By: Jodie Ruby, Director of Marketing
According to a recent article from Digital Transactions, 95% of the top 22 ACH originators in the US plan to offer Same-Day ACH origination services by the end of the year. The article also mentions a survey conducted by EastPay in March where 64% of smaller institutions plan to offer these services. With the Phase 1 deadline of September 23, 2016 quickly approaching, ODFIs planning to offer Same-Day origination services are deep into planning their roll outs. If you are a part of one of these organizations working to operationalize Same-Day ACH, have you considered the potential for increased fraud that may result from offering this service and how to mitigate this added risk?
Benefits of Same-Day ACH
Same-Day ACH offers many benefits for financial institutions, businesses and consumers. All parties can send and receive funds faster. FIs offering Same-Day ACH can differentiate themselves to consumers with this value-added service, while reducing costs associated with bill payment services, person-to-person services and checks. Businesses can hold onto funds longer by waiting to pay invoices on the due date. Consumers can move funds more quickly between accounts, and transfer funds more quickly to family and friends.
Same-Day ACH Could Lead to More Fraud
But with the increased speed of these payments, additional opportunities for fraud may develop. With two additional payment submission windows being introduced with Same-Day ACH, fraudsters may submit fraudulent payments later in the day when analysts have less time to review them. According to a recent survey from NICE Actimize, “more than 93% of financial institutions anticipate that new fraud threats will emerge as a result of the upcoming transition to Same-Day ACH.” In addition, 54% of respondents indicated that they do not have the fraud tools in place to manage Same-Day ACH transactions.
With the potential for added risk from Same-Day ACH, how prepared are you? Is your KYC program robust enough to identify hidden risks in your portfolio before they cause damage? Transaction monitoring systems can help to spot suspicious behaviors, but they provide more of a rear-view mirror perspective to identify fraud as opposed to a proactive approach.
Protect Your Portfolio with Business Customer Intelligence
To improve your KYC in advance of rolling out Same-Day ACH services you need Business Customer Intelligence which reveals hidden risks in your portfolio that common KYC tools and processes miss. Business Customer Intelligence combines over 11 years of proprietary risk history data on millions of business customers with the expertise of highly skilled analysts to reveal customers with histories of fraud, sales of illegal goods, website content violations, declining reputation, NAICS misclassifications and more.
G2 KYC Solutions use Business Customer Intelligence to help financial institutions improve their regulatory compliance, increase their operational efficiency and manage risk. Read this case study to see how a large FI uncovered over 1000 business customers in restricted or prohibited categories that were lurking in their portfolio using G2 Business Classification. This is just one of many examples of G2 KYC Solutions helping FIs to uncover hidden risks.