The Fraudsters Are Ready For FedNow… Is Your Financial Institution Prepared?
The FedNow Service developed by the Federal Reserve is soon to launch. Financial Institutions of every size will now have the ability to conduct instant payment services, rendering ACH for most smaller banking institutions obsolete.
Customers will be able to deposit and withdraw funds in seconds. Corporate Treasurers and institutional accountants will have real-time balancing. Waiting days for clearing will be a thing of the past.
However, FedNow has some major drawbacks. Most notably fraud.
FedNow Instant Payments Will Not Prevent Fraud: In fact, real-time settlement will reduce a bank’s ability to continue using their current fraud-prevention tactics and software. (But there is a solution).
Treasury and Risk
“We can reasonably expect fraud to increase after [FedNow] goes live. Instantaneous payments do not give financial institutions any time to identify suspicious transactions.”
Positives and Negatives of RTP and FedNow
Positives
Speed and Availability
Deposit and withdrawal of funds in seconds. 24/7/365.
Enhanced Reporting
Transaction details are instant with real-time reconcilement.
Modernized Payment
Mobile payment and transactions in real-time.
ACH a thing of the Past
Smaller institutions will no longer need to rely on ACH to conduct business.
Negatives
Speed and Availability
No time to detect fraud as it’s happening.
Enhanced Reporting
Transactions reconciled will include fraudulent activity. Potentially missed.
Modernized Payment
Mobile payment and transactions ripe for fraud with no-wait transfers.
Fraud Prevention Tools Obsolete
Most fraud prevention and detection tools do not operate in real-time. A real-time solution like ToolCASE is vital to prevent fraud.
“The only solution to risk in real-time banking is real-time fraud detection and prevention.” – ToolCASE
“If bad actors are able to intercept a transaction and divert funds, by the time the parties involved notice the fraudulent activity, the company’s money might be impossible to recover.” – Treasury and Risk
The World’s Most Advanced Transactional AI Company. The Retail Banking Industry’s Preferred Choice For Real-Time Risk Management and Fraud Detection.
ToolCASE will get your banking institution prepared for FedNow. Our real-time fraud detection and prevention services can interact directly with all of your data channels and integrate seamlessly with FedNow. Learn how to prevent fraud in the new FedNow world. Visit us Here
