Under The Microscope
Aite: Align Fraud Management Strategies Across Enterprise
BOSTON-Financial institutions are making progress toward enterprise-wide fraud management integration, according to a new study from Aite Group.
Aite said its study maps the progress of integrating data access across the enterprise, and discusses the current use of enterprise-wide technology solutions and planned areas of investment over the next three years. The report is based on an Aite Group survey of 35 North American banks and credit union fraud and product executives, conducted in December 2010.
Financial institutions have been working to integrate their fraud management practices across their enterprises, the consultancy said. FIs recognize that while they are heavily siloed by business line and product type, fraudsters' activity is not contained to any one product type; in fact, fraudsters are all too often cognizant of and quick to capitalize on financial institutions' lack of coordination.
Cross-product and cross-channel integration of fraud management capabilities allows institutions to pool data and resources and recognize fraudulent activity more quickly, Aite Group advised. This not only helps curb losses, but also provides a better customer experience. Institutions that can catch fraud on customers' accounts before customers discover it are likely to retain those customer relationships.
"Enterprise-wide fraud management will become a competitive advantage for those institutions that embrace the concept," said Julie Conroy McNelley, senior analyst with Aite Group and co-author of the report. "It enables institutions to better align their detection activities with the specific kind of fraud perpetrated by fraudsters. Enterprise-wide strategies can also provide cost efficiencies, which are especially important in light of the dramatic revenue cuts imposed by regulatory activity over the last couple of years."
For info: www.aitegroup.com
Study: CARD Act Makes Pricing Clearer, More Competitive
DURHAM, N.C.-New credit card rules mandated by the Credit CARD Act of 2009 have resulted in significantly greater price transparency for consumers, according to a new research report by the Center for Responsible Lending.
The report, "Credit Card Clarity: CARD Act Reform Works," said despite industry claims, the price consumers pay for credit cards has remained stable and access to credit has not tightened beyond what would be expected from the economic downturn.
The Center for Responsible Lending said CARD Act reforms have helped reverse years of increasingly unclear pricing that misled consumers into believing they would pay less for credit card debt than was actually true. Inaccurate pricing likely caused many borrowers to take on more credit card debt than they otherwise would have.
Since Feb. 22, 2010, when most CARD Act reforms took effect, stated rates have moved closer to actual rates, which have remained steady, the study found. Now, more than $12 billion in once obscure charges are stated more clearly in credit card offers. Transparency breeds competition, which lowers price long term.
"People mistake higher rates on mail solicitations and other offers in the last year as a price hike," said CRL senior researcher Josh Frank, author of the report. "But the facts show that offers now just more closely match actual costs. Prices have been level, but borrowers have a much better picture of what those prices are."
For info: www.responsiblelending.org
Paper Examines Challenges, Solutions In Remote Capture
SARATOGA, Calif.-All My Papers, a developer and distributor of software for Image Cash Letters, has released a paper describing the challenges and solutions for remote deposit capture (RDC) using scanners without hardware magnetic MICR readers for check image exchange.
The advent of Remote Deposit Camera Capture (RDCC) challenges current assumptions about check image processing, AMP said. It is more than just a mobile phone application. Check image deposits that were once primarily captured with traditional RDC scanners with hardware magnetic MICR now are being captured by mobile phones, desktop flatbed scanners, and digital cameras without hardware magnetic MICR. MICR data such as bank routing numbers and account numbers now must be read accurately using software-only applications.
AMP said its solutions paper covers the significant issues raised by the emerging RDCC technology, including:
* Check images captured with RDCC devices often have poor image quality and are not in the correct file format required for check image exchange. A different image processing strategy must be used for each type of device to ensure the check images flow through the exchange process with minimal returns and rejections.
* Checks scanned by consumers and small businesses have a greater chance of being presented multiple times, because these users lack the rigorous workflow that traditionally deals with the truncation (destruction) of the original paper checks after scanning and RDCC.
* Exchange networks, such as the Fed, have limited the file formats for Image Cash Letters for exchange. However, this file conformance is in contrast to the many and unique ICL file formats that financial institutions use for RDC. The RDC file formats often are proprietary to a particular financial institution. Any adopted solution must be able to create the exact format required by the destination point of the ICL.
* In order to attract and retain customers, the financial institution RDCC process must ensure a positive customer experience. Customers do not want to take repeated pictures of checks or have deposits go to the wrong bank or account. Speed and accuracy of extracted data as well as check images that clear the system are essential.