Fraud Detection as a Selling Point

By Deborah Peace

How one bank monitors $4.3 billion to prevent fraud while generating revenue with real-time fraud detection.

According the Ponemon Institute, 80% of financial institutions were oblivious to fraud until after the funds were transferred out of the accounts, and a majority of account holders—57%—were unable to recover the losses.

As a result, 40% of the account holders victimized by fraud moved their banking activities to another institution.

These statistics illustrate how financial institutions are continuously challenged with the costly initiative of staying a step ahead of cybercriminals to protect their customers, as cybercriminals constantly shift their tactics to bypass enhanced security measures. This puts immense pressure on financial institutions to enact stronger fraud prevention methods.

While conventional fraud prevention methods work, they lack the flexibility and convenience to allow customers to quickly detect and respond to suspicious transactions. As a result, financial institutions incur added operational costs and shoulder the liability for preventing fraud. In addition, the timeline to dispute certain types of transactions, such as an ACH debit, is very limited, which can result in financial losses for both the account holder and the financial institution.

Eliminating unauthorized transactions will remain a top priority for the industry.

Financial institutions of all sizes have been challenged to proactively prevent fraud in a way that empowers their customers—without incurring additional costs.

At least one bank has accomplished this by not only strategically enhancing the security of its business customers’ accounts, but also offering a new service to generate additional revenue. Mississippi-based Trustmark has implemented a real-time debit approval process that triggers an actionable alert when an ACH debit hits the customer’s account. In other words, its customers can stop unauthorized transactions immediately.

Using scalable technology that simplifies and automates the fraud detection, response, and dispute process, Trustmark can systematically monitor where a business customer’s funds are directed and who is pulling the funds from the account, based on the customer’s instructions. This empowers the customer with greater control over their account and significantly reduces the risk of fraud.

With this approach to fraud prevention, Trustmark has enabled the account holder to:

  • Identify trusted trading partners to be included in a pre-approved list for future transactions.
  • Decide who will be alerted and how when an ACH debit arrives.
  • Determine what conditions should prompt an alert.

These flexible filters allow Trustmark’s business customers to establish notification rules based on several factors, including dollar amount limits and how the debit was originated. By utilizing these features, the need to maintain legacy, labor-intensive debit filters is eliminated, thereby reducing operational and staffing costs.

“This real-time debit approval process allows us to further expand our fraud prevention services to our business customers,” said Chris Styga, senior vice president and director of corporate treasury services at Trustmark. “The solution’s conditional filters and intuitive design empower our customers to exercise greater control over their account, enhancing the customer experience while effectively mitigating the risk of fraud.”

What happened after implementation?

Since implementing the automated fraud prevention solution, Trustmark has monitored more than $4.3 billion, preventing unauthorized transactions and returning $8.3 million for its business accounts. Innovations in mobile and online technologies have enabled Trustmark to proactively involve its customers in fighting fraud, resulting in reduced operational costs and increased efficiency. In addition, by offering a convenient, self-service fraud solution, the bank recognized a valuable opportunity to generate additional revenue, increasing the bank’s profitability.

Trustmark plans to continue leveraging this real-time approach to fraud prevention when same-day ACH goes into effect, which will facilitate same-day settlement of electronic payments. Utilizing an automated, real-time fraud prevention solution will enable the bank to better protect its customers as accelerated settlements become standardized.

Automating fraud prevention services through a real-time detection and response approach can save financial institutions time and money while enhancing the customer experience. By using scalable technology that automates a traditionally manual process, Trustmark has offered its business customers real-time control over transactions, shifting liability for fraud detection and response to the customer, and effectively reducing the risk of fraud. Not only does this empower account holders, it opens up valuable opportunities for expanded service offerings, positioning the bank as a dynamic industry leader.

 Deborah Peace, AAP, is chief executive officer of ACH Alert, a provider of patented, innovative fraud detection services to financial institutions ranging from community banks to top tier financial institutions. Email: [email protected].

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