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Perils of not being in “real time”

Is your bank a “real time” player? If not, you may have fraud exposures

Obvious and mediocre won’t be found here—but “Why didn’t I think of that?” will! Challenging the banking status quo is Dan Fisher’s personal mission. Obvious and mediocre won’t be found here—but “Why didn’t I think of that?” will! Challenging the banking status quo is Dan Fisher’s personal mission.

Contextually speaking real time means just that, the current moment.

To further explain, real time translates into an immediate result reflected across the enterprise of all products at the same time—not four hours later, tomorrow morning after the update, or next week.

In other words … now.

In simple terms, say a customer completes an account-to-account transfer through internet banking, the balance changes are reflected in all of the impacted accounts immediately after they press the enter key.

Real time!

This also means that your core application account balances are changed. Along with mobile banking, ATMs, and debit card systems.

All real time!

The same concept should apply to transactions completed at the teller window or using remote deposit capture.

Where does your bank exist?

The fascinating fact is many institutions, think they are real time and in reality they are only near real-time … and in some cases, only batch!

The same can be said about card fraud systems.

It is important to note that many card fraud systems are not real time at all, and only score transactions after they have occurred.

Which means the first fraudulent transaction gets through.

Also, many financial institutions do not monitor fraud after hours or on weekend including holiday weekends.

Consequently, on the first business day after a three-day weekend financial institutions are often deluged with card fraud cases that need to be worked right away. (Understanding that most of these have already occurred, the product has left the store, and there is little or no recourse to recover the loss.)

The financial institution credits the customer and eats the loss. Sound familiar?

Not being real time can cost you

Crooks know this. They know your weak points and they exploit them to their benefit. This type of theft is low hanging fruit and very easy to pick!

This situation is only made worse if your core banking application is offline and you only send updated balance files to your processor. 

How do you defend against this?

First, all systems should be real time. You should accept nothing less.

Second, card fraud systems should be set to stop transactions at the point of sale, not after!

Third, financial institutions need to be have a round-the-clock fraud monitoring and intervention process in place.

Once a perpetrator figures out you’re not watching… well, you know the story.

Oh, have you heard about same-day ACH? It is coming soon to a branch near you.

So the question is… are you ready for real time?

—The Wombat! 

Special note for Wombat fans: Dan Fisher will be at the combined North Dakota/South Dakota Bankers Associations’ annual convention June 12-14, 2016 in Bismarck, N.D., with Copper River Group exhibiting and sponsoring there. Come meet Dan and hear the unfiltered Wombat’s views! Learn more about the convention

Dan Fisher

Dan Fisher is president and CEO of The Copper River Group, a consulting firm headquartered in Fargo, N. D., that focuses on technology and payment systems research and consulting for community financial institutions. For nearly 30 years, Fisher has worked in the financial industry using technology to improve the bottom line. He was CIO of Community First Bankshares (now part of Bank of the West), has served as a director of the Federal Reserve Board of Minneapolis, the chairman of the American Bankers Association Payment Systems Committee, and was a member of the Independent Community Bankers of America Payments Committee. Fisher has written numerous articles on banking technology and the payments system. He has authored or co-authored six books and recently published a book titled, "Capturing Your Customer! The New Technology of Remote Deposit." You can contact Fisher at [email protected] or at 701-293-6222.
P.S. To understand Dan's nickname, check out "About the Wombat" on his website.       

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