Jen Wasmund, AAP, NCP Compliance Services Director

Transcription

1 Jen Wasmund, AAP, NCP Compliance Services Director Regional Payments Associations, through their Direct Membership in NACHA, are specially recognized and licensed providers of ACH education, publications and support. Regional Payments Associations are directly engaged in the NACHA rulemaking process and Accredited ACH Professional (AAP) program. NACHA owns the copyright for the NACHA Operating Rules & Guidelines. The Accredited ACH Professional (AAP) is a service mark of NACHA. DISCLAIMER: This presentation and applicable materials are intended for general education purposes and nothing in this presentation should be considered to be legal, accounting or tax advice. You should contact your own attorney, accountant or tax professional with any specific questions you might have related to this presentation that are of a legal, accounting or tax nature. 2 Navigating Payments

2 Growth of mobile RDC Why mobile RDC? Risk Management and Compliance Resources Questions? 3 Continued adoption by community banks and credit unions Primary focus on consumer use of mobile RDC applications, but potential for small business usage as well As the number of smartphone and/or tablet users continues to increase, demand for the product may do so as well Mobile phones may begin to become a critical component of future payment system evolution 4 Navigating Payments

3 Consumer Usage September 2014 Study Source: Survey: Bank Customers Embracing Remote Deposit Capture, American Bankers Association, September 18, Source: 6 Navigating Payments

4 Many community financial institutions are still weighing their options for mobile RDC offerings to account holders A number of the largest institutions in the country have made the product available to their customers or members Advertising and marketing have made mobile RDC something that consumers are continuing to request, giving institutions an opportunity to respond with a new product 7 August 22, Navigating Payments

5 Is there a cost savings to be realized? Javelin Strategy and Research report surveyed over 18,000 consumers about their deposit habits An average FI can save nearly $50 a year in processing costs for each customer who uses mobile RDC instead of a branch office for just one deposit a month Is there fee income to be earned? Source: RDC-is-Key-to-1.5-B-in- Profits.aspx 9 Does the product help attract new business? Does it meet the needs of your current account holders? Can it help you keep existing relationships or maintain business outside of your typical geographic footprint? Does it replace or delay a need to add new brick and mortar locations (branches)? Precursor to the next phase of mobile mobile photo bill pay? 10 Navigating Payments

6 Where is the risk with mobile RDC? Legal/compliance risk Mobile application security Check fraud Duplicate check deposits Bait and switch Alterations or forgeries Security of physical items FFIEC Risk Management guidance is intended to apply to mobile RDC as well What other regulatory issues apply? Regulation CC Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) Regulation DD (Truth in Savings disclosures) E-SIGN Uniform Commercial Code (Articles 3, 4) Other FFIEC IT Handbooks and documents ECCHO Rules or separate exchange agreements 12 Navigating Payments

7 No existing laws or regulations that pertain directly to mobile banking Agreements With you and your vendor/third-party service provider With you and your mobile RDC user 13 Duplicate check deposits Accidental or unintentional Learning curve of what to do with original check One person deposits via mobile RDC, then a spouse or family member takes the check to a branch location Intentional fraud June 2013: Louisville, KY man purchases at least 32 Western Union money orders, deposits them via mobile RDC, then cashes them in at a local grocery store after depositing them for over $12,000 in proceeds after withdrawing the funds from the fraudulent deposits 14 Navigating Payments

8 Bait and Switch One individual writes a check to someone for a transaction or purchase Payee of the check steps away for a moment and makes a deposit via mobile RDC The payee then changes their mind or asserts that the check was for too much, asking for a different payment method or a check for a different amount 15 Alterations or forgeries No teller or personnel to physically examine the check before it is deposited Missing drawer s signature on the front of the check or accepting remotely created checks Endorsements proper or restrictive? Security of physical checks Where are they stored? For how long? How are they destroyed? 16 Navigating Payments

9 Account holder qualification Will you offer the service to everyone or only certain customers/members? What data will you consider if you choose to offer it only to certain account holders? Balances Length of relationship Credit scores NSF history Returned deposited items history 17 Deposit limits Maximum per day? Per month? Limit on number of items that may be deposited Different limits based on different classifications of users or one size fits all? What can your system do for transaction monitoring or tracking? Return tracking Endorsement verification Image quality analysis (IQA) Duplicate detection database 18 Navigating Payments

10 Funds Availability Images are not checks Regulation CC does not apply to deposited images! Disclosures of different availability made by mobile RDC agreement Better availability for more well-established users? Pay for pace of availability? Higher per item deposit charges for accelerated access to funds via mobile RDC Immediate, next-day, two-day, etc. Does money made offset potential loss or risk? 19 Source: Associated-with-Mobile-RDC.aspx 20 Navigating Payments

11 Other risk management considerations: Periodic account reviews? Is this feasible in your environment? Requiring specific language on the physical endorsement franking? Are tellers trained on how to spot a previously deposited item? Customer or member education both on the system to limit unintentional errors and on security of physical items and mobile device itself Do your branch capture systems and duplicate systems verify against items that are deposited in your mobile RDC system? For how long? 21 Mobile RDC adoption still leaves a lot of room for community institutions to enter the market Consumers are demanding the product and it may have financial and loyalty benefits as long as you are willing to manage potential risks Does the product fit the needs of your FI from a strategic standpoint? Ensure your management team and Board of Directors are involved before making a decision document critical decisions made 22 Navigating Payments

12 Remote Deposit Capture.com: FFIEC Guidance on Risk Management of Remote Deposit Capture: FFIEC IT Handbook Info Base: 23 Contact UMACHA for any of your Remote Deposit Capture questions! (800) or (763) Navigating Payments

13 Have a rockin good time at Navigating Payments 2014! 25 Navigating Payments