Tag: DDA

The financial services industry faces increasing pressure to innovate in today's fluctuating interest rate environment. For regional banks and credit unions, effective deposit growth strategies involve more than just offering attractive rates. Leveraging data and analytics is key to enhancing deposit portfolios, improving customer engagement, and fostering financial wellness. By prioritizing consumer-focused solutions, institutions can achieve dual benefits: driving organizational growth while meeting customer needs. For a deeper dive into this subject, check out our on-demand webinar “Growing Beyond Interest Rates: The Opportunity for Demand Deposit Accounts.” The current state of interest rates and market dynamics As interest rates change, financial institutions encounter shrinking margins and heightened competition. The stakes are high: 54% of consumers plan to leave their banks within the next year1, often citing unmet expectations for personalized services and financial guidance2​​. This competitive environment requires innovative strategies to retain customers and attract new ones without solely relying on interest rates. Key challenges: Shrinking margins due to rate volatility. Increased competition from fintechs and alternative providers. Rising consumer expectations for personalized, proactive services. Leveraging data and analytics in your deposit growth strategies Regional banks and credit unions can distinguish themselves by investing in advanced data analytics and personalized engagement tools. These strategies help create value for customers while improving the institution’s operational efficiency and revenue potential. 1. Personalization through financial insights According to Experian data, more than half of consumers expect their financial provider to actively support their financial wellness2. However, one-third feel that current efforts fall short3​. Offering tools like spending trackers, budgeting resources, and personalized credit score improvement plans can help close this gap. 2. Engagement-driven solutions Consumers are more likely to stay loyal to institutions that provide actionable insights. Experian’s partners have seen a 5% lift in 12-month retention rates among customers enrolled in credit and identity programs according to data reported by partners2​. Alerts for credit monitoring and financial updates not only keep customers informed but also help drive monthly logins, enhancing cross-sell opportunities. 3. Identity and data protection as value-added services With the increasing threat of identity theft, proactive identity monitoring and restoration services are becoming critical. Banks offering these features—branded under their name—can boost customer satisfaction and loyalty​​. Practical steps for regional banks and credit unions To capitalize on these opportunities, financial institutions should consider the following steps: Step 1: Develop a customer-centric engagement program Tailor programs to different demographic groups. Millennials and Gen Z are particularly drawn to tech-savvy solutions that integrate seamlessly with their financial lives. By consolidating financial management tools within one portal, banks can help simplify customers’ lives and enhance engagement. Step 2: Focus on retention and cross-sell opportunities Consumers engaged with financial tools, such as credit score trackers or budgeting aids, exhibit stronger loyalty and are more likely to adopt additional products​. Use insights from these tools to offer personalized product recommendations that align with their financial journey. Step 3: Offer premium tiers Institutions can create tiered service packages, starting with free offerings (e.g., basic credit monitoring) and progressing to paid premium packages that include advanced identity protection or financial management analytics​​. Step 4: Utilize advanced analytics for targeting By analyzing anonymized customer data, banks can identify high-value segments and tailor marketing efforts to their specific needs. This targeted approach fosters more meaningful relationships and improves ROI on acquisition campaigns​. Case for Action: Why consumer engagement matters A customer engagement program does more than enhance loyalty, it helps drive measurable outcomes: Retention rates: Over 98% for free services and 91% for paid programs.4 Improved credit scores: Subprime consumers enrolled in credit-building tools see an average credit score increase of 32 points​​.5 Higher satisfaction scores: Some institutions offering comprehensive financial tools report a lift in Net Promoter Scores (NPS)​. Conclusion The path forward for regional banks and credit unions lies in moving beyond rate-based competition and looking to multipronged deposit growth strategies. By leveraging data, analytics, and consumer-focused programs, financial institutions can enhance their deposit portfolios and deepen customer relationships. Now is the time to transform engagement into a growth engine, ensuring long-term success in a dynamic market. Ready to elevate your deposit portfolio with our tailored solutions? Click below to learn more or contact us to schedule a consultation and design a program that meets your organization’s goals. Learn more Watch the webinar 1 Retail Bank Customer Satisfaction Holds Steady but Trust Declines, J.D. Power Finds, 2024 2 Experian internal analysis, 2024 3 MX, What Influences Where Consumers Choose to Bank, June 2023 4 Experian Core metrics analysis, October 2023 5 Experian Data, Credit Score Rates with subprime consumers, June 2022 – June 2023

Financial institutions are under increasing pressure to grow deposits and onboard more demand deposit accounts (DDA). But as demand increases, so do fraud attempts from scammers. While a robust mitigation effort is needed to stop fraud, this same effort can also drive away potential clients. In fact, 37 percent of U.S. adults said that they abandoned opening an account online due to experiencing friction. This leaves institutions in a unique quandary: how do they stop DDA fraud without scaring away potential clients? The answer lies in utilizing robust, machine learning tools that can help you navigate fraud attempts without increasing onboarding friction.  Chris Ryan, Go to Market Lead for Experian Identity and Fraud, shares his thoughts on demand deposit account fraud and which decisioning tools can best combat it.   Q: What is a demand deposit account and how is it used? "Demand deposit is just your basic checking account," Ryan explains." The funds are deposited and held by an institution, which enables you to spend those assets or resources, whether it be through checks, debit cards, person-to-person, Automated Clearing House (ACH) — all the things we do every day as consumers to manage our operating budget."  Q: What is demand deposit account fraud?   "There are two different ways that demand deposit account fraud works," Ryan says. "One is with existing account holders, and the other is with the account opening process.” When fraud affects existing account holders, it typically involves tricking an account holder into sending money to a scammer or using fraudulent actions, like phishing emails or credit card skimmers, to gain access to their accounts. There is also a resurgence in fraud involving duplication, theft and forgery of paper checks, Ryan explains.   Fraud impacting the account opening process occurs when scammers originate new DDAs. This can work in a variety of ways, such as these three examples:  A scammer steals your identity and opens an account at the same bank where you have a home equity loan. They link their DDA to your line of credit, transferring your money into their new account and withdrawing the funds.  A scammer uses a synthetic identity (SID) to open a fraudulent DDA. They will then use this new DDA to open more lucrative accounts that the institution cross-sells to them. A scammer uses a stolen or SID to open “mule” accounts to receive funds they dupe consumers into sending through fake relationship schemes, bogus merchandise sales and dozens of similar scams. While both types of fraud need to be dealt with, account opening fraud can have especially large repercussions for lenders or financial institutions.  Q: What are the consequences of DDA fraud for organizations?   "Fraud hurts in a number of ways," Ryan explains. "There are direct losses, which is the money that criminals take from our financial system. Under most circumstances, the financial institution replaces the money, so the consumer doesn’t absorb the loss, but the money is still gone. That takes money away from lending, community engagement and other investments we want banks to make. The direct losses are what most people focus on."  But there are even more repercussions for institutions beyond losing money, and this can include the attempts that institutions put into place to stop the fraud. "Preventing fraud requires some friction for the end consumer," Ryan says. "The volume of fraudulent attempts is overwhelmingly large in the DDA space. This forces institutions to apply more friction. The friction is costly, and it often drives would-be-customers away. The results include high costs for the institutions and low booking rates. At the same time, institutions are hungry for deposit money right now. So, it's kind of a perfect storm."  Q: What is the impact of DDA fraud on customer experience?  Experian’s 2023 Identity and Fraud Report revealed that up to 37 percent of U.S. adults in the survey had abandoned a new account entirely in the previous six months because of the friction they encountered during onboarding. And 51 percent reported considering abandoning the process because of problems they encountered. Unfortunately, fraud mitigation and deposit fraud detection efforts can end up driving customers away. "People can be impatient," Ryan says, "and in the online world, a competing product is a mouse-click away. So, while it is tempting to ask new applicants for more information, or further proof of identity, that conflicts with their need for convenience and can impact their experience.” Companies looking for cheap and fast mitigation can end up impeding customers trying to onboard to sweep out the bad actors, Ryan explains. "How do you get the bad people without interrupting the good people?" Ryan asks. "That's the million-dollar question."  Q: What are some other problems with how organizations traditionally combat DDA fraud?   Unfortunately, traditional attempts to combat DDA fraud are inefficient due to the fragmentation of technology. Ryan says this was revealed by Liminal, an industry analyst think tank.  "Nearly half of institutions use four-or-more-point solutions to manage identity and fraud-related risk," Ryan explains. "But all of those point solutions were meant to work on their own. They weren't developed to work together. So, there's a lot of overlap. And in the case of fraud, there's a high likelihood that the multiple solutions are going to find the same fraud. So, you create a huge inefficiency."   To solve this challenge, institutions need to shift to integrated identity platforms, such as Experian CrossCore®.  Q: How is Experian trying to change the way organizations approach DDA fraud?   Experian is pushing a paradigm shift for institutions that will increase fraud detection efficiency and accuracy, without sacrificing customer experience. "Organizations need to start thinking of identity through a different lens," Ryan says.   Experian has developed an identity graph that aggregates consumer information in a manner that reaches far beyond what an institution can create on its own. "Experian is able to bring the entire breadth of every identity presentation we see into an identity graph," Ryan says. "It's a cross-industry view of identity behavior." This is important because people who commit fraud manipulate data, and those manipulations can get lost in a busy marketplace.   For example, Ryan explains, if you're newly married, you may have recently presented your identity using two different surnames: one under your maiden name and one under your married name. Traditional data sources may show that your identity was presented twice, but they won’t accurately reflect the underlying details; like the fact that different surnames were used. The same holds true for thousands of other details seen at each presentation but not captured in a way that enables changes over time to be visible, such as information related to IP addresses, email accounts, online devices, or phone numbers.   "Our identity graph is unlocking the details behind those identity presentations," Ryan says. "This way, when a customer comes to us with a DDA application, we can say, 'That's Chris's identity, and he's consistently presenting the same information, and all that underlying data remains very stable.'"   This identity graph, part of Experian's suite of fraud management solutions — also connects unique identity details to known instances of fraud, helping catch fraudulent attempts much faster than traditional methods. "Let's say you and your spouse share an address, phone numbers, all the identity details that married couples typically share," Ryan explains. "If an identity thief steals your identity and uses it along with a brand-new email and IP address not associated with your spouse, that might be concerning. However, perhaps you started a new job, and the email/IP data is legitimate. Or maybe it’s a personal email using a risky internet service provider that shares a format commonly used by a known ring of identity thieves. Traditional data might flag the email and IP information as new, but our identity graph would go several layers deeper to confirm the possible risks that the new information brings.  Q: Why is this approach superior to traditional methods of fraud detection?  "Historically, organizations were interested in whether an identity was real,” Ryan says. "The next question was if the provided data (I.e., addresses, date of birth, Social Security numbers, etc.) have been historically associated with the identity. Last, the question would be whether there’s known risk associated with any of the identity components.” The identity graph turns that approach upside down.   "The identity graph allows us to pull in insights from past identity presentations, " Ryan says. "Maybe the current presentation doesn’t include a phone number. Our identity graph should still recognize previously provided phone numbers and the risks associated with them. Instead of looking at identity as a small handful of pieces of data that were given at the time of the presentation, we use the data given to us to get to the identity graph and see the whole picture."  Q: How are businesses applying this new paradigm?  The identity graph is part of Experian's Ascend Fraud Platform™ and a full suite of fraud management solutions. Experian's approach allows companies to clean out fraud that already occurred and stop new fraudulent actors before they're onboarded. "Ideally, you want to start with cleaning up the house, and then figure out how to protect the front door," Ryan says.  In other words, institutions can start by applying this view to recently opened accounts to identify problematic identities that they missed. The next step would be to bring these insights into the new account onboarding process.  Q: Is this new fraud platform accessible to both small and large businesses?  The Ascend Fraud Platform will support several use cases that will bring value to a broad range of businesses, Ryan explains. It can not only enable Experian experts to build and deliver better tools but can enable self-serve analytical development too. "Larger organizations that have robust, internal data science capabilities will find that it’s an ideal environment for them to work in," Ryan says. "They can add their own internal data assets to ours, and then have a better place to develop analytics. Today, organizations spend months assembling data to develop analytics internally. Our Ascend Fraud Platform will reduce the timeline of the data assembly and analytical development process to weeks, and speed to market is critical when confronting continually changing fraud threats. "But for customers who have less robust analytical teams, we're able to do that on their behalf and bring solutions out to the marketplace for them," Ryan explains.   Q: What type of return on investment (ROI) are businesses experiencing?  "Some customers recover their investment in days," Ryan says. "Part of this is from mitigating fraud risks among recently opened accounts that slipped through existing defenses.”     "In addition to reducing losses, institutions we're working with are also seeing potentially millions of dollars a month in additional bookings, as well as significant cost savings in their account opening processes," Ryan says.  "We're able to help clients go back and audit the people who had fallen out of their process, to figure out how to fine-tune their tools to keep those people in," Ryan says.   “By reducing risks among existing accounts, better protecting the front door against future fraud, and growing more efficiently, we’re helping clients  Q: What are Experian's plans for this service?   "We're working with top-tier financial institutions on the do-it-yourself techniques," Ryan says. "In parallel, we're launching our first offerings that are created for the broader marketplace. That will start with the portfolio review capability, along with making the most predictive attributes available through our integrated identity resolution platform. And while the Ascend Fraud Platform has a strong use case for DDA fraud, its uses extend beyond that to small business lending and other products. In fact, Experian offers an entire suite of fraud management solutions to help keep your DDA accounts secure and your customers happy.   Experian can help optimize your DDA fraud detection  Experian is revolutionizing the approach to combating DDA fraud, helping institutions create a faster onboarding process that retains more customers, while also stopping more bad actors from gaining access. It's a win-win for everyone.   Experian's full suite of fraud management solutions can optimize your business's DDA fraud detection, from scrubbing your current portfolio to gatekeeping bad actors before they're onboarded.  Learn more Speak with a specialist About our expert: Chris Ryan has over 20 years of experience in fraud prevention and uses this knowledge to identify the most critical fraud issues facing individuals and businesses in North America, and he guides Experian’s application of technology to mitigate fraud risk.

When checking access accounts were first introduced, it wasn’t uncommon for banks to provide new customers “basic” transaction services in starter checking accounts. These services typically included an automatic teller machine (ATM) access card and the ability to withdraw cash at their local branch. As consumers developed a relationship and established financial trust with their bank, they eventually would get a checkbook, which allowed check-writing access. This took time and a consumer demonstrating both the willingness and ability to manage finances to the bank’s expectations. Establishing the financial relationship was a trust-building process. With the onset of general-purpose debit cards and a host of other digital money-movement capabilities, such as online banking, the majority of banks now offer just basic and preferred checking. A minimum acceptance standard leaves many consumers out of the financial transaction system, which is something that concerns regulatory bodies such as the Consumer Financial Protection Bureau (CFPB). Approval criteria vary across financial institutions, but a typical basic checking account has some form of overdraft feature enabled, and some consumers may not be able to afford these fees even if they elect to opt in for overdraft functionality. Nonetheless, banks still screen applicants to ensure prior accounts at other institutions were managed with no losses incurred by other banks. In today’s modern world, it is difficult to participate fully in our credit-driven society without a checking account at a recognized bank or credit union. The answer in many cases would be checking accounts for consumers that have either overdraft functionality assigned based on the consumer’s wish to opt in or overdraft access that matches that same consumer’s ability to pay. In early February, the CFPB passed new guidelines to increase access to basic check products. While a step towards making checking accounts available to all, the most recent actions still leave unresolved regulatory actions regarding what the CFPB refers to as “affordable” checking access. For instance, for those consumers without disposable income, the issue of fees for overdraft and nonsufficient funds is still an unresolved regulatory matter. In the most recent announcement, the CFPB took several actions related to its focus on increasing consumer access to checking transaction accounts with banks: Sending a letter to CEOs of the top 25 banks encouraging them to take steps to help consumers with affordable checking account access such as “no fee” and/or “no overdraft” checking accounts Providing several new resources to consumers such as a guide to “Low Risk Checking, Managing Checking and Consumer Guide to Checking Account Denial” Introducing the Consumer Protection Principles, which include a drive toward: Faster funds availability Improved consumer transparency into checking account fee structure, funds availability and security Tailoring products to reach a larger percentage of consumers Developing no-overdraft type checking products, which only a handful of large banking institutions had What lurks ahead for banks is the need to develop products that are designed to reach a larger population that includes under banked and unbanked consumers with troubled financial repayment history. Coupling this product development effort with the CFPB desire for no-overdraft-fee type products makes me wonder if we should look to account features from several decades ago, such as creating a 21st century version of the checking account with digital money-movement features that protects consumers’ privacy, but doesn’t put them in a position to rack up large amounts of overdraft fees they can’t afford to pay in the event they overdraw the checking account. Experian® suggests taking the following steps: Conduct a Business Review to ensure that your product offering includes the type of account the CFPB is advocating and your existing core banking platform can operationalize this account Align your checking account prospect and opening procedures to key segments to ensure more consumers are approved and right-sized to the appropriate checking product Enhance your business profitability by cross-selling credit products that fit the affordability and disposable income of various consumer segments you originate These steps will make your journey “back to the future” much less turbulent and ensure you don’t break the bank in your efforts to address CFPB’s well-intentioned focus on check access for consumers.

Attract and retain high-value demand deposit accounts The excitement of the new year has ended, and now the big question remains: What will 2016 hold for our market and the economy? So far, we’ve seen this election year bring a volatile financial market: The Federal Reserve increased short-term interest rates by 25 basis in December, and there is uncertainty if and when future increases will come China’s gross domestic product is forecasted at 6.5 percent, the lowest in a quarter century The Dow Jones industrial average is down 10 percent to start the year, signaling a lot of uncertainty for banks and consumers It’s hard to find answers in a shifting financial landscape with a long list of mixed signals. The average consumer is looking on and wondering if we face another Great Recession or if the current economy is spiking a fever just before it is completely cured. The reality, for those of us in the banking industry, is that the modest economic recovery is likely to continue as part of a new normal pattern. In 2016, banks that remain competitive in a more digital world will be those that have frictionless products and processes to attract and retain high-value, highly sought-after consumer deposits and loans. Banks should expect the competition for deposits to intensify, and they will need to ensure that new deposit customers are on boarded effectively and cross-sold loan products quickly to reduce first-year attrition. Cross-selling at the point of origination for the demand deposit account (DDA) customers is the best way to ensure that new customers keep the institution as their primary bank. Financial institutions can exceed consumer expectations and ensure a competitive business model by leveraging modernized technology capabilities fully in combination with making relevant decisions to deliver consumer-friendly experiences. First-year DDA attrition rates will demonstrate how the consumer’s expectations were met and if the new bank got the account-opening process right or wrong. Experian® suggests three capabilities clients should consider: A deposits technology platform that offers frictionless change to data, origination strategies and instant cross-sell to loan products that yield sticky customers Strategies that comply with current and evolving regulatory demands, such as those being sought by the Consumer Financial Protection Bureau (CFPB) Business planning to identify execution gaps and a road map to ensure that gaps are addressed, confirming continued competitive ability to attract high-value deposit and loan customers DDA-account opening effectiveness can be achieved by using a consumer’s life stage, affordability considerations, unique risk profile and financial needs to on board optimally and grow those high-value consumers effectively and efficiently. Financial institutions that are nimble and fast adopters of these critical capabilities will reduce operating expenses for their organizations, grow sustainable revenue from new prospects and customers, and delight those new customers along the way. This is a win-win for banks and consumers. Join me next week as we discuss best practices across the entire demand deposit account life cycle.

Deposit accounts for everyone Over the last several years, the Consumer Financial Protection Bureau (CFPB) has, not so quietly, been actively pushing for changes in how banks decision applicants for new checking accounts.  Recent activity by the CFPB is accelerating the pace of this change for those managing deposits-gathering activities within regulated financial institutions.  It is imperative banks begin adopting modern technology and product strategies that are designed for a digital age instead of an age before the internet even existed. In October 2014, the CFPB hosted the Forum On Access To Checking Accounts to push for more transparent account opening procedures, suggesting that bank’s use of “blacklists” that effectively “exclude” applicants from opening a transaction account are too opaque.  Current regulatory trends are increasingly signaling the need for banks to bring checking account originations strategies into the 21st century as I indicated in Banking in the 21st Century.  The operations and technology implications for banks must include modernizing the approach to account opening that goes beyond using different decision data to do “the same old thing” that only partially addresses broader concerns from consumers and regulators.  Product features attached to check accounts, such as overdraft shadow limits, can be offered to consumers where this liquidity feature matches what the customer can afford. Banking innovation calls for deposit gatherers to find more ways to approve a basic transaction account, such as a checking account, that considers the consumer’s ability to repay and limit approving overdraft features for some checking accounts even if the consumer opts in.  This doesn’t mean banks cannot use risk management principles in assessing which customers get that added liquidity management functionality attached to a checking account. It just means that overdraft should be one part of the total customer level exposure the bank considers in the risk assessment process. The looming regulatory impacts to overdraft fees, seemingly predictable, will further reduce bank revenue in an industry that has been hit hard over the last decade.  Prudent financial institutions should begin managing the impact of additional lost fee revenue now and do it in a way that customers and regulators will appreciate. The CFPB has been signaling other looming changes for check account regulations, likely to accelerate throughout 2015, and portend further large impacts to bank overdraft revenue.  Foreshadowing this change are the 2013 overdraft study by the CFPB and the proposed rules for prepaid cards published for commentary in December 2014 where prepaid account overdraft is “subject to rules governing credit cards under TILA, EFTA, and their implementing regulations”.  That’s right, the CFPB has concluded overdraft for prepaid cards are the same as a loan falling under Reg Z.  If the interpretation is applied to checking account debit card overdraft rules, it would effectively turn overdraft fees into finance charges and eliminate a huge portion of remaining profitability for banks from those fees. The good news for banks is that the solution for the new deposits paradigm is accomplished by bringing retail banking platforms into the 21st century that leverage the ability to set exposure for customers at the client level and apportioned to products or features such as overdraft.  Proactively managing regulatory change, that is predictable and sure to come, includes banks considering the affordability of consumers and offering products that match the consumer’s needs and ability to repay.  The risk decision is not different for unsecured lending in credit cards or for overdraft limits attached to a checking account.  Banks becoming more innovative by offering checking accounts enabling consumers more flexible and transparent liquidity management functionality at a reasonable price will differentiate themselves in the market place and with regulatory bodies such as the CFPB.  Conducting a capabilities assessment, or business review, to assess product innovation options like combining digital lines of credit with check accounts, will inform your business what you should do to maintain customer profitability. I recommend three steps to begin the change process and proactively manage through the deposit industry regulatory changes that lay ahead: First, assess the impacts of potential lost fees if current overdraft fees are further limited or eliminated and quantify what that means to your product profitability. Second, begin designing alternative pricing strategies, product offerings and underwriting strategies that allow you to set total exposure at a client level and apportion this exposure across lending products that includes overdraft lines and is done in a way that it is transparent to your customers and aligns to what they can afford. Third, but can be done in parallel with steps one and two, begin capability assessments of your financial institution’s core bank decision platform that is used to open and manage customer accounts to ensure your technology is prepared to handle future mandatory regulatory requirements without driving all your customers to your competitors. It is a given that change is inevitable.  Deposit organizations are well served to manage this current shift in regulatory policy related to checking account acquisitions in a way consistent with guaranteeing your bank’s competitive advantage.  Banks can stay out front of competitors by offering transparent and relevant financial products consumers will be drawn to buy and can’t afford to live without! Thank you for following my blog and insights in DDA best practices.  Please accept my invitation to participate in a short market study.  Click here to participate. Participants in this 5 minute survey will receive a copy of the results as a token of appreciation.

By: Heather Grover In my previous entry, I covered how fraud prevention affected the operational side of new DDA account opening. To give a complete picture, we need to consider fraud best practices and their impact on the customer experience. As earlier mentioned, the branch continues to be a highly utilized channel and is the place for “customized service.” In addition, for retail banks that continue to be the consumer's first point of contact, fraud detection is paramount IF we should initiate a relationship with the consumer. Traditional thinking has been that DDA accounts are secured by deposits, so little risk management policy is applied. The reality is that the DDA account can be a fraud portal into the organization’s many products. Bank consolidations and lower application volumes are driving increased competition at the branch – increased demand exists to cross-sell consumers at the point of new account opening. As a result, banks are moving many fraud checks to the front end of the process: know your customer and Red Flag guideline checks are done sooner in the process in a consolidated and streamlined fashion. This is to minimize fraud losses and meet compliance in a single step, so that the process for new account holders are processed as quickly through the system as possible. Another recent trend is the streamlining of a two day batch fraud check process to provide account holders with an immediate and final decision. The casualty of a longer process could be a consumer who walks out of your branch with a checkbook in hand – only to be contacted the next day to tell that his/her account has been shut down. By addressing this process, not only will the customer experience be improved with  increased retention, but operational costs will also be reduced. Finally, relying on documentary evidence for ID verification can be viewed by some consumers as being onerous and lengthy. Use of knowledge based authentication can provide more robust authentication while giving assurance of the consumer’s identity. The key is to use a solution that can authenticate “thin file” consumers opening DDA accounts. This means your out of wallet questions need to rely on multiple data sources – not just credit. Interactive questions can give your account holders peace of mind that you are doing everything possible to protect their identity – which builds the customer relationship…and your brand.  

By: Heather Grover In past client and industry talks, I’ve discussed the increasing importance of retail branches to the growth strategy of the bank. Branches are the most utilized channel of the bank and they tend to be the primary tool for relationship expansion. Given the face-to-face nature, the branch historically has been viewed to be a relatively low-risk channel needing little (if any) identity verification – there are less uses of robust risk-based authentication or out of wallet questions. However, a now well-established fraud best practice is the process of doing proper identity verification and fraud prevention at the point of DDA account opening. In the current environment of declining credit application volumes and approval across the enterprise, there is an increased focus on organic growth through deposits.  Doing proper vetting during DDA account openings helps bring your retail process closer in line with the rest of your organization’s identity theft prevention program. It also provides assurance and confidence that the customer can now be cross-sold and up-sold to other products. A key industry challenge is that many of the current tools used in DDA are less mature than in other areas of the organization. We see few clients in retail that are using advanced fraud analytics or fraud models to minimize fraud – and even fewer clients are using them to automate manual processes - even though more than 90 percent of DDA accounts are opened manually. A relatively simple way to improve your branch operations is to streamline your existing ID verification and fraud prevention tool set: 1. Are you using separate tools to verify identity and minimize fraud? Many providers offer solutions that can do both, which can help minimize the number of steps required to process a new account; 2. Is the solution realtime? To the extent that you can provide your new account holders with an immediate and final decision, the less time and effort you’ll spend after they leave the branch finalizing the decision; 3. Does the solution provide detail data for manual review? This can help save valuable analyst time and provider costs by limiting the need to do additional searches. In my next post, we’ll discuss how fraud prevention in DDA impacts the customer experience.