Similar to identity theft, this type of fraud happens when an unauthorized individual gain access through online banking applications, capturing the account information to create and write bad checks.
Account-centric enterprise content management solutions allow users to access account holder information based on their account numbers.
ACH (Automated Clearing House) is an electronic payment network that enables banks, credit unions, businesses, and consumers to securely send and receive funds between accounts for transactions such as direct deposit, bill payments, recurring payments, and account transfers.
An adverse action notice is a document sent to a loan applicant stating a bank’s rationale for denying a loan. It may also contain a counteroffer, such as a lesser amount or a request for an approved co-borrower.
Agentic AI refers to artificial intelligence systems that can autonomously plan, reason, make decisions, and take action to achieve specific goals with limited human intervention.
The term “aging exceptions” refers to a group of critical exceptions that have not been resolved within a reasonable amount of time.
Altered check fraud occurs when a fraudster changes the amounts and Payee from a stolen check.
API is short for “application programming interface.” Technology companies like Alogent rely on APIs to connect multiple software applications, thereby enabling a two-way exchange of information to support users’ needs.
Audit and exam prep is a process that financial institutions go through in order to adequately prepare for upcoming audits and exams.
An authorized signer form is a document that allows an account holder to grant a range of clearance levels to individuals to perform certain functions within a bank account.

Financial institutions use exception categories to classify their exception data into easily understandable groups. Exception categories are especially useful for reporting purposes, such as when a bank or credit union needs to quickly analyze its insurance-related exceptions.

Why Categorizing Exceptions is Important

In banking, exceptions typically involve one of the following scenarios: incomplete information, insufficient information, expiring documents, or pending actions. For example, commercial customers’ financial statements would likely be considered expiring documents, as new versions must be collected annually.

Being able to efficiently generate a report containing hundreds of soon-to-expire documents is a good starting point. However, as a financial institution scales its operations and the list of exceptions grows, additional categorization may be necessary. Proper categorization can help the financial institution avoid oversights, identify operational bottlenecks, ensure timely follow-up, and, ultimately, streamline exception resolution.

Examples of Exception Categories

Exception categories vary from one financial institution to the next. At Alogent, we’ve seen institutions use exception categories to manage:

Critical (& Non-Critical) Exceptions, such as those involving UCCs, property insurance, and deeds of trust.

Insurance Exceptions, such as missing insurance documentation for commercial real estate loans.

Loan Policy Exceptions, such as those relating to financial ratios and loan amounts.

Collateral Exceptions, such as expiring UCC financing statements for equipment and other assets used to secure loans.

Quality Control (QC) Exceptions, such as scanned documents with missing signatures or poor image quality.

Approaches for Categorizing Exceptions

Some banks and credit unions allow users to organically develop their own exception categories, while others prefer a top-down approach. Either way, spreadsheets are a common and low-cost solution for categorizing exception data. Drop-down lists in spreadsheets are intuitive for staff to use. However, as exception reporting requirements expand and evolve, a spreadsheet-intensive approach may result in data entry errors and unreliable reporting.

Managing exception categories in a system like AccuAccount could offer a better approach, especially for financial institutions with large exception databases. Administrators can create global rules so documents are automatically categorized as desired—rather than manually selecting categories from a drop-down list.

Visit Alogent’s Innovation Hub for banking definitions, industry papers, and other free resources. Learn about exception tracking and reporting in AccuAccount.
 

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