, which forces institutions to identify suspicious activity much quicker.

Institutions that lag in finding better solutions will face even greater challenges. Payments fraud is inevitable—and rising at a rampant rate, according to the most recent AFP Payments Fraud Survey. It’s critical that institutions reexamine their current solutions now and make the right changes.

Security and customer experience: Braving the balance

Even as banks must monitor for fraud, customer experience is also vital. Today, customers expect ease of use, convenience and self-service-on-demand services. In fact, these factors largely determine where a business or consumer will bank.

Unfortunately, as customer expectations evolve in a digital payments environment so too do the tactics fraudsters use. As such, financial institutions must balance a delightful customer experience with strong security measures: not easy since one demands speed and seamlessness, the other care and caution.  

This hasn’t been the case.

With many of today’s treasury management systems, growing fraud have created even more cumbersome methods for the login and transaction authorization processes. Grated, they’re in place for good reason. But they can negatively impact the experience—assuming these methods are effective to begin with.

Some financial institutions have responded by implementing more robust fraud monitoring and behavior analytics to guard against potential compromises. But this costs money and banks cannot typically scalable these efforts. Additionally, the “call and verify” technique may no longer guarantees wire fraud prevention, though it will ultimately impact the experience regardless.

The view from here: Fraud prevention in action

We will continue see rising interest in treasury management systems that feature actionable fraud prevention. Many systems currently have actionable capabilities where they can initiate a wire transfer, an ACH batch, internal transfers and loan payments. While some offer ACH positive pay and check positive pay—allowing customers to detect suspect ACH debits and checks—these methods lack user friendly automation, with low adoption as a result.

Instead, more financial institutions will offer actionable fraud prevention—and put security in the hands of their account holders. By empowering customers to detect and respond to suspicious activity before funds ever leave their account, security measures and customer experience effectively rise.


Additionally, treasury management systems that feature actionable fraud prevention across virtually all payment types can make financial institutions more profitable and competitive. They will retain valuable existing customers and attract new ones; improve customer experience; and scale up without needing to add support staff. With 2020 just five months away, count on all this to only gain in importance.

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Deborah Peace is CEO of ACH Alert, a provider of fraud detection services to financial institutions.

Listen to  Deborah on the BAI Banking Strategies Podcast, “Why top customer experience needs tough fraud protection.”