Getting skeptical small business customers on board with remote and mobile deposit capture is a worthy goal, but it may require overcoming about a billion hurdles. These are the customers that write 70 percent of the paper checks still in the system, but also the ones most worried about the $1 billion in check fraud losses the American Bankers Association found in 2008. "A lot of our [bank] customers are very skeptical of RDC," says Aaron Calipari, director, product management at FIS. They're not the only ones. The Federal Financial Institutions Examination Council issued guidance last year warning banks that check alteration, forging and counterfeiting risks could increase with the implementation of remote deposit capture technology, and warned that bank regulators would be looking closely at how banks addressed these risks.
While all RDC vendors are addressing the risks, FIS has brought all of its real-time check fraud detection capabilities to bear on the RDC fraud risk with the rollout of Real-Time DepositShield.
Currently there are three versions of DepositShield for different sized institutions. DepositShield applies advanced authentication procedures and predictive analytics to proprietary and shared databases, including the check writing and check cashing histories of 180 million U.S. consumers and businesses, to accurately assess fraud risk for every deposit, the company says.
Those analytics will now be combined with real-time capabilities so a bank will know if a check is fraudulent when it's presented to the teller or transmitted by an RDC device. "Detecting check fraud early in the process is key," says Wesley Wilhelm, a senior analyst at Aite. "It's all about how quickly you can detect anomalous behaviors and how accurately you can do so."
Kay Nichols, evp, channel solutions at FIS, says this real-time capability will allow FIS to indemnify checks, reducing a bank's exposure to check fraud risk.
"When we can indemnify the check we can start to offer that service and that takes away that risk for the banks," she says. "It's a big breakthrough, a real game changer for adoption."
Wilhelm says this real-time capability will bring check fraud detection and mitigation close to the high level of detection and mitigation governing credit card and debit card transactions. He is unaware of another check fraud detection solution that offers this real-time ability. "By combining the physical set of data with predictive analytics, and then rolling that into a workstation and making it real-time...that's huge."