Mobile RDC: Addressing Check Disposition Concerns

Don’t Dread the Shred

Mobile banking has expanded “online banking” into the realm of immediate gratification; how perfect for today’s younger generation. But actually, it’s not only GenY-ers who want instantaneous information and accessibility. The list also includes business people, soccer moms, college students and just about everyone with a smart phone.

Cool Technology: Mobile RDC

Mobile banking should also incorporate Mobile RDC (remote deposit capture). Think of the ability to allow any customer with a check to make a deposit by simply taking a picture of the front and back of this paper document. Using this method, the customer never needs to visit the bank in person, nor must the actual document be provided to the financial institution. Cool… very cool.

Check Disposition: Can you trust the customer?

It is clear that RDC can save customers time and provides a superior level of convenience. However, after the check is scanned, can the financial institution trust the depositor to discard the check properly? For the most part… but that’s not good enough because “bad” things can happen:

• Customer may decide to redeposit the item in a secondary account at another bank
• Customer mistakenly deposits paper at branch
• Check is recovered by fraudster who decides to deposit the item in their account
• Fraudster perpetrates identity theft by gathering customer information on the account by using full name, address, bank account number and even an example of their signature and even endorsement.

Each of these scenarios can be circumvented with the appropriate controls. The FFIEC guidelines provide a solid foundation to limit risk in this environment. However, there are technologies which can add tremendous value in minimizing the risk of “anyone depositing” items and not shredding the check.  They include:

• Implement an automated method confirm the existence of an endorsement on the check. Automated Endorsement Analysis (AEA) is now very reliable to detect the presence of endorsements. AEA even identifies personal checks with signatures from small business deposit stamps.  If the endorsement is missing; delay availability of the funds and notify the customer! Remember, the bank of first deposit (BoFD) is the one liable here!
• Verify all amounts on checks through an “amount verification” process. This will ensure that the courtesy amount and legal amounts match and there are limited mispostings.
• Make sure your duplicate detection software incorporates all check workflows as well as ACH converted checks.
• Implement an image analysis profile for items deposited across all accounts. This can provide real-time fraud detection for on-us and even select transit checks.

Our lesson from today’s post: “Don’t dread the shred.” We know there are going to be issues at a point in time with Mobile RDC. Like many products, initial problems addressed in the “control group” don’t always arise until a product is main stream. Plan accordingly to minimize exposure.