SQN's Winter 2011 Newsletter
The checking and payments industry is evolving. In a post-Check 21 era, and with 2011 upon us, the changing face of check processing will bring new challenges and opportunities to financial institutions and the checking industry as a whole. Paper-check writing is expected to stabilize with billions of checks written into the future. Check fraud, however, is still alarmingly widespread and on the rise. As we transition into this new year, we take a look at some industry issues and answers to popular misconceptions, as well as the people and products that help make us great.
Myth Busters: Issues and Answers in a Changing Industry
SQN Banking Systems President, Joe Uhland, addresses popular misconceptions and the realities behind them.
Myth:
New technology in the emerging Remote Deposit Capture (RDC) environment decreases the likelihood that a financial institution will process a fraudulent item.
Answer:
"While RDC technology is sophisticated and convenient, it eradicates the methods developed over the last two decades to mitigate risk, i.e. magnetic ink character recognition encoding (MICR), watermarks, indelible ink, etc. The emerging trend in this industry is leaving a large window of risk for financial institutions that, if unprepared, can lead to significant losses."
Myth:
In a post-Check 21 world, paper-check writing and check fraud is on the decline.
Answer:
"Fraudsters know the easiest way to steal money is through a fraudulent check. While paper-check writing is on the decline, fraudulent items are being processed at an alarming level - increasing in 2009 and 2010 respectively. According to the 2009 ABA Deposit Account Fraud Survey, industry check-related losses reached $1.024 billion in 2008, marking the first time within the ABA´s survey that losses surpassed one billion."
William G. Fitting, Partner and Senior Consultant with the Catalyst Consulting Group Weighs In
Myth:
The trend away from paper presentment to image cash letters will increase forged check exposure.
Answer:
"Not necessarily. The image of dedicated clerks holding paper checks and scrutinizing check signatures to detect forgeries is comforting, but inaccurate. High check volumes and tight time constraints limit the number of items that can be reviewed and the review process is notoriously hit or miss. Digitizing check images actually improves the situation because it makes comparing signatures on checks with signature snippets easier and faster. While bankers might lose the ability to hold and `feel´ a check, this is more than offset by the greatly increased number of check signatures that can be reviewed.
Myth:
Changing consumer preferences and the movement to online and mobile payments will rapidly eliminate the use of paper checks for bill payment.
Answer:
"Not true, at least for now. Based on research by Aite Group, checks sent through the mail remain the most common method for paying bills. In 2010 Aite estimates that consumers will mail almost 5 billion checks for bill payment, which represents more than 30% of all bill payments. While the use of online and mobile channels for bill payment will continue to increase, "checks through the mail" will remain a consumer favorite for the foreseeable future
Myth:
Bankers are smarter and work harder than Fraudsters
Answer:
"Although most of us would prefer not to acknowledge it, crime can be a lucrative profession. As a result, it attracts some smart, hardworking people who are dedicated to their craft. Many fraudsters approach their "profession" with as much thought and hard work as those of us in honest lines of work. Just as bankers spend a lot time on fraud mitigation, fraudsters spend a lot of time developing new ways to defraud banks. This is an ongoing battle of wits, neither side enjoying a clear advantage. The biggest danger for banks is complacency. Remaining diligent in the face of this constant risk is one of the most important components of an effective fraud mitigation program.
Myth:
Fraud mitigation is a back office responsibility.
Answer:
"Fraud mitigation is the responsibility of the entire institution, starting at the point of initial customer contact. One of the most effective ways to migitgate fraud is simply to keep the fraudster out of the bank. While `know your customer´ requirements have strengthened account opening practices, there are additional steps that can be taken. Various validation services enable institutions to determine both if they can safely open an account as well as to help them determine if they want to open the account. Heading off potential problems before they occur is still the best way to avoid trouble. A fraud mitigation program must coordinate back office and customer contact fraud mitigation activities. This is a crucial component of an integrated, institution-wide risk management program."
SQN Banking Systems Enters into Seventh Consecutive Year in Partnership with Bull Ltda.
--Technology partnership delivers powerful check fraud prevention to global market --
Rancocas, N.J.-based SQN Banking Systems, a leading provider of integrated fraud detection and process improvement products for the financial industry, announces its seventh consecutive year in partnership with Bull - Latin America, an information technology company that helps corporations and public sector bodies develop open and secure information systems.
The success of this partnership supports the joint implementation of SQN´s SENTRY: SigCheckTM automated signature comparison system, allowing both institutions to provide a modern and powerful solution for the international banking community.
"With the rising number of check images being processed in Brazil and the rapidly changing fraud environment, innovative fraud prevention solutions are mission critical," said Eraldo Silveira, executive director for the Financial Vertical at Bull. "For seven years our partnership with SQN has allowed us to offer the most relevant and powerful automated signature verification solution. Bull customers process hundreds of millions of negotiable items on the SigCheck platform each year, and as our clients have grown, SQN has responded by providing the most up-to-date technology available."
The SigCheck solution reviews on-us checks for signature fraud using sophisticated pattern recognition technology. It can be fully integrated into teller and account opening platforms. The technology compares daily signature images and MICR data from on-us checks with existing digital signature database, and flags items that fall out of bank set parameters as possible forgeries. A "confidence score" is assigned to each signature and, based on rules set by the bank, suspicious checks are then sent for review by bank personnel for a payment decision.
Joe Uhland, president of SQN Banking Systems said, "Whether domestically or abroad, automated signature comparison is a powerful tool to deter check fraud. SQN proudly partners with Bull to deliver our SENTRY: SigCheck solution to its notable list of financial institution customers. Our primary goal is to equip our banking partners with the most robust check fraud detection systems available.
About Bull
Bull is an information technology company, dedicated to helping corporations and public sector bodies develop open and secure information systems to sustain their business strategies. The premier European-based global IT supplier, Bull has a worldwide presence in more than 100 countries, and is particularly active in the defense, finance, healthcare, manufacturing, and public and telecommunications sectors. In Brazil, Bull has a strong presence in the Banking Industry, being recognized by it´s expertise as one of the main providers of smart solutions for banking operations. For more information, visit: www.bull.com.
About SQN Banking Systems
For more than 25 years, SQN Banking Systems has provided integrated fraud detection and process improvement products for the financial industry, meeting the needs of financial institutions of all sizes. The SENTRY suite of products includes software for exception item processing, image fraud analysis, automated signature comparison, verification and display, transaction analysis and safe deposit operations management. More than 500 SQN customers have improved their earnings and reduced check fraud losses by as much as 84 percent with SENTRY. For more information, visit SQN´s Web site at www.sqnbankingsystems.com.
Employee Spotlight
Introducing James E. McGuirk, Regional Sales Manager
James McGuirk
reached this position with SQN Banking Systems with more than 25 years of
previous industry experience. With
an extensive sales and management background, including 25 years divided
between Burroughs and Unisys Corporations, James is an invaluable asset to the
SQN team. As Regional Sales
Manager, James is responsible for guidance and leadership in account and sales
management for his region
As a long-term industry veteran, James is acutely aware of the needs and challenges his customers face. "My goal is to provide the best solution for each and every one of my customers. In a changing industry, it is crucial for the relationship between vendors and customers to be flexible and evolving," said McGuirk. "SQN has done a great job identifying an industry-wide need to efficiently and effectively mitigate risk and I am proud to support that goal."
McGuirk is a seasoned, educated and effective resource for SQN Banking Systems. He obtained his masters degree in marketing at the beginning of his career, more than thirty years ago. Since then, he has supplemented his degree and experience by earning numerous milestones, awards and industry memberships.
SQN Tech Tips!
By Stan Jaslar, Chief Technology Officer
SENTRY: Fraud Suite Holiday File
A holiday file can be used to schedule days that you do not want some of the modules to run in the SQN SENTRY: Fraud Suite. You can schedule individual modules to work on different days if needed. The settings are imported into the system via a flat file of dates or a user can enter the dates using the GUI interface provided in the SQN Application Control Center (ACC) (Figure 2). You can turn on the holiday file feature in the ACC. Navigate to the Image Processing > Settings > Image Processing Settings panel and make sure the holiday file box is checked (Figure 1). Then browse to the file you would like to use as the holiday file by using the browse button. Call SQN Technical Support with any questions.
Figure 1 - Image
Processing > Settings > Image Processing Settings
Figure 2 -
Settings Management > Settings Management > Holidays
