ACH Risk Management: Faster Payments, Immediate Risk Mitigation. Erica El Hilali, MBA, AAP. Argos Risk. Director of Client Services

Transcription

1 ACH Risk Management: Faster Payments, Immediate Risk Mitigation Erica El Hilali, MBA, AAP Director of Client Services Argos Risk

2 Faster Payments are here Same-Day ACH Real-Time Payments Payroll and Direct Deposit Approximately 194,000 Same Day ACH Transactions Daily 90% of payroll professionals survey by NACHA in 2014 said they want same-day settlement

3 Which type of same-day payments had the highest volume by dollar amount in 2016? 1.Business-to-Business Payments 2.Direct Deposit 3.Consumer Bill Payments 4.Person-to-Person Payments

4 Faster Payments: Same Day Volume Same Day Transaction Volume in 2016 $1.2B $0.7B $5.9B $8.8B B2B Direct Deposit Consumer Bill Payments P2P

5 Real Time Payments How many of your Financial Institutions have a plan in place for risk management with Real Time Payments?

6 Key Drivers for RTP Threat from new FinTech entrants Increased Revenue Potential? Banks Customer s expectations for faster payments Convenience Customers Consumer protections Financial inclusion & cashless Regulators

7 Global March to Faster Payments

8 Real-Time Payments and Risk Risk Strategy Either 24-7 staffing or automation Need for due diligence Operational 24 hour 7 days a week Only Push Credit System For now $25K limit in place (likely to rise as business demands higher limits) Real time posting for receivers

9 Strategy 1: Risk Rate your Originators Use a risk rating system or solution to rate your Originators and than use that when on-boarding new ones LOW RISK MID RISK HIGH RISK Same Day ACH Restricted Limit Same Day ACH Consider No Same Day ACH or Highly Restricted

10 Strategy 2: On-Going Monitoring Don t wait for the annual review Set up automated on-going monitoring to get alerted on changes Update Limits Appropriately? MID RISK HIGH RISK LOW RISK? MID RISK? LOW? RISK HIGH LOW RISK RISK? MID RISK

11 Strategy 3: Consider Security Faster Payments are more attractive to fraudsters??? Are they properly authenticated? Educate Customers on how they can prevent fraud Consider dualapproval to prevent imposter fraud

12 Strategy 4: Automate Automation can help mitigate operational risks especially with RTP and faster payments. With 24-7 processing automated risk solutions are more necessary than ever. LOW RISK MID RISK HIGH RISK Same Day ACH Restricted Limit Same Day ACH Consider No Same Day ACH or Highly Restricted

13 Things to look for before you Originate How Risky are your Originators? Gauge overall business and financial health Compliance risks and due diligence checks Type of business (SIC or NAICS Code) How would you respond if they declare bankruptcy or have a major lawsuit? What would happen if they went out of business or in the case of a consumer, they become deceased?

14 Assessing Business Health 24 / 7 CONSUMER COMPLAINTS LAWSUITS & LEINS FINANCIAL HEALTH NEWS & EVENTS INDUSTRY TRENDS Risk Factors

15 Verifying Originator Identity Street View of Address

16 Verifying Originator Identity Street View of Address SIC Code and Industry Group SIC 7379 Industry Group Computer Programming, Data Processing, And Other computer Related

17 Verifying Originator Identity Street View of Address SIC Code and Industry Group Address Analysis Other Business w/same Address ADDRESS ANALYSIS COMPANY ADVANCED INTEGRATED SOLUTIONS, INC. WISE GUYZ TECHNICAL SVCS LLC ADDRESS 926 AURORA AVE. 926 AURORA AVE.

18 Originator-Related News Press Releases Business News National News BBB Customer Complaints

19 Compliance Checks? Continuous Monitoring Of: FinCEN Money Service Business Check

20 Compliance Checks? Continuous Monitoring Of: FinCEN Money Service Business Check OFAC

21 Lawsuits and Liens 3,500+ Websites Checked Activates Alerts VENDOR SUMMARY

22 Need for On-Going Monitoring: Case Study 84 Year Old Company Publically Traded Stable Financials and Payment History ORIGINATORSE TUP ANNUAL REVIEW STATUS CHECK

23 Score Changes over 180 days

24 Changes within 180 days CEO CHANGE PRESIDENT LEAVES CFO LEAVES INITIAL UNDERWRITING EARNINGS LEGAL NEW PRESIDENT ANNUAL REVIEW

25 Three Main Take-Aways Automate, Automate, Automate Use Data Analytics to Your Advantage On-Going Monitoring More Important Than Ever

26 Conclusion We re witnessing the creative destruction of financial services, rearranging itself around the consumer. Who does this in the most relevant, exciting way using data and digital, wins! Arvind Sankaran

27 Any Questions? Erica El Hilali, MBA, AAP Director of Client Services Argos Risk