Risk Based Check Cashing Update
Wouldn’t it be awesome if you could provide your members immediate access to their mobile deposit funds without putting a huge strain on your back office staff? What if that same process could provide consistency for the entire credit union and more confidence for your front office staff? My credit union, Y-12 FCU, has made that a reality!
In September of 2016, we introduced an improved Mobile App to our members. Our initial goal was to improve usage of the app as well as increase mobile deposit transactions. We implemented some of the newest available technology to achieve the increased usage, but we needed a way to improve the mobile deposit process in order to get the transaction numbers we wanted. We determined that the main deterrent for mobile deposit was likely the time delay between the member submitting the deposit using their phone and when the funds are actually available to them. The process at the time included a back office employee reviewing each individual item before releasing the funds to the member. This is a standard process, but it’s also very slow.
Several CU employees got together and came up with a list of key items that they look for when deciding on check holds. We then gave each of those items a ranking of importance based on different levels of member engagement and transaction history and came up with several different “tiers” of risk factors based on input from the member’s account. We refer to this as “The Matrix”. The Matrix allows us to assign each account with a “Risk Score” that indicates a “Hold Base” recommendation and lets us know how much we can provide each member in immediate funds with minimal risk. This process, which we call Risk Based Check Cashing, eliminates the need for an employee to carefully review each mobile deposit check. Instead, our members are now given immediate credit for their funds depending on their Hold Base amount, which in many cases is the entire check. For example, if a member has a Hold Base of $1,500 and they deposit a $950.00 check using our Mobile App, the entire amount would be immediately available in their account.
The Risk Based Check Cashing process was so successful that we decided to also implement it in the branches. This has done a tremendous job of creating consistency across all of our banking channels, since each member gets the same amount of availability regardless if they deposit their check on the teller line or using the Mobile App. It has also been instrumental in allowing our front line staff, especially new tellers, to confidently assess appropriate check holds.
To further reduce the manual efforts around mobile deposit review, we needed a way to review items in an automated fashion. This would reduce the risk of allowing higher deposits and faster funds availability. We approached Bluepoint Solutions and asked if their fraud detection service would be possible in the mobile channel. This effort resulted in Y-12 FCU becoming the first Bluepoint Solutions credit union to implement TrueCheck testing on real-time posting for mobile deposits. Bluepoint also added a Restrictive Endorsement qualification that has to be met before a member’s check is allowed to be processed.
Other than the Fraud and Restrictive Endorsement review technology, this solution was developed at zero cost to the credit union, other than programming hours for the IT department. So far, our Mobile App results have been wonderful. In August of 2016, the month before our new app was released, there were 2,309 mobile deposits processed. As of June 2017, that number had increased to 6,964. That’s a 200% increase in less than 1 year and these statistics are consistently increasing each month. All of these improvements have not only made life more convenient for our members, but they have also greatly reduced the amount of time our staff spends reviewing and approving checks, which frees them up to perform other job duties and serve our members faster.
Our next steps are to implement the Risk Based Check Cashing program into our Personal Teller Machine transactions. Our PTM machines run NCR software which is integrated with our core, making the process a little trickier to implement. We are also working with our vendor to begin allowing our members to apply mobile deposits directly to their loan payments. This process has been very rewarding, and I can’t wait to see how much we are able to build on it in the future!
Lindsey McMillen
