The cool factor: New tech in banking has an edge


My wife recently recognized that her cool six-branch community credit union was now offering remote deposit capture (RDC) for checks. I think she was looking to share how advanced they are now. Embracing this disruptive technology, the reality is, that unless you are a financial institution with a reasonable handle on services in the marketplace and are actively developing these new channels, you will quickly get left behind. As Brett King posits on the cover of Bank 3.0, “Banking is no longer somewhere you go, but something you do.”

RDC is now five years old, and there are fraud patterns that already have matured in this channel. To be sure, it's a growing problem.

The problem in the channel is that while it makes banking more accessible for those who are on the go and need convenient access to perform these services, it may expose the bank to easily concocted schemes that didn't exist before. Such is the case with RDC, as your next check goes through this channel, once the money is in the account, what happens with the paper it was printed on? Is it immediately destroyed? Is there a control that will write “VOID” across the front and cast it directly in the shredder? Or can it be re-deposited in another channel, like an ATM, or the local post office or signed over to the next guy? What if it's a cashier's check? Great, let's RDC it, then go to the branch with that bad boy and get two more printed up! As always, we need to recognize that to participate in this new technological playground, we need to have some sophisticated new out-of-channel strategies and controls placed around them as well.

So, if RDC is already a kindergartener, you might be asking “what's the next disruptive technology that will occur in this space, Mr. King?” It's alphabet soup; EMV, NFC, A2A (that's “any to any”, and it's reflective of what the future will look like…with real-time payments going in every direction). It's mobile wallets, merchant direct billing and cryptocurrencies. Most of this is already here, more or less, and it's just when the technology will make critical mass and the VHS/Beta moment will happen. Here's proof: it's happening offshore in developing countries where the unbanked have accounts tied to their feature (dumb) phones. It's happening in the developed world where we can de-couple our debit cards at major merchants for another 5 percent in savings.

In the rush to get onboard with the latest new things, we sometimes forget to have a look at the old tightrope of convenience and security.  Yes, Bitcoins can now be used to buy an electric car (seriously, a $100,000 Tesla Model S), but they frequently get hacked at the exchanges. Sure, P2P at my favorite online auction site is convenient, but is fairly “scammable.” It's almost always the case that in the fog of war to bring a new technology to market, there is a gap that is exploited by those who make it their job to skim off the top. So while RDC is a really cool technology, and newly minted tech will continue to shift the industry, the exploits of it will remain and continue to frustrate us.

To really get ahead of new technology (and all the old ones, as well) requires the innovator to be responsible well ahead of potential new fraud vectors in the channel. Fraud detection should be covering all the channels in the enterprise, and be developed out to be cross channel. So while creating RDC specific to deposit accounts via mobile, the money movement can be any-to-any. When the roll-out of the next innovative payment technology is met by enterprise, cross and all-channel fraud detection and monitoring, that's where we really have the next advanced and mature technology. Naturally, this will all trickle down to the smaller providers and it's how we develop a smarter and more secure payments network. In doing so, no one gets left behind if they want to stay current with technology. At this point, no one who wants to stay current in technology gets left behind.

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