The U.S. payments landscape hasundergone a major transformation, with the physical transportationof checks replaced by the capture, processing and clearing of checkimages from diverse points of deposit including branches, kiosks,ATMs, merchant locations, homes and mobile phones.

The unprecedented convenience for customers has raised the baron expected user experience. It has also ushered in a set of risks,from outright fraud to unintended errors.

As the financial services industry emerges from the GreatRecession, the battle between institutions will be for customerdeposit acquisition and retention. The delivery of superior servicewill be critical in enhancing customer loyalty. Risk mitigation andcustomer service are often competing imperatives. In the battle fordeposits, the successful financial institutions will be those thatcan ensure a consistent, positive customer experience whilemitigating deposit risk.

With remote deposit capture it is important to remember that themembers scanning deposits or taking pictures of checks on mobilephones are not check processing professionals. Expectation in ourinstant gratification era is for a “click-and-go” experience.Excellent image quality, particularly for mobile deposits oftenaffected by angles and shadows, is an imperative. Rejection of toomany checks for poor image quality can result in members abandoningthe deposit alternative or even the credit union altogether.

Image processing has vastly accelerated the deposit processingcycle. While there are obvious positives from early posting andfunds availability, fraud can also happen at “light speed.” Thetraditional approach to risk mitigation is to analyze deposits onDay Two through batched processes. In today's world, that is acouple of days and several dollars short. Modern risk managementsystems need to operate in real-time, across and at all points ofdeposit, on Day Zero.

It is important to assess risk from multiple perspectives suchas member history, size of deposit, the particular deposit channelbeing used, potential for duplicate deposits, etc. Severityassessments can drive policy actions like deposit holds and reviews– both human and automated. On the other hand, they can alsofacilitate member-friendly actions like making funds available formembers deemed low risk.

Systems need to allow credit unions to customize thresholds,criteria and actions based on their risk mitigation strategy. Therisk safety net needs to work across multiple financialinstitutions to determine, for example, whether an account has beenclosed or if the same check has been deposited at anotherinstitution. Proficient systems can have more than a hundredtune-able, real-time risk filters working together to drivecomprehensive risk management policy.

Effective analytics are necessary to aggregate and analyzetransaction behavior across multiple institutions to continuouslyrefine strategy alternatives based on best practices. In otherwords, systems need to be Day Zero, real-time, granular andself-learning.

To address user experience risk, particularly for mobiledeposits, systems need to have access to an audit trail of allattempted image uploads by the member. This can help technicalsupport organizations render quick and relevant assistance. Usereducation through error messages can help improve the overallexperience. For example, “Flatten check and place on a darksurface” is more effective than “Error- cannot read image”!

An agile risk mitigation strategy and platform allows creditunions to effect the best balance between containing risk andimproving the user experience. The dictionary defines agile asquick and well coordinated in movement. Thus, modern systems needto be fast and yet comprehensive in assessing risk, andimplementing policy actions.

The way forward is for agile risk management engines that workon Day Zero, across all deposit channels and multipleinstitutions.

Jim Ballagh is vice president of business development atEnsenta Corp. in RedwoodShores, Calif. CONTACT: [email protected] or (650)868-5517.