M&T Bank

Kyle Caldwell, Senior Vice President Fraud Product Management

Challenge your Processes- Your Customers will Thank You

Kyle Caldwell, Senior Vice President Fraud Product Management

Banking is one of the oldest and most established industries in the world with roots tied all the way back to 2000 BCE where gold could be deposited for safe keeping in Babylonian temples and palaces. In the United States the first bank was established in 1782 by the Continental Congress to serve the needs of the newly found US colonies. With such a long-standing history of best practices, it’s not surprising that banking often lags in advancements, both technical and procedural, especially compared to other industries.

To be clear, this is often the strategy of most banks. To protect customer and shareholder value- banks are typically conservative when it comes to investing in new ways of working. In fact, the adage “if it ain’t broke, don’t fix it” typically comes to mine. Unfortunately for banks, customers have more options than ever and are no longer tied to physical locations. Neobanks, (generally an online bank without traditional branch locations) are not tied down by years of enterprise growth and procedure.

This is becoming quite clear to fraud fighters who continue to try to fight fraud with old and antiquated technology. Worse, we are being handcuffed from agility by having to cut through red tape created by old processes or procedures. This is creating an interesting paradigm for us as we have become some of the strongest advocates for the customer experience- sometimes even detracting from our enterprise-wide mission of limiting financial crimes.

In fact, how common is the following conversation:

Fraud Fighter: Hey we were recently attacked and had to restrict users from a service that was abused by fraudsters.

Business Owner: Okay, do you have numbers around the loss and number of good customers impacted?

Fraud Fighter: Yes, we are stopping 1 fraudster for every 5 good customers and loss looks like it will exceed $200,000 over a three-day attack.

Challenge each of the processes implemented by a business to ensure better workflow in the new system

Business Owner: That’s not horrible, do we have a better process in place to help restore access for the good customers?

Fraud Fighter: Improvement to the process we have implemented? No, but we can implement a new technology solution that helps solve the problem at the root cause.

Business Owner: How much would that cost and how long would it take to implement?

Fraud Fighter: About $500,000 annually and 6 months

Business Owner: That is too long, and the budget won’t allow it. Maintain the current process until the fraud subsides and then we can readdress it.

5 YEARS LATER

New Fraud Fighter: Wow I just had a chance to review this process implemented before I got here, and its really impacting customers- can we investigate?

New Business Owner: No, it was before I got here and is likely in place for a good reason. Our losses are also still high for the channel so we should keep it.

So what can we do? I have found success with the following best practices:

• Identify the root cause of an issue:

o Often, we take a procedure at face value without truly working to understand why the process was implemented in the first place. Typically, a manual process is implemented because the system at the time cannot support the needed process. However, this should not carry over to a new system. Challenge each of the processes implemented by a business to ensure a poor workflow, or practice is not replicated in the new system.

• Calculate the cost of delay:

o Answer the following question: If we do not bring in the technology or challenge the procedure, what is the total financial impact to the organization?

o Be sure to include metrics such as customer impact (customer retention for negative events, customer growth for positive events), financial impact (fraud loss or relationship growth), operational impact (improved/delay to speed of an outcome) and reputational impact (expected growth/abandonment from customers).

o Dollars saved or revenue created boil this down to a very simple conversation. Even if you don’t have exact numbers, so long as you are estimating in good faith- that is totally okay!

• Identify your Change Advocate

o People generally want to do what’s best for their customers. Identifying the person within the business to help you lead the effort is critical for your success. Getting buy in from someone from within the business not only increases the likelihood of success but also helps to cover any blind spots you may have.

• Persistence is key:

o Change is scary for a lot of people and regardless of your delivery, the first reaction for most people is hesitancy. Remember, you are effectively asking someone to change a practice that in some cases has been around longer than you. It’s uncomfortable and that’s okay.

o Meet regularly with the person(s) you’ve identified to be a change agent is critical. Do not rely on them to set up meetings or follow up. Be respectful yet persistent.

o Any events or issues that may have been avoided due to your proposed solution should be escalated with an analysis of what your solution may have done better.

In my opinion, the last point is where the hardest but most needed changes often die. People create great presentations, sell the solution effectively then rely on their change agent to pick up the work from there. Often, the person you’ve identified to help advocate for a new fraud solution is the same person someone else has identified for their needs. With so many fires to put out, the most persistent person will win.

The articles from these contributors are based on their personal expertise and viewpoints, and do not necessarily reflect the opinions of their employers or affiliated organizations.