Aug 03, 2021 MicroBilt News
Over 270,000 reports of credit card fraud in the USA in 2020 alone. Also, between 2017 and 2019, instances of fraud doubled and show no signs of slowing down. Because of this, an investigation into better bank verification must take place.
If you do not want to fall behind in financial security, you must take action to keep up-to-date with the latest changes. The progress of digital security and bank verification tools continues apace.
This article will discuss the problems of bank verification methods in the digital era. It will also present options to ensure safe and secure transactions for you and your institution.
Problems of the Digital Era
Despite the best intentions, problems with online accounts and financial security can happen to the best of us. There are several sources of this, and the following are a small section of issues that financial institutions should focus on.
Fraud and Identity Theft
With the advent of digital onboarding and account opening, banks must make sure their processes are fool-proof. In this age of COVID, online transactions are even at an all-time high. Fraud has followed suit by increasing in volume over the same period, which only goes further to show how important remote security is.
Banks running digital services must maintain secure environments. These systems must remain up-to-date with current laws and regulations. Admins must make constant changes to the software to keep up with the latest changes to these regulations to stay relevant.
One of the latest updates to this is the allowance of digital signatures in several countries through changes to the law. This lets people assure others of their identity via their signature as if they were in person.
Many of these laws are at the forefront of how the digital landscape progresses. Regardless, you should note that many of the regulations are not up-to-date with how things are. Compliance should not be the goal, but as an absolute minimum to exceed in digital security.
Risk Management of External Vendors
As system management becomes more complex, institutions are moving their databases. They are now exporting a lot of system administration to third parties as part of "infrastructure-as-a-service". This is especially prevalent when companies start to move their operations into the cloud, which comes with a list of their own problems.
The bank or other organization is still responsible for the holding of finances and transfer of money. Because of this, it needs to have a level of oversight of any external group it works with. Any pairing in this regard needs a vendor management plan that will keep up-to-date on external areas of security and liability.
Any third party also needs to stay relevant when it comes to the above areas of electronic compliance to stay competitive. Anyone hiring their services needs to be able to query and understand what they provide in that regard.
Nacha Account Validation
Starting from March 2021, several financial institutions will come under new ACH rules. These ask that account validation be part of any fraud detection in in-house systems.
In theory, this will help root out and reveal fraud as it occurs. Therefore, it will prevent issues or allow for the prosecution of those who abuse the banking systems as they exist.
Several banking processes are susceptible to fraud. Because of this, the NACHA rules will need any person who initiates an authorized payment to put in place the following:
- Methods to screen all account debits and detect fraudulent transactions
- Systems to verify the identity of the person receiving the money, according to the debit transfer's data
- Verification methods to ensure that the routing number used in the transfer is a valid one and has not been spoofed in any way
With the above systems in place, consumers and financial services can all have greater assurances. They can assume that transactions will be reliable and secure.
Instant Bank Verification
The question many people have on their lips is wondering, "Why do I need bank verification?". Well, it may not be obvious to everyone, but lenders need the system in place to verify everything to do with an account.
Information such as your balance, your employment history, and bank statements should only go to a verified individual. If a lender wishes to verify a consumer's banking information, they can do it by an electronic system. This is instead of the consumer needs to pass them a paper statement proving who they are.
Some companies now offer services to assist with this. Instant Bank Verification (IBV) allows institutions to access data from locations around the world. This data can give them the tools they need to verify the identity of anyone in the bank.
Using this, the lender can make much more informed decisions about what they can do with accounts. They can determine how to lend money to consumers if they need to default on an account or any of several other concerns.
This system ensures compliance with the Fair Credit Reporting Act and several other laws and regulations. The organization can stop worrying about the issues themselves and get on with the tasks they intend to do instead.
Consumers should also show interest in IBV services. They allow the bank to have the correct information it needs to offer loans and print statements. Also, businesses need this information to discuss their financial information with one another in more open ways.
What Else Can Be Done?
You should now have a much greater understanding of why bank verification needs to stay updated in any system. Also, you should have a higher level of knowledge about how banking processes are being updated. Specifically, how they continue to give individuals and companies a sense of security.
If you have any further questions on banking security or still question "just what is bank verification?", get in contact. We would be happy to answer your questions. We are on-call to discuss tools and solutions for your banking security needs.