The $5.2 billion, Pleasanton, Calif.-based Patelco Credit Union engaged the Redwood Shores, Calif.-based Ensenta to implement remote deposit capture and conduct an enterprise risk review, resulting in policy and channel enhancements.

By enhancing its services and honing its policies, Patelco not only improved deposit volume by more than 70% and deposit dollars by 51%, the credit union also won over members, mitigated risk and improved its operations without adding additional staff.

The credit union started its relationship with Ensenta − which specializes in cloud-based, enterprise deposits, payments and risk mitigation − in 2010 to implement desktop capture, in 2012 for mobile capture and in 2014 for shared branch ATMs.

Patelco now provides an enterprise solution with a more convenient and consistent experience for its more than 300,000 members across all remote channels. With Ensenta's configurable risk factors, members in select segments can receive accelerated funds availability and make deposits with no dollar limits.

“We wanted a hassle-free member experience,” Patelco Vice President Lani Apolonio said. “It's really just looking at the business and reacting to new trends because of the mobile deposit availability and convenience for our members.”

Apolonio added, “Being able to have a partner in this remote channel enables us to be consistent and uniform in our decisioning across all the remote channels. That is very important for our member experience.”

After introducing the new deposit channels to members, Patelco reexamined its risk settings to maximize its enterprise RDC program.

Rich Klein, chief technology officer at Ensenta, pointed out one of the keys is making decisions in real time about a particular member.

“In the process of depositing the check we're analyzing what the risk is associated with the person,” he said.

That means applying the right policies based on historical data and then applying the right limits. “The result is a higher level of security and review of a lot less items,” he said.

Klein described how the process works: The check is initially captured, whether from a mobile device or at an ATM, and sent securely to Ensenta using typical, secure socket layer/transport layer security. The Ensenta database treats the item as a perform library function, encrypting it whether it's in flight or at rest in the system. “A lot of that is because they are subject to PCI compliance,” Klein said.

He explained that since the turn of the millennium, the check deposit process has experienced a major revolution. Electronic capture, processing and clearing of check images from various points of deposit – most recently, mobile phones – has replaced physical transportation. While convenient for members, this has presented a new set of risks and regulatory concerns for financial institutions, including:

Increased fraud: According to the American Bankers Association, check fraud increased by 25% yearly, with $11 billion in attempted check fraud reported in 2014 alone.
More regulatory guidelines, which present additional operational burdens. One recent example is the May 2016 CFPB guidance, which ensured financial institutions credit the correct deposit amounts to accountholders who deposit checks electronically. Failure to do so can result in multimillion-dollar fines, as was the case for one financial institution.

According to Ensenta, ultimately, financial institutions like Patelco must deliver an exceptional banking experience while mitigating risk and controlling back-office expenses.

The credit union consulted with Ensenta in late 2014 to conduct an enterprise-wide risk review to optimize its RDC program. The goal was to improve the member experience by opening the deposit channel for even greater limits and offering quicker funds accessibility while mitigating risk and improving back-office processing. To achieve this, Ensenta assessed Patelco's existing risk settings within its flexible risk management platform to better understand the credit union's deposit policies. Ensenta also reviewed enterprise deposit analytics reports to study the behavioral trends, risks and efficiencies resulting from the existing settings.

Ensenta identified the most critical adjustment opportunities and allowed Patelco to make informed decisions about improving its RDC policies. Ensenta and Patelco still meet every six months to assess and measure the success of those policy changes, and make more deposit policy and channel enhancements. As a result, Patelco continues to optimize settings for its RDC program.

To validate its policy changes, the credit union engaged the membership-based payments association WesPay in San Francisco, which provides regulatory guidance, audit and advisory services to perform a risk management review of Patelco's RDC program. The review revealed the credit union was not only adhering to regulatory guidelines, but that its policies supported substantial deposit growth. “Everything is configurable regarding risk aversion and reviews,” Klein said.

WesPay reviewed the credit union's check deposit services within the context of its overall enterprise risk strategy, including its check deposit policies, procedures, forms and agreements. WesPay also compared this to industry best practices and, most importantly, to FFIEC guidelines.

The risk review not only validated Patelco's deposit policies and adherence to regulatory guidelines, it also confirmed the credit union's policies supported its growth in deposits. In addition, it offered an objective assessment of how Ensenta's Risk Management platform supports Patelco's RDC risk controls and strategy. WesPay encouraged other financial institutions to follow the credit union's lead in leveraging a smarter and safer solution to unlock the capacity of an RDC program.

The credit union uses Ensenta's 200-plus parameter-driven risk factors to automate the processing and decisioning of check transactions, routing only a subset of checks for review to ensure accurate posting. These configurable risk factors support a range of functions, from cross-institutional duplicate detection to managing deposit limits according to member groups. By leveraging these filters, Patelco only reviews a small percentage of all checks deposited. “Initially, Patelco was reviewing too many items,” Klein noted.

As a result of the Ensenta Risk Review and by fine-tuning settings, Patelco has increased deposit volume and improved the member experience while mitigating risk and maintaining compliance, all without increasing operational costs. Patelco has also grown individual deposit amounts across its mobile and desktop channels.

“We are experiencing increased volume on the mobile side and the desktop side is declining,” Apolonio said.

Besides an improved member experience, the credit union realized:

A 44% increase in items deposited and 27% increase in dollars deposited from 2013 to 2014;
A 30% increase in items deposited and 24% increase in dollars deposited from 2014 to 2015; and
An average of 40,000 items processed per month for deposit.

Patelco has also achieved these goals without adding extra personnel. In fact, the credit union sends 99% of captured items for clearing after reviewing only 30%, which is well below the industry average. Additionally, Ensenta's technology automatically identifies variances in the amount entered versus the amount read to the penny.

Ensenta's risk technology has also protected Patelco from a variety of fraud including duplicate presentment and social media scams.

Instant Insights /

Patelco Improves Bottom Line, Member Experience Via RDC

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