From the rise in open banking to the widespread adoption of peer-to-peer payments such as Zelle and Venmo, digital banking is here to stay. While digital transformation has brought enormous benefits to organizations and consumers, it’s not without its fraud risks.
To address this digital banking trend, financial institutions must have strong account validation solutions in place. Before initiating a money transfer or disbursing funds to an account, it’s important for financial institutions to establish that the account can receive funds and that the receiving consumer or business is the authorized owner of the account.
Moreover, regulatory changes, such as the Nacha WEB Debit Rule, now require “commercially reasonable fraudulent transaction detection systems” to screen WEB debits for fraud.
In this blog, we’ll explain the different types of account validation solutions available, and evaluate how Socure’s new bank account validation solution, Socure Account Intelligence, compares.
Types of account validation solutions
Choosing the right solution for your organization depends on your business needs; some things to consider are cost, accuracy, timeliness, and customer experience. Here are the three types of solutions:
- Consumer Permissioned: A consumer-permissioned solution is one in which a consumer grants explicit consent to an organization to access their account and obtain needed data, typically by providing their bank account login credentials.
- Data Driven: In a data-driven solution, an originator compares a consumer’s account number, routing number, and personally identifiable information (PII) against a third-party database.
- Non-Real Time: Non-real-time solutions include micro-deposits, a zero-dollar payment, or voided check to verify bank accounts, with validation usually taking days as opposed to seconds.
Overall, consumer-permissioned solutions tend to be secure and accurate, yet they often require disclosure of sensitive information, and are subject to unreliable bank account connections. Data-driven solutions are more affordable, and have very little friction, but are limited to the accuracy of the data sources the solution references. Non-real-time solutions are slow and high friction and are best as a fallback solution for accounts that can’t be verified with other methods.
How Socure Account Intelligence is different from our competitors
Socure has entered the Payment Risk Prevention space with the introduction of its newest product, Socure Account Intelligence. The product instantly verifies domestic bank account status and ownership, prior to ACH payment transactions or funds disbursement. Only the consumer or business name as well as the bank account and routing numbers are needed for this real-time service that establishes trust between accounts and supports regulatory compliance.
Socure Account Intelligence is a data-driven solution, and works well for any client or industry in which an ACH payment is being made—including bank account funding, disbursement of government benefits, bill payments, insurance payouts, and merchant and peer-to-peer payments.
Let’s take a look at Socure Account Intelligence versus the top solutions in the space.
Socure Account Intelligence vs. leading Consumer-Permissioned Solutions
- Enhanced coverage: Due to the ever-changing approach banks take to sharing data, the bank account connections from which consumer-permissioned solutions rely can break at any time, resulting in questionable reliability. Socure Account Intelligence does not have this limitation, offering up to 92% account status coverage and 72% account ownership coverage, based on recent evaluations with leading financial institutions.
- Economical option: Data-driven solutions cost on average 33% less than consumer-permissioned solutions, enabling cost-effective waterfall approaches by placing Socure Account Intelligence ahead of additional, costly step-up authentication methods.
- Superior consumer experience: Due to the increase in data breaches, some consumers are uncomfortable disclosing sensitive bank account login credentials required for consumer-permissioned products. Socure Account Intelligence only requires the non-sensitive inputs of name + account and routing number (additional PII optional), resulting in a more comfortable user experience.
Socure Account Intelligence vs. Leading Data-Driven Solutions
- Better performance: Recent “Proof of Concept” evaluations with leading financial institutions have resulted in an average coverage lift above other data-driven verification providers, by +9% in account status and +19% in account ownership.
- Robust fraud suite: Socure Account Intelligence is integrated into Socure’s ID+ full product suite. Extremely few data-driven competitors offer an accompanying identity suite, and if they do, it lacks the machine learning, synthetic fraud detection, and document verification capabilities available in Socure’s robust suite of solutions.
- GLBA solution: Socure Account Intelligence is a Gramm-Leach-Bliley Act (GLBA) solution, meaning clients can gain valuable insight in payment risk while avoiding the costly consumer disclosures and dispute resolution processes associated with Fair Credit Report Act (FCRA) products.
Other Key Product Differentiators
Socure Account Intelligence:
- Delivers results with immediacy, as opposed to competing micro-deposit solutions, which can take days and lead to a significant consumer drop-off
- Filters and enhances the front-end data for pin-point accuracy, such as name-matching technology
- Avoids screen-scraping methods, or using a computer program to copy data from a website, which have historically led to regulatory repercussions for competing vendors
- Enables customizable branding and language flows to promote flexibility and user experience testing
- Part of a reliable brand, trusted by 1,800+ customers, including 4 of the 5 top U.S. banks, 12 of the top 15 credit card issuers, and 250+ top fintechs
Choosing an account validation solution for your needs
Now more than ever, financial institutions must accurately assess trustworthiness and payment return risk without impacting the consumer experience.
While there is no “wrong” way to validate account ownership, each individual solution accommodates different preferences around cost, accuracy, timeliness, and customer experience.
Socure Account Intelligence allows users to convert more good customers via automated bank account verification, reducing manual processes, friction and customer abandonment. It also decreases returning payments by accurately and quickly confirming that an account is open, verifying its owner, and limiting returns from closed and unauthorized accounts.
As a recognized leader in digital risk prevention, Emily Saitta has spent over a decade monetizing identity verification and fraud prevention solutions, across both Fortune 500 companies and startups. Specializing in competitive intelligence, she penetrates lucrative global and domestic markets with next-generation B2B and B2C fraud solutions. As an advocate for diversity, equity, and inclusion, Emily can often be found presenting as a keynote speaker on the importance of accessible solution design.
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