The challenge
A leading American bank holding company allows customers to make payments on certain products, such as loans and credit cards, using external demand deposit accounts (DDAs). A DDA lets customers withdraw deposited funds at any time, without advance notice, via external accounts from other banks. However, anyone who knows the bank account information of others can make transactions using these accounts, which can lead to fraud. The bank amassed fraud losses of around $3.3 million per year because the company’s external accounts were not being validated as customers made payments. To reduce fraud losses and control the transactions made with external accounts, the bank decided to build a real-time validation capability for external DDAs. It turned to Cognizant to implement a solution to address its challenges and goals.
Our approach
The two-phased project began with the primary validation of accounts using an early warning system (EWS) and secondary validation using microdeposits. Real-time validation and EWS services allow the bank to exchange information between organizations to prevent and combat fraud. With the EWS validation process, the bank can ensure, with the utmost security, whether the external account can be added to a customer’s profile. It also checks the status of the account each time, prior to any payment being made.
In the second phase, we implemented the validation using microdeposits. If a customer is not satisfied with their initial EWS validation’s rejection, the system prompts the customer to opt for additional validation using microdeposits, which allows them to continue adding the account. In addition to real-time validation, our banking technology solution includes features such as velocity control, pluggable UI, reusable API and stimulus check validation.
