Leading financial institution Bank of America (BofA) announced the launch of its latest product feature, Account Validation, a fraud prevention service targeted towards corporate and public sector clients.
Prior to initiating an electronic credit or debit payment, a client using the service can verify the status of an account and authenticate its owner. According to BofA, Account Validation also assists in helping prevent misdirected payments, which occur when a payee inadvertently provides an incorrect account number.
For banking users, the service can be critical. The rate of suspected digital fraud attempts against financial services companies increased 109% when comparing the last four months of 2020 and the first four months of 2021, a TransUnion report revealed.
“The rate of fraud attempts are up globally and especially in the financial services industry because fraudsters understand this is where the most high-value transactions are taking place,” said Shai Cohen, Senior Vice President of Global Fraud Solutions at TransUnion.
“We’re seeing more financial services organizations implement fraud prevention solutions with some success, though our findings make it clear this is not the time to relax,” Cohen added.
BofA’s Account Validation is supported by Early Warning Services, a fintech company that provides identity, risk and payment solutions to financial institutions and is operated by seven of the nations largest banks: BofA, BB&T, JP Morgan Chase, Capital One, PNC, US Bank and Wells Fargo.
Chuck Moore, vice president of product management at EWS recently shared in an interview with PYMNTS that the long integration time and point solutions of the old treasury banking system must pivot more quickly to API-based solutions to react to changes in cash flow and to data solutions that inform smarter decision-making.
“Consumers are bearing the brunt of the fraud expense, as the latest data suggests,” Moore told PYMNTS. “These frauds need to be mitigated.”
BofA noted a key component of Account Validation is its ability to respond to clients’ inquiries in near real-time. Companies can use the service prior to making payments to consumers via ACH, wire transfer or a real-time payment. Additionally, Account Validation could help companies to comply with the NACHA WEB Debit Account Validation rule.
“Account Validation can help companies prevent fraudulent payments without compromising on speed for valid payments to vendors and contractors,” said Stephanie Wolf, head of Financial Institutions Sales and head of Business Banking Sales in Global Transaction Services at Bank of America. “By reducing misdirected payments, companies will also save a considerable amount of time and money it takes to attempt to retrieve misdirected payments.”
BofA’s roots trace back nearly a century ago, however, CEO Brian Moynihan sees his firm today not only as a legacy bank, but as a financial technology company on the cutting edge of digital innovation. At Yahoo Finance’s All Markets Summit on Monday, the CEO noted, “We’re clearly a technology company. We spend about $3.5 billion a year on new code implementation. New products and services are driven by technology.”