How Banks Can Control Fraud With FedNow Instant PaymentsExperts Share How Community Banks Can Put Anti-Fraud Controls in Place for FedNow
The Federal Reserve's FedNow Service will launch in July this year. Many banks, including community banks, will be able to leverage FedNow as an instant payment platform. How can these banks prepare for faster payments, and what security controls should they consider adding? Two experts - Peter Tapling, a board advisory group member with the U.S. Faster Payments Council and Rebecca Kruse, executive vice president and COO of ICBA Bancard - share their views.
"Community banks will be looking at affordable fraud controls. The most affordable fraud controls will be to use what you have today. It is important to note that banks, businesses and consumers are not going to connect directly to FedNow. Banks need a product to connect to that channel," Kruse said. "We always tell community banks to ensure the providers they are subscribing will provide some sort of fraud detection. And in my opinion, the provider should either come with fraud detection built in or partner with a fraud provider who's been proven in this space."
Tapling says that community banks must begin to discuss fraud controls with their providers. "By the way, they don't have to wait until they integrate FedNow," Tapling said. "They can pick up the phone and start the conversation with their providers. That goes along the lines of, 'What fraud prevention are you offering me at what point in time in the transactions and what options do I have to set?'"
In this video interview with Information Security Media Group, Kruse and Tapling also discuss:
- How FedNow might change the U.S. instant payment landscape;
- How community banks can gear up for instant payments;
- How banks can handle synthetic IDs and mule accounts.
Kruse is a former community banker with 17 years of experience in the payment industry. She has expertise in payments, fraud detection and prevention, data security, and operations.
Tapling is managing director of PTap Advisory LLC, a services firm that helps organizations understand technology in terms that can help support their business strategy. He was the founding CEO of Authentify, the company that introduced out-of-band authentication to financial services.