Tag: Internet Banking

The financial services industry is not always synonymous with innovation and forward-thinking. While there are some exceptions with top-10 banks and some savvy regionals, as a whole, the sector tends to fall on the latter half of the diffusion of innovation curve, usually slotting in the late majority or laggard phase. Conversely, the opposite is true for fintechs who have been an enormously disruptive force of change in financial services over the past 10 years.   For many businesses, the pandemic has created uncertainty and an inability to conduct or generate business. However, the silver lining with COVID-19 might just be that it’s driving digital innovation across industries. Andreesen Horowitz, a venture capital firm, estimates businesses of all kinds are experiencing at least two years’ worth of digitization compressed into the last six months. And while they have been significantly impacted, for fintechs who were already pushing the envelope and challenging existing business models, COVID-19 suddenly accelerated financial services innovation into overdrive. Here are three challenges fintechs are answering in the wake of the COVID-19 health crisis. Digital Banking   The first lockdowns flipped the digital switch in financial services. Seemingly overnight, banking moved digital. In April, new mobile banking registrations increased 200%, while mobile banking traffic rose 85%. Likewise, Deloitte reported online banking activity has increased 35% since the pandemic started. Being mobile-first or digital-only has allowed many fintechs to win in offering presentment, activation, underwriting, and a contextual digital interface, all capabilities that will only become more relevant as the pandemic stretches on. At Square, direct deposit volumes grew by three times from March to April, up to $1.3 billion; Chime saw record signups. Continued social distancing will only serve to accelerate customers’ use of mobile and online platforms to manage their finances.  Contactless Payments  Similar to digital banking as a whole, the health crisis has accelerated the necessity for contactless payments. Whereas convenience and a seamless customer experience may have been drivers for payments innovation in the past, now, many customers may view it as a life or death health concern. Phones, wearables and even connected vehicles are empowering customers to participate in commerce while avoiding handling cash or coming in contact with an infected surface. Through their adoption of IOT-powered contactless payments, fintechs are accelerating this area of financial services to keep customers safe.  Financial Inclusion and Speeding Economic Relief  Any disaster disproportionally affects the underbanked and those living at the poverty line, and COVID-19 is no different. While it will undoubtedly contribute to an increase in unbanked households, the pandemic may also provide an opportunity to innovate through this problem. Financial inclusion was already a focus for many fintechs, who’ve made it their mission to bring equity by offering basic financial services in a transparent way. Unencumbered by legacy systems and business models, fintechs are well positioned to work across the financial ecosystem, from financial services, retail and government to efficiently and more quickly distribute benefits to at-risk groups and impacted businesses.   From their ability to quickly ingest new and novel data sources, to a focus on using a digital-first approach to delight customers, fintechs will continue to harness their strengths to disrupt financial services, even during the pandemic. How is your fintech driving innovation and customer experience during the health crisis?   Learn more

The future is, factually speaking, uncertain. We don't know if we'll find a cure for cancer, the economic outlook, if we'll be living in an algorithmic world or if our work cubical mate will soon be replaced by a robot. While futurists can dish out some exciting and downright scary visions for the future of technology and science, there are no future facts. However, the uncertainty presents opportunity. Technology in today's world From the moment you wake up, to the moment you go back to sleep, technology is everywhere. The highly digital life we live and the development of our technological world have become the new normal. According to The International Telecommunication Union (ITU), almost 50% of the world's population uses the internet, leading to over 3.5 billion daily searches on Google and more than 570 new websites being launched each minute. And even more mind-boggling? Over 90% of the world's data has been created in just the last couple of years. With data growing faster than ever before, the future of technology is even more interesting than what is happening now. We're just at the beginning of a revolution that will touch every business and every life on this planet. By 2020, at least a third of all data will pass through the cloud, and within five years, there will be over 50 billion smart connected devices in the world. Keeping pace with digital transformation At the rate at which data and our ability to analyze it are growing, businesses of all sizes will be forced to modify how they operate. Businesses that digitally transform, will be able to offer customers a seamless and frictionless experience, and as a result, claim a greater share of profit in their sectors. Take, for example, the financial services industry - specifically banking. Whereas most banking used to be done at a local branch, recent reports show that 40% of Americans have not stepped through the door of a bank or credit union within the last six months, largely due to the rise of online and mobile banking. According to Citi's 2018 Mobile Banking Study, mobile banking is one of the top three most-used apps by Americans. Similarly, the Federal Reserve reported that more than half of U.S. adults with bank accounts have used a mobile app to access their accounts in the last year, presenting forward-looking banks with an incredible opportunity to increase the number of relationship touchpoints they have with their customers by introducing a wider array of banking products via mobile. Be part of the movement Rather than viewing digital disruption as worrisome and challenging, embrace the uncertainty and potential that advances in new technologies, data analytics and artificial intelligence will bring. The pressure to innovate amid technological progress poses an opportunity for us all to rethink the work we do and the way we do it. Are you ready? Learn more about powering your digital transformation in our latest eBook. Download eBook Are you an innovation junkie? Join us at Vision 2020 for future-facing sessions like:  -  Cloud and beyond - transforming technologies - ML and AI - real-world expandability and compliance

Opening a new consumer checking account in the 21st century should be simple and easy to understand as a customer right?  Unfortunately, not all banks have 21st century systems or processes reflecting the fact that negotiable order of withdrawal (NOW) accounts, or checking accounts, were introduced decades ago within financial institutions and often required the consumer to be in person to open the account.  A lot has changed and consumers demand simpler and transparent account opening processes with product choices that match their needs at a price that they’re willing to pay.  Financial institutions that leverage modernized technology capabilities and relevant decision information have the best chance to deliver consumer friendly experiences that meet consumer expectations.  It is obvious to consumers when we in the financial services industry get it right and when we don’t. The process to open a checking account should be easily understood by consumers and provide them with appropriate product choices that aren’t “one size fits all”.  Banks with more advanced core-banking systems incorporating relevant and compliant decision data and transparent consumer friendly approval processes have a huge opportunity to differentiate themselves positively from competitors.  The reality is that banking deposit management organizations throughout the United States continue to evolve check screening strategies, technology and processes.  This is done in an effort to keep up with evolving regulatory expectations from the consumer advocacy regulatory bodies such as the Consumer Financial Protection Bureau (CFPB) and designed to improve transparency of checking account screening for new accounts for an increased number of consumers. The CFPB advocates that financial institutions adopt new checking account decision processes and procedures that maintain sound management practices related to mitigating fraud and risk expense while improving consumer transparency and increasing access to basic consumer financial instruments.  Bank shareholders demand that these accounts be extended to consumers profitably.  The CFPB recognizes that checking accounts are a basic financial product used by almost all consumers, but has expressed concerns that the checking account screening processes may prevent access to some consumers and may be too opaque with respect to the reasons why the consumer may be denied an account.  The gap between the expectations of the CFPB, shareholders and bank deposit management organization’s current products and procedures are not as wide as they may seem.  The solution to closing the gap includes deploying a more holistic approach to checking account screening processes utilizing 21st century technology and decision capabilities.  Core banking technology and checking products developed decades ago leave banks struggling to enact much needed improvements for consumers. The CFPB recognizes that many financial institutions rely on reports used for checking account screening that are provided by specialty consumer reporting agencies (CRAs) to decision approval for new customers.  CRAs specialize in checking account screening and provide financial institutions with consumer information that is helpful in determining if a consumer should be approved or not.  Information such as the consumer’s check writing and account history such as closed accounts or bounced checks are important factors in determining eligibility for the new account.  Financial institutions are also allowed to screen consumers to assess if they may be a credit risk when deciding whether to open a consumer checking account because many consumers opt-in for overdraft functionality attached to the checking account. Richard Cordray, the CFPB Director, clarified the regulatory agency’s position as to how consumers are treated in checking account screening processes within his prepared remarks at a forum on this topic in October 2014.  “The Consumer Bureau has three areas of concern.  First, we are concerned about the information accuracy of these reports. Second, we are concerned about people’s ability to access these reports and dispute any incorrect information they may find. Third, we are concerned about the ways in which these reports are being used.” The CFPB suggests four items they believe will improve financial institution’s checking account screening policies and practices: Increase the accuracy of data used from CRA’s Identify how institutions can incorporate risk screening tools while not excluding   potential accountholders unnecessarily Ensure consumers are aware and notified of information used to decision the account opening process Ensure consumers are informed of what account options exist and how they access products that align with their individual needs Implementing these steps shouldn’t be too difficult to accomplish for deposit management organizations as long as they are fully leveraging software such as Experian’s PowerCurve customized for deposit account origination, relevant decision information such as Experian’s Precise ID Platform and Vantage Score® credit score combined with consumer product offerings developed within the bank and offered in an environment that is real-time where possible and considers the consumer’s needs.  Enhancing checking account screening procedures by taking into account consumer’s life-stage, affordability considerations, unique risk profile and financial needs will satisfy expectations of the consumers, regulators and the financial institution shareholders. Financial institutions that use technology and data wisely can reduce expenses for their organizations by efficiently managing fraud, risk and operating costs within the checking account screening process while also delighting consumers.  Regulatory agencies are often delighted when consumers are happy.  Shareholders are delighted when regulators and consumers are happy.  Reengineering checking account opening processes for the modern age results in a win-win-win for consumers, regulators and financial institutions. Discover how an Experian Global Consultant can help you with your banking deposit management needs.

This is last question in our five-part series on the FFIEC guidance on what it means to Internet banking, what you need to know and how to prepare for the January 2012 deadline.   Q: How are organizations responding? Experian estimates that less than half of the institutions impacted by this guidance are prepared for the examinations.   Many of the fraud tools in the marketplace, particularly those that are used to authenticate individuals were deployed as point-solutions.  Few support the need for a feedback loop to identify vulnerabilities, or the ability to employ a risk-based, “layered” approach that the guidance is seeking. _____________ This is the last of our five-part series but we're happy to answer more questions as we know you need to know how to prepare for the January 2012 deadline.    

This is fourth question in our five-part series on the FFIEC guidance and what it means Internet banking. Check back each day this week for more Q&A on what you need to know and how to prepare for the January 2012 deadline.  If you missed parts 1-3, there's no time to waste, check them out here: Go to question one: What does “multi-factor” authentication actually mean? Go to question two: Who does this guidance affect?  And does it affect each type  of credit grantor/ lender differently? Go to question three: What does “layered security” actually mean? Today's Q&A: What will the regulation do to help mitigate fraud risk in the near-term, and long-term? The FFIEC’s guidance will encourage financial institutions to re-examine their processes. The guidance is an important reinforcement of several critical ideas: Fraud losses undermine faith in our financial system by exposing vulnerabilities in the way we exchange goods, services and currencies. It is important that members of the financial services community understand their role in protecting our economy from fraud. Fraud is not the result of a static set of tactics employed by criminals. Fraud tactics evolve constantly and the tools that combat them have to evolve as well.   Considering the impact that technology is having on commerce, it is more important than ever to review the processes that we once thought made our businesses “safe.” The architecture and flexibility of fraud prevention “capabilities” is a weapon unto itself. The guidance provides a perspective on why it is important to be able to understand the risk and to respond accordingly. At the end of the day, the guidance is less about a need to take a specific action---and more about the “capability” to recognize when those actions are needed, and how they should be structured so that high-risk actions are met with strong and sophisticated defenses. _____________ Look for part five, the final in our series tomorrow. 

  This is third question in our five-part series on the FFIEC guidance and what it means Internet banking.  If you missed the firstand second question, you can still view - our answer isn't going anywhere.  Check back each day this week for more Q&A on what you need to know and how to prepare for the January 2012 deadline. Question: Who does this guidance affect? And does it affect each type of credit grantor/ lender differently? The guidance pertains to all financial institutions in the US that fall under the FFIEC’s influence. While the guidance specifically mentions authenticating in an on-line environment, it’s clear that the overall approach advocated by the FFIEC applies to authentication in any environment. As fraud professionals know, strengthening the defenses in the on-line environment will drive the same fraud tactics to other channels. The best way to apply this guidance is to understand its intent and apply it across call centers and in-person interactions as well. _____________ Look for part four of our five-part series tomorrow.  If you have a related question that needs an answer, submit in the comments field below and we'll answer those questions too.  Chances are if you are questioning something, others are too - so let's cover it here!  Or, if you would prefer to speak with one of our Fraud Business Consultants directly, complete a contact form and we'll follow up promptly.  

This is second question in our five-part series on the FFIEC guidance and what it means Internet banking.  If you missed the first question, don't worry, you can still go back.  Check back each day this week for more Q&A on what you need to know and how to prepare for the January 2012 deadline. Question: What does “multi-factor” authentication actually mean?    “Multi- Factor” authentication refers to the combination of different security requirements that would be unlikely to be compromised at the same time. A simple example of multi-factor authentication is the use of a debit card at an ATM machine.   The plastic debit card is an item that you must physically possess to withdraw cash, but the transaction also requires the PIN number to complete the transaction. The card is one factor, the PIN is a second. The two combine to deliver a multi-factor authentication. Even if the customer loses their card, it (theoretically) can’t be used to withdraw cash from the ATM machine without the PIN. _____________ Look for part three of our five-part series tomorrow.

This first question in our five-part series on the FFIEC guidance and what it means Internet banking.  Check back each day this week for more Q&A on what you need to know and how to prepare for the January 2012 deadline. Question: What does “layered security” actually mean?   “Layered” security refers to the arrangement of fraud tools in a sequential fashion. A layered approach starts with the most simple, benign and unobtrusive methods of authentication and progresses toward more stringent controls as the activity unfolds and the risk increases. Consider a customer who logs onto an on-line banking session to execute a wire transfer of funds to another account. The layers of security applied to this activity might resemble: 1.       Layer One- Account log-in. Security = valid ID and Password must be provided 2.       Layer Two- Wire transfer request. Security= IP verification/confirmation that this PC has been used to access this account previously. 3.       Layer Three- Destination Account provided that has not been used to receive wire transfer funds in the past. Security= Knowledge Based Authentication Layered security provides an organization with the ability to handle simple customer requests with minimal security, and to strengthen security as risks dictate.  A layered approach enables the vast majority of low risk transactions to be completed without unnecessary interference while the high-risk transactions are sufficiently verified. _____________ Look for part two of our five-part series tomorrow.