A new report from Aite Group focuses on the fraud and operational risks associated with remote deposit capture (RDC) and how RDC vendors and financial institutions can best manage these risks. The report reviews the overall RDC fraud risk environment, examines the fraud risk inherent in customer acquisition, and discusses the importance of customer behavior monitoring for fraud detection.
RDC deployment in the United States continues to maintain momentum. U.S. banks were quick to adopt this technology as it not only enabled them to provide greater convenience and cost savings to their customers, but helped bring the financial industry a step closer to electronic check clearing. Aite Group estimates that between 300,000 and 350,000 accounts are enabled with RDC capability today, and a conservative estimate shows that banks are losing approximately US$1.4 million annually due to fraud in the RDC channel. While this is a small loss relative to other fraud losses facing financial institutions, increasing penetration and deployment yields a growth curve in RDC-enabled accounts and fraud losses. If the volume of RDC-enabled accounts increases at a rate of 25% to 50% per year, potential losses could become significant in a mere four to five years.
“Now is the time for industry players to begin thinking about the potential risks of RDC and collaborating to manage those risks proactively; waiting for them to generate losses sufficient for remediation investments will waste considerable capital,” says Wesley Wilhelm, senior analyst with Aite Group and co-author of this report. “Aite Group recommends the creation of an RDC fraud management consortium, composed of various industry players, to combat and proactively identify RDC fraud and account abuse patterns through the use of predictive analytics.”
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