The Banking Buzz: Fighting Fraud in Real-Time: Enhancing Security at the Teller Line and Mobile Deposit Channel

Welcome, everyone, and thank you for joining us today for the next session of the banking buzz. I'm Wendy Klein. I will be your moderator today, and we're excited to dive into today's webinar with our partners from Mitek, where we'll explore real time check fraud mitigation at the teller and mobile deposit channels. Our speakers today from Allergan are Ashish Bhatia, VP of Product Management, and Doug Hendricks, senior product manager. And from MyTech, we have James Watts, director of product management. We are going to take live questions at the end, so please send us anything throughout the presentation in the, GoToWebinar, chat feature. And now without any further delay, let's get started. Ashish, over to you. Yeah. Thank you, Wendy. And thanks, James, for joining us as well as, everyone that's joined us, this afternoon. Thank you for your time. James, before I, get into, think talking about getting the problem that we are facing today with GetCheck fraud, if you could take a moment and then talk about what is one thing or a couple of things and then the other thing as well as get that that you would kinda like our, would like your people get it can take away from this webinar. Yeah. What would that be? Thanks, Satish. Yeah. Definitely. I think as we progress as an industry, the the biggest thing that we need to focus on is really changing about how we approach check fraud, and moving from a very reactive day two day one, day two process to actually getting into fraud mitigation or from fraud mitigation to fraud prevention and actually moving that fraud review into the real time channel channels so we can protect our customers. Awesome. Thanks. And what about can you the the with me, Doug? What would you like to be able Yeah. I'm following right behind James and just say, you know, along with hitting that kind of stride for, you know, less reactive is kind of understanding that the digital solutions available today, the goal is to enhance your process, simplify your process, make it cleaner, and, obviously, naturally, you're going to get a more effective and efficient process that way with the digital solutions. Awesome. Thanks. So, James, let me get turn this over to you because, and, yeah, I'll let you speak about some of the thing the, figures that we have on this slide in terms of what the problem is and think then can take the conversation further down into how can we can really, yeah, we'll look at tackling this. Absolutely. So if if, you know, a day doesn't go by that we don't see news reports of stolen mail, checks being stole, credit cards being stole, frauds on the on the top of mind of every bank executive right now because we've entered this perfect storm of, you know, creating this opportunity for fraudsters when we can get into a whole discussion about, you know, the whole landscape, but that's for a different topic. But staying on what we're talking about, you know, fraud prevention is the number one spending priority for a lot of banks this year and going into the future because it just continues to rise. In in twenty twenty three, we saw that global fraud losses from check fraud were twenty one billion dollars. Of that, the US accounted for eighteen billion dollars of that loss. And it's anticipated that when the numbers come out for last year, for twenty twenty four, that those numbers are gonna be north of twenty four billion total. So it's a huge problem that's affecting everybody from the consumers and the the account holders at the institutions to the institutions themselves. Last year alone, there were over one point nine million different checks stolen through the US mail, and then these checks then make it through to through criminal marketplaces to be altered, digitally enhanced, or just deposited. And legacy software legacy legacy systems that rely on data aren't enough to spot those differences. And oftentimes, this leads to a direct loss for the institution. And at the end of the day, still, the number one target is still the US Treasury checks because those are considered guaranteed funds and you have such a short window to make a decision on those. Also, you know, the consumer sentiment on fraud is shifting as well. In one of the last reports that was put out is sixty percent of consumers indicate that they would switch banks following an incidence of fraud. And that's regardless whether or not the the bank made them whole or not. It's just it it's it's a reputational risk that are facing financial institutions today. Thanks. So in terms of, let's just think take that, a little bit. Give her the so you gave us all of the get figures related to, within the losses and what's happening. But, let's just take a a minute to talk about what you see and have seen in the market related to how I think people are defrauding, banks and, businesses, with, counterfeit get checks. So if you Yeah. Absolutely. So we see across the industry a complete range from the very low sophisticated old school washing checks in acetone and rewriting them to very sophisticated what we call check cooking, which is the digital manipulation of a check image and then submitted for deposit. A lot of the, the the stolen mail that especially, we see a lot of alterations where they're altering minimal fields on the check to bypass a lot of the controls that financial institutions put in place. And then they're also, you know, collaborating online with each other, knowing where to hit, knowing the bank's policies better than some bank employees do, as well as then just creating the counterfeit check. So we're seeing a combination of old school tactics and then the new digital solutions applied using the same vehicles that we provide as an industry to make our customers' lives easier is now also providing them another attack vector for fraud. And then from the other side of it, we see somewhere the checks aren't even altered at all. Especially in the case of a large business check, what a, fraudster will do is just go open a similar sounding business name with a new account and then deposit that check. Awesome. So and I can know we'll go into get this, I think a little bit later on, as we speak through this. But one of the things that comes to my mind and which we've seen, at least, from some of getting the reports that came out also, especially with the guy, building down income Miami that went into a car dealership and made a down payment with a fictitious paycheck, fictitious financial institution. How how do you see, fintechs and companies like us get through partnerships, get really, plugging a hole over there? It's a twofold partnership. Right? You you've got there's there's two sides to the equation. I like to look at it. You know, you've got the image of the check, which is there something off on this? Has something been altered? But then there's also the data behind it, which a partnership like Alligent and MyTech, you bring both of those together. So you you know, bringing together the data on, is this activity for this customer normal, or is it, an anomaly that needs to be looked at closer? I think having the the both sides of the equation helps you to balance out and plug those holes. Awesome. Thanks. Now let's bring, Doug into the conversation a little bit. So, yeah, Doug, given your background, well, I think as a looking as a teller and a banker, from your perspective, what do you see as the things that really can be improved in the gap, workflow, especially on the, putting the TELUS side thing as well as TELUS side. That'll help us, I think, bridge these gaps that are there. Yeah. I think it's it's interesting, obviously, that Teller Life was a long time ago. But what's interesting when you look at the current state is, you know, it's really not all that significantly different if you break it up by channel. Right? Historically speaking, you know, on us fraud was the big concern. Person in front of you, should they be allowed to cash that check, this, that, or the other? And what the actions you took are actually very similarly aligned with what's taken today in the digital solutions world. Right? So the the solutions itself and the processes and practices themselves, it's really just been a migration from brick and mortar to digital. Right? So you can look at teller and you can look at mobile channels. And when you you pull specific channels, what you find is that the fraud has evolved. Obviously, you know, digitally altering a check is completely brand new. But, again, when you start looking at the fact that you now have a digital image to, you know, use a digital solution, you've improved your ability to move just from on us to transit, right, which, historically speaking, is not something that has been a strength. Right? The strength there was holds, you know, extended folds and things like that. Now you have a real time opportunity via teller or via mobile to get information back related to a transit check that's being deposited. So I I think when you look across and you really pull specific channels, you look at teller and you look at mobile, the digital solutions and the partnerships you can have today, it's not a real heavy lift as long as you go about the discovery process the right way, which is, you know, something that banks and credit unions and everybody's always very heavily involved with because everybody has unique components. But I think what you find is the proper implementation, the proper discovery, you get a very easy lift in a space that really it's challenging today to do the same types of risk mitigation that used to be done, but yet you're facing the same type of fraud. So I I think today's solutions provide a great opportunity of improvement, right, and not very much effort on your part. Yeah. Thanks. And a follow-up, that question for James. So James, back in the day, when twenty one thing began, and so and get duplicates thing became a problem. Yeah. I can remember reading about it that if you got a get duplicate on day one, it's gonna cost you get twenty five dollars to fix it versus, I think, seventy five on day two or three. But could you share, like, some, some, figures if you, got them correlated to what what the cost is now of thing finding, I think, fraudulent item on day two or three, versus thing versus, I think day care one or day zero kind of, weather situation. Yeah. Those those type of numbers are hard to to to measure. But what I will say is what we're seeing is the fraudulent attempted amount is going up every every month, every day. So so right now, across the consortium, we're seeing on the teller line, the average fraudulent attempt is over six thousand dollars. Okay. On on the mobile side, it's slower, but it it's still over a sixteen hundred dollars per fraudulent attempt. And then for the ATM, it's over three thousand dollars. So those accounts, I believe one of the last Fed payment studies that they put out, the average, return check item or or fraudulent check item was about fourteen hundred. So those items across channels have in have increased, and they're only going to increase, right, as, obviously, fraudsters are looking for the most opportunity for the quickest gain that they can get. So they're go they're those amounts are gonna continue to rise, and especially as check volumes dwindle. What's gonna be left are those higher dollar checks that are still, being used that vehicle being used for those higher payments. Right. No. Great. That leads into, really, what we've been kept talking about. Right? How do we move from where we are currently where, yeah, get check volumes are declining. They're not gonna go away. But, how do you take care of the problem on day one, if I can use that term, or day zero, thing when the item is submitted for payment or submitted careful gap processing. So where do you think so so apart from Kirelli, yes, there are lots of things to be fixed with the mail system and so on and so forth. But what can think, banks and credit, to our credit unions, Kareli, can do in terms of getting the implementation of these solutions? Where do you think is the biggest bang for the buck? Great question, Ashish. So as Doug mentioned earlier, you know, traditionally, when you thought about check fraud and you attack the check fraud problem, you were really focused on your on us fraud, and that's because that's the data you have available to you. Now as we see a pretty even split between deposit fraud and on us fraud at institutions, that that that needs to be changed. And being able to have a solution that has the real time integration for check fraud in the teller lines, in the mobile, and in the ATM space where that fraud review comes upon submission and then also provides the information that covers you broadly across whether it is an on us check or a transit check. So you need to have that consortium level data that's pulled into it to provide that information and protection. So, really, I think the biggest thing for the bug and what what I always counsel FIs where to start if they're looking for a starting point is with the teller because that is definitely where the most immediate risk of loss is when it comes to deposit fraud. Because if they're doing a a cash out, that cash is walking outside the out out of the door before the review and the clearing is done. Right? In that situation, having that that information at that time of presentment is key. Right. With mobile and and, you know, ATM, at least, there's other holds and other stuff that you can do to mitigate the the potential for loss. But the teller is really key having real time fraud review integrated. Awesome. Thank you. So now let's shift our focus, get to exactly that. Right? So think fraud mitigation. So cannot only from, attempting fraud can be of various, various types. Right? You could have think people get trying to get deposit the same, get check across multiple financial institutions, the way they have their, the way they have the open accounts, or they are trying to get change, getting the amount of the item and and then depositing it at the same thing institution. So let's take a gap a minute to talk about Karelick, I think, the omnichannel approach. James, and if you could, talk us through what you have done with GetCheck fraud, fraud care defender, and then I can speak a little bit to get what, what Karaj and Kashi Kiplas has done to really can bring a solution, I think that fits the the app, fits the care needs of GetToday. Absolutely. So with Check Fraud Defender, our, approach is to really take a consortium approach to it and enable data sharing, which banks and and credit unions have traditionally not been very good at. So what we do is we build what we call a check profile based on the account and routing number that's on the check. And regardless of where which customer that check comes in, it's compared against that known good check profile. So whether it's a transit check or an on us check, we're we're looking and analyzing to the the layout of the check, the different elements, and and not just check stock validation because there's a lot of solutions that do that, but we're also analyzing the content of each of those fields too. Does the handwriting match what this account is supposed to look like? Is the payor information the same as what is expected from this account? You know, for in the case of business printed checks, does this, you know, check usually printed in all capital letters? But this time, it's a normal case. Are the borders and security features this correct for this stock? So building a a model on that and providing all of that information so that a customer can say, yeah. This check just doesn't look right, without having to physically look at every single check that comes in. So, let me get take up from there. Right? So that is a similar approach that we, took when we kept built our latest, I think product Unify. Right? That's what we really wanted to bring into the solution. And I think people who've heard me speak on the previous, webinars, is I've spoken about the fact that we had and we think still have our legacy products that really siloed from that, from that aspect where if it is get duplicate detection within getting the channel, it's only the mobile deposit. Okay. Within okay. Within getting the telechannel that the, duplicate detection was happening. And there's there was previously Canoke data being shared between these applications. So someone could theoretically and I'm sure they did it, because, otherwise, these things won't be out there, is they took a picture of the check and deposited through mobile. And then five minutes later, walked into the cap branch and get deposited there. And they've given drawn funds and walked out of the door. So there was no correlation of data. And that's where Gallogen Shield plus Kareli can, brings all of the benefits of getting an omni channel approach, cannot only from a capture perspective, but also if you're looking at the risk associated with, thing deposit as well as, thing the person making the deposits. Right? So I want to highlight that. I think we've, spent, quite bit of time, I think, talking about getting the omnichannel approach. But the thing in your the thing in your estimation, Kedal, what is it that, is there something, you would like to add out here about the omnichannel approach? I mean, I think the the simple kind of moment for me is looking at it and realizing that you have solutions that essentially you're plugging into your process today, and it's allowing you to take elements out of your manual process. Right? James mentioned it specifically. We're building a, you know, on a transit check profile specific to a routing number and account number. So all of a sudden, now that one item out of a ten item deposit that's over five thousand dollars is going to be automatically pulled out for review. You're not just relying on the teller to always do that count when they're looking at their deposit and reviewing it. You're actually leveraging a digital solution who's going to do exactly what you're asking your tellers to do. I I think that to me is really where you can get significant strides of success and lift, within this landscape because what you're doing today is just manual. You're relying, you know, on the tellers. You're relying on, you know, pretty robust processes. Omnichannel approaches are creating an opportunity for you to plug in in simple spaces and places to get that on a different rail, and be much, much more efficient with it. And the one thing I'd also add to that, Doug, is, there's an element that we don't like to really discuss as, the industry. But I I think, it was one of the latest, Frank on fraud blogs. But what we'll see well, he's predicting that what we'll see this year is a huge rise of insider threat cooperating with fraudsters. So taking that manual process out of the review is also protecting the organization from that insider threat as well. Awesome. Yeah. So if I can take a moment and share, like, your family's staff, family's situation, and I can know we wanted to leave the time for questions. But I think we've covered a lot here. But just hearing, you, both speak about this, my wife used to work as a teller at a bank that I'll not name. And and think talking about getting the human element. Right? There was this person who built a relationship with all of the cap tellers at the cap our branch. And then one day came in and this person, he used to do a painting business. So well, she always had, putting her checks with that she wanted to cash. And one day, after, because she had built up all of these relationships, she walks up to a teller and tells a sob story, thinking about how she needed to cash this get check to get the money out of there. And instead of, verifying, anything related to what the catch, check was and whether it was a valid check or not, the human element came into play. And the Capella, gave, like, a five thousand dollars the value of the check, and it turned out to be fraudulent. So that's what I think, we really can need to take away from this. Right? There's always gonna be the human element that, we also have to factor into, think bringing the best solution and not really get looking at, okay, how how is it slowing down my workflow. Right? So, James, before we turn it over for questioning, anything else you would like to add about your risk scoring model, thing before we go into other machine plus thing as well as so as well as getting the consortium coverage. Yeah. I would say, you know, we're like we said earlier, the fraudsters are collaborating and only getting more creative. So we're actually staying on on top of that and are we're constantly adding new elements to be analyzed and adding new features to try to stay ahead of the fraudsters. You know, I always say they only have to get it right once. We have to get it right every time. So it it's, it's definitely a battle. So right now, Check Fraud Defender has coverage of over eighty three hundred financial institutions with about thirty million different, check profiles within we'll cover those, as we bring on more institutions because we're really, the only ones that have the coverage on both transit and on us. Each new financial institution we bring on grows that exponentially because we're seeing all the volume. So you get that true coverage. The other thing is we also partner with a company called Dark Tower who gets to go and infiltrate these criminal marketplaces and provide us with the images of the checks are for sale prior to them actually being sold. We then go through and using our technology for imaging, pull out the information from that we can and match it to known profiles that we have so that we can start to be proactive from when we see an item that for sale on a criminal marketplace and and trying to move to that before the fraud has actually been, perpetrated. So as as that that's our coverage right now, and we're we're continuing to grow. Awesome. Yeah. I think we have three minutes left. Wendy, I'd like to turn it over to you see to you to see if there are any, questions that we can answer, okay, before. Sure. Absolutely. And just a reminder, please put any questions, in the chat feature, and let's take a few. Our first one asks, how does EligentShield Plus differentiate itself from other fraud detection and prevention solutions on the market? Yeah. Thanks. I'll I'll take that if you don't mind. So Allergan Shield Plus. So, anyone that, has seen a think, demo of our product, I think latest product, that they have to have been unifies. We have kept brought really, I think, totally an omni channel approach. So whether it is cross channel, real time duplicate detection across whatever points of the presentment thing as well as integrating it into, check fraud defender or, it's it's really doing everything in real time. And we are providing providing, I think, real time feedback. I think so that it's either so it's either giving the teller or the person could reviewing, getting the deposit coming in from KEM mobile is doing it in real time as well as keeping all of that data together. Things so that you have a clear view, not only of in all of the items that have been caught as fraudulent thing as well as get decision, but also care of getting the actions taken against being a certain a deposit and also trying to get build a profile of the person can making those deposits. Because we're we're like well, like James just said, you have to keep one, one, one step ahead thing of the fraudsters. And, you know, I think that's where I think the Allergan Shield plus can really differentiate, can we differentiate from the other solutions in the market? Great. Thank you. Another question asks, are there real time alerts for the teller when a check presented for deposit is identified as fraud? If so, what does this look like? Yes. Like I said, Kia, all of the feedback thing that we provide, so it's in real time. The moment the check is scanned, we also get doing a call out not only to our own duplicate detection, web API to get real time analysis back. But at the same time, we also think passing it on to, ChemMyTech to do a to do a to look up against their consortium database. And whatever feedback we get is being displayed, get back to the teller and get real time things so that they know, okay, whether they can accept the check, they can reject the check, or they need to place a hold on the check, depending on whatever. I think the action is recommended. Right? And it's not just that. It's also making sure that you are, protecting getting the deposit that way. So Okay. Great. Thank you. I wanna be mindful of everyone's time. It looks like we are, at our mark. So if we didn't get to your questions, we do have a copy, and the team will get back to you, after the webinar. Before we close, though, I do wanna mention that we are hosting an in person payments roadshow on May first in Houston, and we're, very appreciative that MyTech will be joining us on-site as a sponsor. So if you're interested in joining us, interested in learning more, please look for an email with a registration link or visit the Alligent website in the event section. That said, thank you everyone for joining us today, and have a great afternoon. Thank you. Thank you, everyone. Thank you, Wendy. Thanks. Thanks, everyone.