Episode Summary

In this episode of "Wrestling Payments," host Joe Casali welcomes back Nanci McKenzie for a follow-up discussion on third-party relationships within the financial industry. Nanci, an independent consultant with extensive credentials in banking and risk management, shares insights from her recent session at PMC 2024. She emphasizes the evolving nature of third-party relationships, particularly the regulatory changes and guidance updates from agencies like the OCC, FDIC, and the Federal Reserve Board of Governors.

 

Nanci and Joe dive into the specifics of interagency guidance approved in 2023, which now includes fintechs and offers consolidated advice for banking organizations. They discuss the critical aspects of these regulations, such as consumer data protection, compliance requirements, and the implications of third-party relationships on risk management. Nanci highlights the importance of identifying and managing risks associated with third-party vendors, stressing the need for comprehensive information security programs and regular audits.

 

Towards the end of the episode, the conversation shifts to data privacy and the potential complications arising from the CFPB's new rule under the Gramm-Leach-Bliley Act. Nanci points out that financial institutions must ensure their third parties comply with these regulations to safeguard against data breaches and financial crimes. Joe and Nanci conclude by acknowledging the increasing complexity of compliance and the ongoing need for vigilance in managing third-party risks.

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Guest-at-a-Glance

💡 Guest: Nanci McKenzie, JM, AAP, APRP
💡 What she does: Consultant
💡Company: Nanci McKenzie, LLC
💡Noteworthy: Nanci McKenzie is an independent consultant with extensive banking credentials.
💡Where to find Nanci: LinkedIn

 

Key Insights

Evolving Third-Party Relationship Guidelines

Regulatory guidelines for third-party relationships have evolved significantly, reflecting changes in the financial landscape. The interagency guidance approved in June 2023 consolidates previous directives, including those from the OCC, FDIC, and Federal Reserve Board of Governors, into a comprehensive document. This updated guidance now specifically addresses fintechs, illustrating the growing complexity and scope of third-party relationships beyond traditional vendors. Financial institutions must navigate these regulations to ensure compliance, manage risks, and protect consumer data effectively. Understanding the roles and responsibilities in these partnerships is crucial, as they encompass various services and products offered to both commercial and non-consumer customers. Proper due diligence, risk assessments, and adherence to information security standards are emphasized as essential practices in maintaining these relationships.

 

Consumer Data Protection is Paramount

The increasing stringency of consumer data protection regulations highlights the necessity for financial institutions and their third-party partners to prioritize data security. Regulatory bodies such as the CFPB and FTC enforce strict compliance to safeguard consumer information. Financial institutions must ensure that their third-party vendors are not only compliant with these regulations but also possess robust information security programs. This includes performing regular risk assessments, maintaining business continuity plans, and having incident response protocols in place. The integration of these measures within the Gramm-Leach-Bliley Act's safeguards rule, updated in June 2023, extends these requirements to third-party entities. Ensuring these compliance measures helps mitigate risks associated with data breaches and financial crimes, ultimately protecting both the institution and its customers.

 

Consent Orders Highlight Compliance Failures

Recent consent orders issued by regulatory bodies reveal common compliance failures within financial institutions, particularly concerning BSA/AML programs and third-party risk management. These orders typically identify deficiencies such as inadequate risk management, insufficient compliance committees, and flawed investigative processes. The integration of BSA/AML requirements with third-party risk management emphasizes the need for comprehensive oversight of high-risk customers and transactions. Financial institutions must ensure that their third-party vendors adhere to strict compliance standards to avoid regulatory penalties and safeguard their operations. The emphasis on enterprise risk management underscores the interconnectedness of various risk factors across different areas of the bank, from ACH operations to loan servicing, highlighting the importance of a holistic approach to managing these risks.

Episode Highlights

Introduction to Third-Party Relationship Guidelines

Timestamp: [00:01:56]

The episode opens with Joe Casali welcoming Nanci McKenzie and providing an overview of the ongoing discussion about third-party relationships in the financial sector. They delve into the complexities and evolving nature of these relationships, particularly how they are no longer limited to traditional vendors but include a variety of service providers and products offered to commercial and non-consumer customers.

"It's very difficult to determine what that relationship really looks like. It's not just for vendors anymore, right? That relationship can be in the form of any sort of service or product that you are offering to a commercial non-consumer customer or member, whether that be in your treasury management services or if they are a vendor of yours."​​

Compliance and Data Protection

Timestamp: [00:20:01]

The discussion highlights the critical importance of compliance and data protection in today's financial industry. Emphasis is placed on the need for robust information security programs and adherence to the updated Gramm-Leach-Bliley Act safeguards rule, which now includes third parties. Ensuring these entities have proper compliance measures is vital to mitigate risks associated with data breaches and financial crimes.

"And in today's world it's not just the financial industry, but in today's world data protection, data privacy are huge issues that everybody has to be not just aware of, but concerned with. And where is my data? Who has it? Who has access to it?"​​

The Role of Consent Orders in Shaping Risk Management

Timestamp: [00:09:29]

The conversation shifts to the impact of consent orders issued by regulatory bodies, focusing on how these orders often highlight deficiencies in BSA/AML programs and third-party risk management. The integration of these compliance requirements underscores the necessity for financial institutions to periodically review and manage high-risk customers and transactions effectively.

"So what's very common in all of the consent orders is that they are looking at the BSA AML program, since we've had so many problems with financial crimes, especially in money laundering and those types of activities."​​

Open Banking and Data Privacy Challenges

Timestamp: [00:21:21]

Towards the end of the episode, the discussion explores the concept of open banking and the associated challenges in data privacy. The potential complications arising from the CFPB's new rule under the Gramm-Leach-Bliley Act are examined, highlighting the need for financial institutions to navigate these regulations while ensuring robust data protection measures.

"I feel that it's going to very much complicate things even more, make things very much more difficult for us. But on the other side of things, I said this recently about the CFPB, love them or hate them. We really need to have them in place because the consumers of the world are their own worst enemies."​​

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode of "Wrestling Payments," Joe Casali and Kevin Olsen continue their discussion from the International Payments Alliance meeting by NACHA, diving into various topics surrounding payment systems and regulations. They start by addressing the move in Germany to eliminate checks and explore how the reduction of paper transactions could simplify banking systems. Kevin points out that while checks have been a long-standing payment method, most use cases for checks can be replaced by instant or recurring payments, except for scenarios where checks are deliberately not meant to be deposited.

 

The conversation then shifts to comparing the regulatory frameworks and roles of service providers in the US and Europe. Kevin highlights that in Europe, service providers often have more direct regulatory oversight and higher requirements compared to the US. He discusses the implications of such differences on the efficiency and responsibilities of these providers.

 

Finally, they dive into the concept of Central Bank Digital Currencies (CBDCs) and the digital euro, reflecting on the controversies and discussions around privacy, technology adoption, and regulatory challenges. They note the contrasting approaches and advancements in digital payment systems between the US and other countries, emphasizing the potential and complexities of moving towards a more digital financial ecosystem.

 

Guest-at-a-Glance

💡 Guest: Kevin “Payments Professor” Olsen
💡Company: Pidgin
💡Where to find Kevin: LinkedIn

 

Key Insights

Germany Eliminates Checks to Streamline Banking

Germany is transitioning away from checks, aiming to streamline its banking system by eliminating paper transactions. The majority of traditional check use cases can be replaced by instant or recurring payments like FedNow, RTP, or ACH. The only exception involves checks sent with the hope they won't be cashed, a niche use case. This move raises questions about the adaptability of banks and customers who are accustomed to checks. The transition highlights the differences between regulatory approaches in Germany and the US, where mandates are less common, and checks remain deeply ingrained in the financial landscape.

 

European Service Providers Face Stricter Regulation

Service providers in Europe operate under more stringent regulatory oversight compared to their US counterparts. European providers often need direct approval from central banks and must meet higher standards. This system contrasts with the US approach, where financial institutions are primarily responsible for their service providers, who must notify them of any impactful changes. These differences underscore the varied regulatory landscapes across regions and their implications for service provider responsibilities and capabilities. The European model's emphasis on direct regulation could influence future US policies as global financial integration continues to evolve.

 

Central Bank Digital Currencies: The Future of Money

The development of Central Bank Digital Currencies (CBDCs), like the digital euro, is progressing rapidly, driven by privacy concerns and technological advancements. While some countries, particularly in Asia, are embracing CBDCs, others, including the US, are more cautious. The debate centers on issues of privacy, control, and the potential benefits of a fully digital currency. This movement towards digital currencies is seen as a natural evolution of existing digital money systems, where physical cash is already largely replaced by electronic balances. The discussion also touches on the complexities and regulatory challenges of implementing CBDCs, reflecting a broader trend towards digital transformation in global finance.

 

Episode Highlights

Instant Payments Systems Gain Traction

Timestamp: [00:04:03]

The discussion highlights the global shift towards instant payment systems, which are increasingly replacing traditional methods like checks. This transition is more advanced in other countries compared to the US. While the US is still exploring use cases for instant payments, other nations have already integrated these systems into daily financial transactions, processing millions of transactions monthly.

"For their instant payments, it's still in the millions, but they're reaching it higher. So they're in millions and millions though. Whereas we look at RTP, which I would say is successful because it's millions per month now too, but there are more like millions per day."

 

Stricter European Regulations for Service Providers

Timestamp: [00:06:27]

The conversation compares the regulatory frameworks in the US and Europe, noting that European service providers often face stricter regulations and direct oversight from central banks. This contrasts with the US, where financial institutions bear the primary responsibility for their service providers, and regulations are generally less stringent.

"But overall, it says the financial institution is going to be responsible for their service provider. And the section really says, hey, as a service provider, if you do anything that affects the financial institution, you have to let them know. There, it is more like the service provider signs up directly to work with the central bank to be vetted by and approved by the different associations, organizations and central banks that allow them to get their licensing to be able to proceed and move forward."

 

UPI’s Explosive Growth in India

Timestamp: [00:23:51]

The discussion delves into the success of the Unified Payments Interface (UPI) in India, which has seen phenomenal adoption rates due to government incentives and widespread utility. UPI processed 14 billion transactions in May 2024 alone, demonstrating its extensive reach and efficiency. The system integrates various payment capabilities into a single platform, greatly simplifying transactions for users.

"Fourteen billion transactions in one month. All right, that just, now it wasn't at the beginning, but in May of 2024, 14 billion transactions, billion with a B [...] To see how well it's perceived by end users, that was phenomenal. To see the actual numbers, the use cases, that was phenomenal."

 

The Concept and Challenges of Offline Payments

Timestamp: [00:18:22]

The podcast explores the idea of offline payments, which allow instant transactions even when the payment service is unavailable. This concept is particularly relevant in cashless societies like Norway, where digital payments are ubiquitous. The episode addresses the potential challenges and solutions for maintaining payment continuity in fully digital environments.

"Now, when you say offline payments it kind of needs to be defined and it is basically an instant payment made when the instant payment service isn't available. Wait, what? Yeah, and I was even, okay, how do you do that? And they explained it would be like a card, or similar to what we see with cards. It would be the storing of the information to be able to process it later."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary

In this episode of "Wrestling Payments," host Joe Casali sits down with Kevin Olsen, also known as the "Payments Professor." The discussion kicks off with Kevin's signature introduction and his enthusiasm for making payments engaging. They delve into their experiences at the NACHA Payments Alliance international meeting in Berlin, where both were deeply impressed by the city's historical significance and the intense professionalism of its business community. Kevin shares his personal experiences of exploring Berlin with his son, highlighting the city's rich history and its mix of architectural styles.

 

The conversation shifts to the core of the episode: the insights and learnings from the NACHA Payments Alliance meeting. Joe and Kevin reflect on the valuable networking opportunities the event provided, allowing them to connect with key decision-makers in the global payments industry. They discuss the significance of the meetings, particularly the discussions on fraud prevention, and the innovative approaches being taken to tackle fraud globally. Kevin emphasizes the importance of the Payments Innovation Alliance meetings and how they bring together leaders from various countries to share their approaches and solutions to common problems in the payments landscape.

 

Finally, Joe and Kevin explore specific topics discussed during the meeting, such as the implementation of the Legal Entity Identifier (LEI) and the concept of verification of payee. They express their admiration for the collaborative efforts seen in Europe to enhance payment security and efficiency, and ponder the potential challenges and benefits of adopting similar measures in the United States. The episode wraps up with reflections on the importance of such international collaborations and the shared goals of improving the payments industry worldwide.

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Guest-at-a-Glance

💡 Guest: Kevin “Payments Professor” Olsen

💡Company: Pidgin

💡Where to find Kevin: LinkedIn

 

Key Insights

The Importance of Global Collaboration in Payments

Global collaboration in payments is crucial for addressing common challenges and fostering innovation. The NACHA Payments Alliance meeting highlighted how professionals from different countries come together to share solutions and strategies, creating a rich environment for learning and networking. This collaboration is essential as it allows participants to understand different regulatory environments and customer expectations. The presence of major decision-makers from various global payment systems provides invaluable insights and fosters partnerships that can drive the industry forward. The collective effort to address issues like fraud, regulatory compliance, and technological advancements underscores the necessity of global cooperation in developing a resilient and efficient payments ecosystem.

 

Fraud Prevention Requires Multi-layered Strategies

Fraud prevention in the payments industry necessitates a multi-layered approach involving various stakeholders. Discussions at the NACHA Payments Alliance meeting emphasized the complexity of fraud and the need for comprehensive strategies to mitigate it. This includes collaboration between financial institutions, central banks, technology providers, and even telecommunications companies. By sharing information and working together, these entities can detect and prevent fraud more effectively. Innovative solutions, such as the implementation of the Legal Entity Identifier (LEI) and the concept of verification of payee, are examples of how the industry is evolving to combat fraud. These measures aim to enhance transparency and security, ensuring that transactions are legitimate and reducing the risk of fraud.

 

Historical and Cultural Context Enhances Industry Meetings

Understanding the historical and cultural context of meeting locations can enrich the experience and outcomes of industry gatherings. The NACHA Payments Alliance meeting in Berlin provided participants with a unique opportunity to explore the city's rich history and diverse architectural styles. This backdrop added a deeper dimension to the professional discussions, fostering a sense of connection and engagement among attendees. Exploring significant historical sites and understanding the local culture helped participants appreciate the broader context in which the global payments industry operates. This cultural immersion can inspire new perspectives and ideas, contributing to more meaningful and productive industry collaborations.

 

Episode Highlights

Berlin's Rich History and Cultural Significance

Timestamp: [00:01:54]

Joe Casali and Kevin Olsen shared their experiences of visiting Berlin, highlighting the city's deep historical roots and diverse architectural styles. They explored significant landmarks like the Brandenburg Gate and remnants of the Berlin Wall, which offered a poignant reminder of the city's tumultuous past. This immersion in Berlin's history enriched their understanding of the city's development and its impact on the global stage. Joe found the mix of pre- and post-war architecture fascinating, noting how it illustrated the city's resilience and evolution. Their experiences underscored the value of understanding the historical context when attending international meetings, enhancing both professional and personal insights.

"Seeing the wall, seeing the places where the wall had been, some of that representation, I know, at least for my decade, my generation growing up that it was just like, wow. And to see places like, where Hitler died in it to be such a non-eventful place too, was phenomenal."

 

Contrasting Regulatory Approaches in the U.S. and Europe

Timestamp: [00:08:11]

The episode dives into the differing approaches to regulation in the U.S. and Europe. In Europe, regulators identify potential issues and leave the solutions to the industry, fostering innovation and adaptability. In contrast, U.S. regulators tend to react more directly to emerging problems, implementing immediate measures. This distinction highlights the varying philosophies towards managing and regulating the payments industry, reflecting broader cultural and operational differences between the regions. The discussion also touched on how these approaches impact the development and implementation of digital currencies like the digital Euro, which is more readily accepted in Europe compared to digital dollar initiatives in the U.S.

"The way the regulators get involved, they basically, the regulators there are more like, 'Here's what we think is a problem. You go figure it out.' Our regulators in the U.S. go, 'Wait, what's happening? Let's do something about it.' And it's a totally different approach to the problem."

 

National Scam Prevention Centers Enhance Fraud Detection

Timestamp: [00:16:29]

National Scam Prevention Centers in countries like Malaysia and Singapore significantly enhance fraud detection and prevention through multi-layered communication strategies. These centers integrate efforts from government, central banks, financial institutions, service providers, and telecommunications companies to create a robust defense against scams. This coordinated approach allows for rapid response and higher detection rates, often identifying fraudulent activities before they fully unfold. The discussion emphasized the potential benefits of adopting similar models in the U.S., despite the challenges posed by differing views on privacy and data sharing between Europe and the U.S.

"They show the detection rates of, kind of like I was saying earlier, seeing it before it happens because the communication level is there. They are able to react so much faster to where they are able to get some funds back."

 

Navigating the Complexities of International Payments

Timestamp: [00:12:54]

The conversation highlighted the complexities of managing international payments, especially when comparing systems like SEPA in Europe to the fragmented approach in the U.S. The discussion underscored the challenges posed by having multiple currencies and regulatory environments within Europe, akin to if each U.S. state had its own currency and payment regulations. This complexity necessitates robust communication and coordination mechanisms to ensure smooth transactions. The insights gained from understanding these complexities can help in developing more integrated and efficient payment systems both in the U.S. and internationally.

"Imagine the U.S. and if payments were flowing and we're comparing it to the EU, if payments were flowing, New York had its own currency. And Massachusetts had its own currency, but they also shared a currency. Imagine the complexities around that." (Approx. 00:13:00 - 00:14:00)​

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

 

Episode Summary

In this episode of Wrestling Payments, Joe Casali talks with Andrea Higgens, a Vulnerable Adult Abuse Investigator from the San Mateo County District Attorney's Office, and Patty Presta, Director of Education at NEACH. Andrea shares her 25 years of law enforcement experience, focusing on elder financial abuse and the critical role of financial institutions in preventing these crimes. Patty adds her insights from decades of advocacy and education on elder abuse prevention.

Andrea discusses the importance of suspicious activity reports (SARs) and how they can help law enforcement track and prevent elder abuse. She emphasizes the need for financial institutions to educate their frontline staff on identifying and reporting suspicious activities. Patty highlights the significance of cross-reporting to Adult Protective Services (APS) to ensure timely interventions.

Throughout the conversation, Andrea, Patty, and Joe explore real-life examples of how collaborative efforts between financial institutions and law enforcement have successfully protected elders from financial exploitation. This episode sheds light on the complexities of elder financial abuse and the continuous efforts needed to safeguard vulnerable seniors.

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Guest-at-a-Glance

💡 Name: Andrea Higgens 
💡What they do: Criminal Elder Abuse Investigator
💡Company: San Mateo County District Attorney’s Office
💡Noteworthy: Over 25 years in law enforcement, specializing in elder abuse cases.
💡 Where to find them: LinkedIn 

💡 Name: Patty Presta
💡What they do: Director of Education
💡Company: NEACH
💡Noteworthy: Passionate advocate for elder abuse prevention since 1994.
💡 Where to find them: LinkedIn  

Key Insights

The Role of Financial Institutions in Elder Abuse Prevention

Andrea Higgens emphasizes the crucial role financial institutions play in preventing elder financial abuse. She highlights the importance of suspicious activity reports (SARs) and cross-reporting to Adult Protective Services (APS). By identifying unusual transactions and collaborating with law enforcement, banks and credit unions can help protect vulnerable seniors. Andrea stresses the need for frontline staff to ask open-ended questions and be vigilant in detecting signs of abuse. She also suggests financial institutions host educational events for customers and their families to increase awareness and preventive measures. Empowering bank employees with knowledge and tools to identify potential abuse can make a significant difference in safeguarding elders from financial exploitation.

The Power of Cross-Reporting to APS

Andrea discusses the impact of cross-reporting suspicious activities to Adult Protective Services (APS). When financial institutions notice unusual transactions, they can trigger an investigation by APS, leading to timely interventions. She shares a success story where a bank's prompt cross-reporting helped uncover a significant financial abuse case. The abuser had liquidated large sums of money and taken ownership of the victim's home. Thanks to the bank's quick action and collaboration with APS and law enforcement, the victim's assets were recovered, and the abuser was prosecuted. This example illustrates how cross-reporting can prevent further exploitation and protect vulnerable seniors.

Empowering Frontline Staff to Detect Abuse

Andrea highlights the importance of training frontline bank employees to detect and report elder financial abuse. She points out that tellers and call center staff are often the first to notice red flags, such as unusual transactions or changes in a customer's behavior. By asking open-ended questions and understanding the signs of abuse, these employees can play a vital role in prevention. Andrea advocates for ongoing education and support for bank staff to ensure they feel confident in their ability to intervene. She also suggests rewarding employees who successfully identify and report suspicious activities, reinforcing the importance of their role in protecting elders.

Episode Highlights

Andrea's Path to Elder Abuse Investigation

Timestamp: [00:02:00]

Andrea Higgens shares her journey into law enforcement and how she specialized in elder financial abuse cases. With nearly 25 years of experience, Andrea began her career as a patrol officer and detective before transitioning to the District Attorney's Office. Her work on annuities fraud cases involving older adults led her to focus on elder abuse. This background set the stage for her current role, where she investigates various forms of elder abuse, with a particular emphasis on financial exploitation.

"I have been in law enforcement for almost 25 years. I started out my career at one of our local police agencies as a patrol officer and detective. And about 14 years ago, I moved over to the district attorney's office as an investigator. And about two years into my work at the DA's office, I was actually investigating annuities fraud. And many of the abuse victims in my annuities fraud cases were older adults." 

Elder Financial Abuse: A Collaborative Effort

Timestamp: [00:07:00]

Andrea and Joe discuss the importance of collaboration between financial institutions, law enforcement, and Adult Protective Services (APS). Andrea highlights how effective partnerships can lead to successful interventions and the prevention of elder abuse. She underscores the need for financial institutions to report suspicious activities and work closely with APS and law enforcement to address complex cases. This teamwork is essential for protecting elders from financial exploitation and ensuring timely action.

"If I could give any message to financial institutions across the board it would be to [...] really empower those frontline workers and educate them about those open ended questions. How do you, instead of saying hey who's taking advantage of you? Because those older adults if they're being taken advantage of will have been schooled and groomed by the abusers, by the scammers to say okay when the bank asks you this question, here's what you tell them." 

The Complexity of Elder Abuse Cases

Timestamp: [00:14:00]

Andrea delves into the complexities of investigating elder abuse cases, particularly when it involves financial capacity and cognitive impairment. She explains that law enforcement and financial institutions often face challenges in assessing an elder's financial decision-making ability. Andrea emphasizes the importance of ongoing education and training for those involved in these investigations. By understanding the intricacies of elder abuse, financial institutions and law enforcement can better protect vulnerable seniors.

"Capacity is really specific to what it is we're assessing for. So it creates a lot of challenges and you know there is no perfect system. So I think part of what I really advocate for is that we all just keep learning, that we all keep striving to do a better job of protecting folks but also understanding that if we have the resources, and we're still in full possession of our cognitive abilities as an older adult, we can do whatever really dumb thing that we want to do with our money."

Real-Life Success Stories in Elder Abuse Prevention

Timestamp: [00:17:00]

Andrea shares a success story where a financial institution's quick action helped uncover significant elder financial abuse. A bank noticed inconsistent financial transactions and promptly cross-reported to APS, leading to a collaborative investigation. This intervention revealed that the abuser had liquidated large sums of money and taken title to the victim's home. The timely response by the bank, APS, and law enforcement resulted in the recovery of the victim's assets and the prosecution of the abuser. This story highlights the impact of vigilant financial institutions in protecting elders.

"We actually got a deputy public guardian, which is an APS social worker who helps out with cases where an older adult may not have capacity anymore. And somebody may need to step in take over because the person who is acting as that person's agent was our suspected abuser basically. So we collaborated and Adult Protective Services went out to the home of our victim with local law enforcement and knocked on the door and said ‘Hey, things are not looking great from the bank.’"

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary

In this episode of Wrestling Payments, host Joe Casali sits down with Jaime Shapiro Berg from Alkami - ACH Alert to discuss the rapidly changing payments landscape and the critical role of fraud prevention. Jaime shares her extensive career journey, from starting in treasury management at KeyBank to her current role at Alkami, emphasizing the importance of adapting to new technologies and staying ahead of fraudsters.

The conversation highlights the innovative Positive Pay & ACH Reporting solutions provided by Alkami to address the need for automated fraud prevention tools in the financial sector. Jaime explains how Alkami's Positive Pay solutions have evolved to help banks and credit unions combat check and ACH fraud, reducing losses and enhancing customer trust.

Joe and Jaime also dive into the broader challenges facing the banking industry, including the need for better education and training in banking operations and treasury management. They stress the importance of financial institutions investing in comprehensive fraud prevention strategies to protect themselves and their customers in an increasingly digital world.

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Guest-at-a-Glance

💡 Guest: Jaime Shapiro Berg
💡 What she does: Director - ACH Alert Sales
💡Company: Alkami - ACH Alert
💡Noteworthy: With over 25 years of experience in the banking and FinTech industries, Jaime Shapiro Berg has a deep understanding of treasury management and fraud prevention. Jaime's background includes transitioning from traditional banking roles to leading innovative solutions in digital banking.
💡Where to find Jaime: LinkedIn

 

Key Insights

Payments Are Rapidly Evolving

The landscape of payments is continuously changing, particularly driven by consumer demands for the latest and most efficient technologies. Consumers always seek the newest and shiniest innovations, pushing businesses to adapt quickly to stay competitive. While businesses also desire cutting-edge solutions, their primary goal remains to generate profit effectively. This dynamic environment necessitates that companies stay updated with technological advancements to meet consumer expectations and achieve their financial objectives.

 

Fraud Prevention Requires Continuous Innovation

Fraud prevention in the financial sector demands innovative and seamless solutions to combat increasingly sophisticated fraudulent activities. Traditional methods, often manual and error-prone, are no longer sufficient. ACH Alert's Positive Pay solutions automate fraud detection, minimizing human error and resource expenditure. By integrating these automated solutions, financial institutions can significantly enhance their ability to prevent fraud, thus safeguarding their operations and maintaining customer trust.

 

Education in Banking Operations Is Essential

There is a growing need for comprehensive education and training in banking operations and treasury management. Many financial institutions struggle to hire individuals with relevant experience due to a lack of specialized training programs. Enhancing educational opportunities in these areas can help bridge the skills gap, ensuring that banks have the necessary expertise to manage operations efficiently. Institutions should consider revamping management training programs to focus not just on lending but also on critical areas like treasury and operations management to maintain a robust talent pipeline.

 

Episode Highlights

The Evolution of ACH Alert

Timestamp: [00:12:41]

ACH Alert was founded by Debbie Peace and her husband, identifying a critical need for automated fraud prevention tools in the financial sector. Initially focused on consumer needs, the product quickly shifted to business applications due to market demand. The company developed ACH Positive Pay, a solution designed to seamlessly integrate backend and front-end processes, eliminating manual errors and improving efficiency. This solution has grown to include check positive pay, addressing the increasing problem of check fraud.

"Debbie was an innovator and saw a hole in the market. She was an AAP, very active, and noticed there was something called blocks and filters, but no automated product to help financial institutions eliminate fraudulent transactions with ease of use from a customer experience standpoint."

Importance of Management Training in Banking

Timestamp: [00:07:11]

There's a significant challenge in hiring individuals with a background in banking operations and treasury management due to the lack of specialized educational programs. Many financial institutions rely on in-house training programs, but these often focus on lending rather than the operational aspects. There is a pressing need to develop management training programs that include a comprehensive curriculum on banking operations to ensure a steady pipeline of skilled professionals.

"Management training programs at financial institutions are important, not just to turn out lenders. You only have so many people doing treasury management in our environment, and what you see a lot of is people moving from bank to bank because it's hard to hire experienced people."

Digital Banking Expansion through Acquisitions

Timestamp: [00:03:54]

Alchemy has expanded its digital banking services significantly through strategic acquisitions over the past few years. Starting in the credit union space, they now offer digital banking to banks nationwide. Their acquisitions include companies specializing in online account opening and data and marketing analytics, allowing them to provide a comprehensive suite of products from a single vendor. This expansion has positioned them as a key player in the digital banking sector.

"Alchemy started offering digital banking in the credit union space. They have expanded over the years and now offer digital banking to banks all across the country. They have made several acquisitions over the last four or five years."

Educating Businesses on Fraud Protections

Timestamp: [00:25:54]

Many businesses operate under the misconception that they are protected in the same way as consumers when it comes to fraudulent transactions. It's crucial for financial institutions to educate their business clients on the differences in protections and the importance of preventative measures like check and ACH Positive Pay. Understanding these protections helps businesses avoid significant losses and manage their financial operations more effectively.

"Businesses think they're consumers. So when, when they hear that,  a check, a fraudulent check was cashed, they go, okay, that was just a mistake. Can you give me my money back?"

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary

In this episode of "Wrestling Payments," host Joe Casali dives into the details of National Small Business Week. He emphasizes the importance of utilizing available resources, such as the SBA’s virtual summit and educational programs, to help small businesses thrive. Joe highlights key sessions on AI, cybersecurity, and marketing strategies that are crucial for business growth and stability in today’s dynamic environment.

Joe also discusses the practical aspects of running a small business, including managing cash flow and leveraging e-commerce. He underscores the significance of tools like positive pay for fraud prevention, sharing real-life examples to illustrate its benefits. His insights provide actionable advice for small business owners to navigate challenges and secure their operations.

Throughout the episode, Joe reminds listeners of the critical role small businesses play in the economy. He encourages owners to utilize community banks and credit unions for support and stresses the importance of staying informed about the latest industry trends and solutions. This episode is a valuable resource for any small business owner looking to enhance their operations and safeguard their future.

Download Episode Transcript

 

Guest-at-a-Glance

💡 Host: Joe Casali
💡Company: NEACH

 

Key Insights

 

AI Can Drive Small Business Growth
Artificial Intelligence (AI) offers numerous benefits for small businesses, from generative AI to automation and pattern recognition. Generative AI can create content, such as business stories and marketing materials, efficiently and effectively. Automation and pattern recognition help businesses spot trends and anomalies, enhancing risk management and decision-making processes. AI's potential to streamline operations and improve accuracy makes it an invaluable tool for small businesses looking to grow and stay competitive in a rapidly changing market.

 

Cybersecurity is Critical for Remote Work
In the current landscape where remote work has become prevalent, securing business operations is more crucial than ever. Small businesses must prioritize cybersecurity to protect sensitive data and ensure smooth operations. This includes implementing robust security protocols and educating employees about best practices. With the increasing threats of cyber-attacks, having a strong cybersecurity framework helps businesses safeguard their assets and maintain trust with their customers and partners.

 

Positive Pay Prevents Fraud
Positive pay is an essential tool for small businesses to prevent fraud. It involves the business providing a list of authorized checks to their bank, which then cross-checks any checks presented for payment. This system helps detect and stop unauthorized transactions before they can cause significant financial damage. The use of positive pay can save businesses time and resources by preventing fraudulent activities, thereby maintaining the integrity of their financial operations and protecting their bottom line.

 

Episode Highlights

Introduction to National Small Business Week

Timestamp: [00:01:29]

The episode begins with an introduction to National Small Business Week, highlighting its significance and providing a brief overview of the planned activities. The discussion includes the importance of recognizing the challenges faced by small businesses and the resources available to them through the SBA. The introduction sets the stage for the rest of the episode by emphasizing the value of small businesses and their contributions to the economy.

"There is a virtual summit. It is a free two-day event for small businesses. And I know,  finding time as a small business owner or a small business staff is really hard, because you're busy.

There are things that have to be done and a two-day training is not one of them. But  if you could make it over to this virtual training,  there's lots of the co-sponsors and you can imagine, we speak from the heart here on Wrestling Payments  You can see the speakers are all vendors. So the vendors are trying to get your attention."

 

Leveraging E-commerce for Business Growth

Timestamp: [00:06:04]

This segment focuses on the importance of e-commerce in scaling a business. It explains how online marketing and e-commerce platforms can drive business growth by reaching a broader audience and optimizingpayment processes. The discussion includes practical advice on utilizing tools like Constant Contact for email marketing and how businesses can benefit from integrating e-commerce into their operations.

"Leveraging e-commerce to scale your business. Really important. That's where Wrestling Payments spends most of its time thinking about how your payments are being processed, how and what challenges, what you're wrestling with in processing payments."

 

The Role of SBA in Supporting Small Businesses

Timestamp: [00:10:29]

This part emphasizes the support that the SBA provides to small businesses, including resources for securing loans and writing grant proposals. The conversation highlights the importance of these resources in helping small businesses grow and navigate challenges. It also mentions the benefits of attending SBA events and using their educational programs.

"SBA can be a partner for you. Again, we have no relationship. We're not connected to the SBA. This is just knowing that they are a good resource for you."

 

Future of Commerce and Payment Trends

Timestamp: [00:09:00]

In this segment, the focus shifts to the future of commerce and emerging payment trends. The discussion covers the rise of digital payments, the decline of checks, and the increasing importance of secure payment methods. It underscores the need for businesses to stay informed about these trends to remain competitive and secure in the evolving market landscape.

 

"We're seeing digital payments go up. We're seeing card payments go up. We're seeing ACH payments hit a new height, all time high. We're seeing checks continuing to decline but leveling off. So checks are way down from their high point, but they're not going away."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

In this episode of "Wrestling Payments," Joseph Casali dives into the often misunderstood realm of government benefit payments and their reclamation process. Highlighting a new course he's developed, Casali explains the crucial difference between the rules at financial institutions and those dictated by government agencies when a beneficiary passes away. His insights illuminate the complex interactions between laws, the "Green Book" guidelines, and real-world banking practices, emphasizing the practical implications for those managing such funds.

Joe also introduces the concept of constructive knowledge, explaining its vital role in determining financial institution liability. Through compelling examples, he outlines how seemingly simple knowledge can trigger significant financial responsibilities, stressing the importance of being proactive and informed.

The episode wraps up with a call to action, inviting listeners to engage with the course that not only educates but also equips financial professionals with the tools to navigate these intricate scenarios effectively. Joe's approachable discussion aims to enhance understanding and help institutions limit their financial risks associated with government benefit reclamation.

Download Episode Transcript

Guest-at-a-Glance

💡 Host: Joseph Casali

💡Company: NEACH

Key Insights

Government Benefit Payments Are Bound by Dual Regulatory Frameworks

Navigating the realm of government benefit payments demands understanding the distinct yet overlapping rules set by federal agencies and financial institutions. While agencies may deem a person eligible for certain payments, financial institutions adhere strictly to their regulations, which often only recognize the claim if the recipient was alive during the payment dispatch. This discrepancy creates a complex scenario, especially in situations involving the deaths of beneficiaries, leading to significant operational challenges for banks and credit unions as they reconcile these divergent guidelines.
 

Constructive Knowledge Determines Financial Liability

The concept of constructive knowledge plays a critical role in managing the liability associated with government payments. Financial institutions are expected to act upon any credible information indicating a beneficiary's death, which sets their liability from that point forward. This encompasses various scenarios where knowledge can come from direct notifications like letters from nursing homes or even more informal sources like local knowledge of a death. Ignoring such information can significantly increase the institution's financial risk and legal exposure.
 

Effective Training Reduces Risk in Payment Reclamations

Proper training in handling reclamations is essential for reducing potential liabilities. Financial institutions must implement robust procedures to manage and respond to death notifications and other signals of beneficiary status changes. Through well-structured courses and tools, institutions can ensure their staff is equipped to adhere to both the legal framework and operational best practices, thereby minimizing financial losses and enhancing compliance with regulatory requirements.

Episode Highlights

The Role of the Green Book in Interpreting Legal Requirements

Timestamp: [00:05:07]

Joseph Casali clarifies the function and significance of the Green Book in the context of government payments. He emphasizes that while many consider it as the go-to resource, it is essentially a guide to understanding federal regulations and not the law itself. Joe points out that understanding this distinction is crucial for financial institutions to manage their responsibilities accurately.

"The Green Book isn't the law. The Green Book is a user manual for the law, and the Green Book changes from time to time."

Understanding the 31 CFR Part 210

Timestamp: [00:05:23]

In the middle of the podcast, the discussion shifts to the specifics of the Code of Federal Regulations, particularly 31 CFR Part 210. Joe explains this legal framework governs the Treasury’s use of electronic funds transfer systems, which has profound implications for how payments are processed and reclaimed.

"We're talking about 31, Code of Federal Regulations (CFR) Part 210 [...] They take years to change."

The Financial Impact of Failing to Limit Liability

Timestamp: [00:10:30]

Joe discusses a case study where a financial institution faced a significant financial risk due to failure in limiting liability correctly. He elaborates on how the institution could have faced a massive financial loss if they hadn't navigated the legal steps effectively, highlighting the importance of adhering to procedural guidelines.

"The law states that the government can come back to you for six years of payments... Six years is 12 months times six years of payments."

The Importance of Internal Training on Reclamations

Timestamp: [00:09:20

Joe Casali talks about the necessity of training internal staff on handling reclamations effectively. He mentions that the training includes comprehensive lesson plans that cover legal, regulatory, and procedural aspects, ensuring that the staff is well-equipped to handle such complex scenarios.

"So you're going to walk away with a lesson plan on how to train internal staff on reclamations [...] the course goes through the law, then it goes through the Green Book, and then it goes through the ACH rules."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

 

 

 

Episode Summary

In this episode of Wrestling Payments, host Joe Casali welcomes Patty Presta, AAP, NCP, the Director of Education at NEACH. Patty shares her unique journey from aspiring to be a nurse to becoming a pivotal figure in the payments industry. Her transition highlights the unexpected paths that lead to rewarding careers in finance.

Patty and Joe discuss critical topics like elder abuse and human trafficking. They emphasize the importance of education and vigilance within financial institutions to prevent exploitation. Patty’s experiences from teaching to working on the front lines against financial crimes offer invaluable insights into the evolving challenges in payments.

The conversation also covers the evolution of payment systems, from direct deposits to modern AI and P2P technologies. Patty's return to NEACH marks a full circle, bringing her expertise back to where her journey in payments began. This episode sheds light on the ongoing fight against financial crime and the importance of continuous learning in the payments industry.

Download the Episode Transcript
 

Guest-at-a-Glance

💡 Name: Patty Presta, AAP, NCP
💡What they do: Director of Education
💡Company: NEACH
💡Noteworthy: Over 20 years in payments, passionate about elder and financial abuse education.
💡 Where to find them: LinkedIn 

 

Key Insights

The Unplanned Journey into Payments
Patty’s career path serves as a fascinating example of how life can take unexpected turns. Originally aspiring to be a nurse, Patty’s journey into the payments industry began with a temporary job that unexpectedly evolved into a significant role in education within NEACH. This story highlights the unpredictable nature of career paths and the importance of being open to new opportunities. Patty's transition from a secretary tasked with web development to becoming a pivotal figure in payments training underscores the role of adaptability and learning on the job in achieving professional success.

 

Addressing Elder Abuse and Human Trafficking in the Financial Sector
Patty brings to light the critical issues of elder abuse and human trafficking, underscoring the financial industry's role in combating these problems. With a deep-seated passion for protecting the vulnerable, she has dedicated a significant part of her career to educating financial institutions on recognizing and preventing financial exploitation. Patty’s work in creating awareness and training materials for detecting signs of abuse and trafficking within financial transactions reveals the power of education and vigilance in making a difference. This insight underscores the importance of the financial sector's proactive engagement in societal issues.

 

Evolution of Payment Systems and the Importance of Continuous Education
Patty illuminates the rapid evolution of payment systems, from direct deposits and electronic checks to cutting-edge technologies like AI and P2P payments. This evolution not only signifies technological progress but also highlights the increasing complexity and potential for fraud within the payments industry. Patty’s emphasis on the necessity for ongoing education in the face of these changes stresses the importance of staying informed and adaptable. Her return to NEACH with a wealth of knowledge and experience signifies a commitment to educating others about these advancements and their implications, demonstrating the critical role of continuous learning in navigating the payments landscape.

 

Episode Highlights

Reconnecting with the Payments Community

Timestamp: [00:02:00]

After returning to NEACH, Patty reflects on the warmth and recognition she received from the payments community, underscoring the deep connections and impact she's made over the years. This part of the conversation reveals the importance of community and relationships in the professional world, especially in specialized industries like payments. Patty's recounting of seeing messages and acknowledgments from old colleagues and students highlights the lasting bonds formed through her work and the personal fulfillment derived from these connections.

"I was actually still only at NEACH for like a week and I was trying to find my way around. I happened upon the internet, the website, and I saw this cute post [...]. So it was really exciting to come home after my sabbatical. "

 

Pioneering Payments Education

Timestamp: [00:08:00]

Patty discusses her role in evolving NEACH's educational programs, including the transition from in-person workshops to the pioneering use of webinars for training. This shift not only demonstrates Patty's adaptability but also NEACH's responsiveness to technological advances and changing learning preferences. Patty's initiative in adopting new teaching methods reflects a broader theme in the payments industry: the necessity for continuous innovation and education to keep pace with rapid technological changes.

"I mean we did all our classes and our workshops live. I drove all over New England. And we started webinars And I think and I remember the the platform we used. I don't even know if they're still around."

 

The Intersection of Technology and Financial Exploitation

Timestamp: [00:10:00 - 00:11:00]

Patty delves into her work on elder financial protection and combating human trafficking, highlighting how technology can both facilitate and combat financial crimes. Her efforts illustrate the critical need for education, awareness, and technological tools to protect vulnerable populations. By sharing examples from her experiences, Patty showcases the complexities of modern financial crimes and the multifaceted approach required to address them effectively.

“So, unfortunately, number one, we're going to see it [scams] rise because there's more elders. And number two, you've got so many sophisticated online scams that are going on, through the internet and robo calls and voice recognition, you know.”

 

Spotting and Stopping Human Trafficking

Timestamp: [00:25:00]

In a compelling account, Patty shares how vigilance and data analysis by a credit union uncovered a human trafficking operation. This story serves as a powerful reminder of the role financial institutions can play in identifying suspicious activities that may indicate broader criminal enterprises. Patty's recounting of this event underscores the importance of due diligence, the potential of transaction monitoring for safeguarding against exploitation, and the profound impact financial professionals can have beyond traditional banking roles.

"It's just that finance institutions need to know how they're moving funds through their institution."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary

In this episode of Wrestling Payments, host Joe Casali dives into the complexities of the modern banking sector, focusing on the dynamic between risk management and innovation. Joe, an expert in the field, shares insights on how banks are adapting to regulatory changes and the increasing importance of cybersecurity.

The conversation shifts towards the challenges and opportunities presented by digital payments and consumer protection. Joe emphasizes the need for banks to evolve while ensuring customer safety in an increasingly digital world.

The episode concludes with a look ahead, as Joe discusses the future of financial services. He highlights the balance between embracing technological advancements and maintaining robust security measures to protect both banks and their customers. This episode provides a comprehensive overview of the current state and future direction of banking and payments.
 

Guest-at-a-Glance

💡 Host: Joseph Casali

💡Company: NEACH

💡Where to find Joe: LinkedIn
 

Key Insights

The Risk of Complacency in Banking

Governor Michelle Bowman's speech highlighted the inherent risks of complacency within the banking sector, emphasizing the large regulatory burden faced by financial institutions. Bowman articulated the dual challenge banks encounter in balancing risk management and compliance efforts while striving for innovation and growth. This insight underlines the need for constant vigilance and adaptability in the face of evolving financial landscapes and regulatory expectations.

 

Innovating Consumer Protection in Digital Payments

The episode discusses a report from the Federal Reserve Bank of Atlanta on credit push fraud, underscoring the necessity for banks to update their approach to consumer protection. This includes adapting mitigation techniques to counteract authorized push payment fraud more effectively. It points to the importance of shifting strategies in consumer protection to keep pace with the changing nature of digital payments and the innovative tactics employed by fraudsters.

 

The Call for Regulation in Payment Apps

District Attorney Alvin Bragg's letter to payment apps like Venmo, Zelle, and Cash App, following a series of fraudulent scams, calls for immediate actions to enhance consumer protection. Bragg's recommendations, including multi-factor authentication and setting default lower limits on transactions, emphasize the urgent need for regulatory measures to address vulnerabilities in digital payment platforms. This insight reflects the ongoing challenges in balancing the convenience of instant payments with the security measures necessary to protect consumers from fraud.
 

Episode Highlights

Exploring Faster Payments and Associated Risks

Timestamp: [00:18:49]

In this part of the episode, Joe discusses the evolution of payment systems, particularly focusing on faster payments like FedNow and RTP (Real-Time Payments). He dives into the balance between the convenience of instant payments and the potential for increased fraud. The episode highlights the excitement around these new payment technologies, while also acknowledging the fears and uncertainties they bring, especially in terms of security and fraud prevention. Joe suggests that while these innovations promise efficiency and speed, they also necessitate rigorous security measures to protect against fraud.

"How do we balance the wonders of instant payments, which are great and they are instant, with security fraud? I think that multi-factor authentication is a table stakes. You have to start there."

 

The Role of Banks in Community Support

Timestamp: [00:06:50]

Joe reflects on the critical role banks play within their communities, beyond just being financial institutions. He emphasizes that banks are fundamental to the economic well-being and growth of the communities they serve. This segment underscores the importance of banks in supporting local development, providing essential services, and fostering a sense of community trust. Joe also touches on the need for banks to innovate and offer new financial products and services to meet the evolving needs of their communities.

"Banks are there for their communities. They're there as a resource as the go-to organization for their community [...] You're forgetting that the banks serve the community and they do that really well."

 

Regulatory Burdens and Financial Innovation

Timestamp: [00:02:28]

This segment discusses the speech by Governor Michelle Bowman on the regulatory challenges faced by financial institutions. Joe highlights the fine line these institutions must walk between adhering to regulatory requirements and pushing the envelope on innovation. The discussion points to the increasing complexity of the regulatory landscape and how it impacts the ability of banks to grow and innovate. Joe stresses the importance of regulatory bodies working to reduce these burdens to foster a more dynamic financial sector.

"The regulatory burden on financial institutions is large [...] it balances the position financial institutions are in by all the risk management, the risk appetite, the compliance they have to go through as well as trying to provide services and continue to grow, continue to innovate."

 

Cybersecurity and Consumer Protection in Digital Banking

Timestamp: [00:04:06]

Joe dives into the pressing issue of cybersecurity and its implications for consumer protection in the digital banking sector. He explores how banks and financial institutions are grappling with the increasing sophistication of cyber threats, particularly in the realm of digital payments. The episode underscores the need for robust security measures, such as multi-factor authentication and consumer education, to safeguard against unauthorized access and fraud.

"These credit push scams, called authorized push payment fraud, deserve a shift in our curriculum, mitigation techniques, and approach to push payment fraud [...] they deserve changes in our approach to consumer protection."

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

 

 

Episode Summary

In this episode of Wrestling Payments, host Joe Casali talks with Sean Carter, President & CEO at NEACH, about the significant changes in ACH rules. They dive into the recent ballots passed with over 93% approval, focusing on the new risk management framework. This framework aims to protect the payment network from fraud, a challenge all payment systems currently face. Carter emphasizes the collective effort required to combat fraud, highlighting that the changes affect not just one party but all involved in the ACH network.

The conversation then shifts to specific rule changes, particularly the ACH credit monitoring by RDFIs. This new concept asks receiving financial institutions to do more in spotting and preventing fraud, marking a departure from the traditional focus on originators and ODFIs. Examples of past fraud incidents are discussed to illustrate the potential impact of these rules in preventing future fraud. Carter points out the importance of collaboration between RDFIs, ODFIs, and originators to effectively use these rules.

Finally, Carter stresses the urgency of implementing these changes well before the 2026 deadline. He suggests that financial institutions should not wait to adapt, given the serious implications of fraud on society, including funding for trafficking, drugs, and terrorism. The discussion concludes with the importance of keeping information up to date in the NACHA registry and leveraging technology like AI to enhance fraud detection efforts.

Download the Episode Transcript

 

Guest-at-a-Glance

💡 Guest: Sean Carter

💡 What he does: President & CEO

💡Company: NEACH

 

Key Insights

A United Front Against ACH Fraud

Sean Carter emphasizes the importance of a collective effort in combating fraud within the ACH network. The new ACH rules, passed with overwhelming approval, reflect this approach by not singling out any one party but rather distributing the responsibility across RDFIs, ODFIs, originators, and third-party senders. This strategy acknowledges that fraud is a complex issue that no single entity can address alone. By mandating contributions from all sides, the aim is to fortify the entire payment system against fraudulent activities, demonstrating a shift towards a more inclusive and collaborative defense mechanism within the financial ecosystem.

 

Enhanced Role of RDFIs in Monitoring ACH Credits

The episode dives into one of the major changes in the ACH rules: the requirement for RDFIs to monitor ACH credits more closely. This significant shift tasks RDFIs with identifying and addressing potential fraud more proactively. Previously, the focus was predominantly on the originators and ODFIs. By extending this responsibility, the new rules aim to leverage the unique position of RDFIs to spot unusual activities, such as unexpected large deposits, that might indicate fraud. This change underscores a holistic approach to fraud prevention, recognizing that effective detection requires insights from all parties involved in the transaction process.

 

Immediate Action Required to Combat Fraud

Despite a 2026 deadline for implementing the new ACH rule changes, Sean Carter stresses the importance of starting now. He highlights the critical nature of fraud prevention, not just for the integrity of the payment system but also for societal concerns, as fraud often funds illegal activities. By encouraging financial institutions to adopt new measures promptly, Carter underscores the notion that waiting is not an option when it comes to safeguarding against fraud. This urgency is a call to action for all entities involved in ACH transactions to review and update their processes, utilize new technologies, and ensure compliance with the evolving landscape of financial security measures.

 

Episode Highlights

The Rising Challenge of ACH Fraud

Timestamp: [00:02:05]

Joe Casali and Sean Carter discuss the alarming rise in ACH fraud, highlighting its impact on the payment system's integrity. They focus on how fraud challenges, including person-to-person fraud and email impersonation, have necessitated the development of a new risk management framework by NACHA. This framework is designed to protect the ACH network and its users by implementing rules aimed at mitigating fraud risks. The conversation underscores the pressing need for these changes, given the sophistication and prevalence of fraudulent activities targeting the ACH system.

"Felt that these were important changes important enough to approve them becoming rules. Uh the impetus for this really uh is really to try to protect the network. Uh anybody that's paying attention can tell you that all payment systems including ACH are being really challenged right now with fraud."

 

Leveraging Technology to Combat Fraud

Timestamp: [00:20:53]

The podcast highlights the critical role of technology, especially AI, in enhancing ACH fraud prevention efforts. Sean touches on how the new risk management framework could benefit from advancements in technology, providing financial institutions with better tools to detect and prevent fraud. He emphasizes the importance of integrating technological solutions into the ACH network's defenses against fraud, suggesting that future enhancements in AI and machine learning could significantly improve the effectiveness of these measures.

"I don't think anybody needs to wait. I think you can start formulating your plan now, work with your cores, look for technology. What can AI do and look at spaces where AI could help with this. "

 

Early Adoption of New ACH Rules is Crucial

Timestamp: [00:13:56]

The dialogue emphasizes the importance of early adoption of the new ACH rules, well ahead of the 2026 deadline. Sean Carter argues that given the serious implications of fraud, it's imperative for financial institutions to start planning and implementing the necessary changes immediately. He illustrates how fraud not only affects the financial system but also has broader societal impacts, funding illegal activities such as trafficking and terrorism. The conversation calls for proactive measures, urging institutions to not delay their response to these critical updates.

"So part of it is that the RDFI will now do a little more due diligence and say why did this one account get five different names of five different unemployments from three different states?"

 

Striking a Balance: Regulation and Innovation in ACH Transactions

Timestamp: [00:16:52]

In this segment of the podcast, Joe and Sean discuss the balance between introducing new regulations to combat fraud and fostering innovation within the ACH payment system. They touch on how the ACH rules serve as minimum requirements, encouraging financial institutions to go beyond these standards to protect their customers. Sean Carter suggests that as technology evolves, so too will the strategies employed by fraudsters, making it crucial for regulations to adapt in tandem to ensure the ACH network remains secure and efficient for users.

"We put that in as a response to natural when they were doing the web rule. We thought it should be for every SEC code. Anyway I don't I don't think an SEC code drives fraud right? It's the actions of the originators and the receiver."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

Episode Summary

In this episode of Wrestling Payments, Joe Casali shares insights from the MIT Fintech Conference, focusing on the rapid evolution of fintech. He discusses how artificial intelligence and blockchain technology are driving change in the payments industry. Joe also highlights the importance of navigating regulatory landscapes to foster innovation while ensuring security and trust.

The conversation shifts to the impact of digital currencies and payment platforms on traditional banking systems. Joe emphasizes the need for financial institutions to adapt to these changes to remain competitive. He provides examples of how fintech startups are challenging established players by offering more efficient and user-friendly solutions.

Lastly, Joe offers advice for entrepreneurs entering the fintech space. He stresses the significance of understanding customer needs and regulatory requirements. The episode concludes with Casali predicting future trends in fintech, including further integration of AI and personalized financial services.

Download the Episode Transcript

 

Guest-at-a-Glance

💡 Host: Joseph Casali

💡Company: NEACH

💡Where to find Joe: LinkedIn

 

Key Insights

Navigating the Future: Fintech's Leap into AI

Joe Casali discusses the significant strides in artificial intelligence (AI) within the fintech sector, particularly emphasizing AI's potential as an underlying operating system for financial platforms. This concept heralds a transformative approach to handling financial transactions, where AI's integration could lead to more informed decision-making processes and a new era of financial services innovation. The conversation sheds light on the cautious yet optimistic embrace of AI in fintech, highlighting the balance between leveraging cutting-edge technology and ensuring reliable, garbage-free outputs.

 

The Real-time Payments Challenge: Finding a Use Case

A significant part of the discussion centers around the excitement and subsequent skepticism surrounding real-time payments (RTP). Despite the technological achievement of developing RTP systems like FedNow and RTP, Casali underscores a pivotal concern: the need for compelling use cases that justify the adoption and widespread use of these systems. This insight delves into the industry's quest to demonstrate how RTP can meaningfully change the financial landscape, reflecting a critical juncture where potential meets practical application.

 

Fintech's New Frontier: Making Regulatory Compliance a Core Competency

In the fintech industry, where innovation races ahead, regulatory compliance emerges as a key area of focus. Joe highlights how fintech companies are now prioritizing knowledge about banking regulations, transforming compliance into a valued skill rather than a cumbersome obligation. This shift reflects a broader understanding that navigating the complex regulatory environment is essential for sustainable growth and innovation in fintech. It marks a maturation of the fintech sector, acknowledging the importance of aligning cutting-edge financial solutions with regulatory standards.

 

Episode Highlights

AI as Fintech's Backbone: The Next Revolution

Timestamp: [00:14:07]

Joe Casali discusses the pivotal role of artificial intelligence (AI) in shaping the future of fintech. He emphasizes AI's potential to act as the foundational operating system for financial services, transforming decision-making processes and enhancing service delivery. Casali highlights the dual nature of excitement and caution in adopting AI, stressing the importance of informed models to avoid "garbage in, garbage out" scenarios.

"AI could become the underlying operating system on a platform... There is so much being done today with AI... cautious approaches are necessary to ensure quality outputs."

 

Real-time Payments: Searching for a Strong Use Case

Timestamp: [00:19:14]

The conversation dives into the development of real-time payments systems like FedNow and RTP. Despite technological advancements, Joe points out the industry's challenge in identifying compelling use cases that justify widespread adoption. This section underscores the gap between technological capability and practical utility in the payments sector.

"All the excitement around developing a real-time system has come down to... Show me how real-time payments make a difference."

 

Embracing Regulatory Compliance in Fintech

Timestamp: [00:05:12]

Regulatory compliance emerges as a critical theme, with Joe advocating for fintech companies to view compliance not as a burden but as a competitive advantage. He discusses how a deep understanding of regulatory frameworks is essential for fintech innovation and sustainability, marking a significant shift in how startups approach the financial landscape.

"FinTech regulations... the days of talking to a FinTech who has no idea about regulation around banking, those days are probably gone."

 

Teamwork and Mentorship: Keys to Fintech Success

Timestamp: [00:07:31]

Highlighting the significance of having a solid team and mentorship, Joe reflects on the conference's insights into entrepreneurship within fintech. He argues that a great idea or a great team is essential for success, with the potential to compensate for the other's weaknesses. Furthermore, Casali emphasizes the role of mentors and resources in navigating the complex fintech environment.

"You need one of two things to be an entrepreneur in the FinTech world. One is a great idea. One is a great team. You need either one of those to be successful."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary
 

In this episode of Wrestling Payments, host Joe Casali engages with the intricate world of payment systems. He dives into the evolving landscape, highlighting the shift towards faster and more secure transactions. Joe sheds light on the technological advancements driving change, from blockchain to AI, emphasizing their impact on both consumers and financial institutions.

Primarily, this episode reports on the responses to our listeners' responses of the areas of interest they would like to hear more about in 2024. It also includes a thank you for named respondents.

1. Faster Payments – Operational Considerations

2. Faster Payments – Strategic Considerations

3. AI and Fraud

4. Payments Modernization – Payment Choices

Joe concludes with insights into the future of payments, including the potential of FedNow and other real-time payment solutions. Casali's expert commentary provides listeners with a comprehensive understanding of the payment industry's current state and dynamic future, making this episode a must-listen for anyone interested in financial technology and innovation.

Download the Episode Transcript

Key Insights
 

The Rise of Faster Payments and Operational Considerations

 The episode dives into the rapidly evolving landscape of faster payments, highlighting operational considerations that businesses face. With faster payments, questions around functionality, error handling, and unexplored details come to the forefront. The push for speed in transactions offers benefits but also introduces complexities in implementation and management. This insight underscores the need for financial institutions to adapt to new technologies while ensuring reliability and security in their operations.

 

Strategic Implications of AI and Fraud in Payment Systems

 AI's integration into payment systems marks a significant shift towards combating fraud more effectively. Joe explores how AI tools enhance fraud protection by analyzing patterns and identifying anomalies in transaction data. This technological advancement is not just about preventing unauthorized transactions; it's also about streamlining processes and improving operational efficiency. The episode emphasizes AI's role in shaping future payment security strategies, illustrating its potential to mitigate risks in an increasingly digital financial landscape.

 

Payment Evolution: From Barter to FedNow

 Tracing the history of payment systems from barter to the introduction of FedNow, the episode provides a comprehensive overview of how payment methods have evolved. It highlights the persistence of older payment systems alongside the adoption of new technologies. The focus on FedNow's launch and its adoption by financial institutions showcases the industry's movement towards instant payment solutions. This insight reflects on the diverse payment mix available today and the strategic decisions businesses must make to accommodate consumer preferences and technological advancements.

Episode Summary

In this insightful episode of Wrestling Payments, host Joe Casali welcomes Caleb Avery, CEO of Tilled, to discuss the evolving world of payment processing. Caleb shares his journey from door-to-door sales to pioneering innovative payment solutions. He reflects on the complexities of the industry, highlighting the nuances of competing and partnering within the same space.

Caleb dives into the intricacies of payment facilitation, explaining how companies like Stripe and Square have revolutionized the field. He emphasizes the role of software-led payments in reshaping the industry, offering a glimpse into the future of payment processing. His insights reveal how technology and strategic partnerships are key in navigating this dynamic landscape.

The conversation also touches on the importance of adapting to industry changes and leveraging emerging opportunities. Caleb's expertise offers valuable lessons for aspiring entrepreneurs in the fintech space, illustrating the balance between innovation and practical business strategies.

Download Episode Transcript

Guest-at-a-Glance

💡 Guest: Caleb Avery

💡 What he does: Founder, CEO

💡Company: Tilled

💡Noteworthy: Caleb Avery: Started in payments at 19, door-to-door sales, evolved to angel investing and consulting.

💡Where to find Caleb: LinkedIn

Key Insights

The Evolution of the Payment Facilitator Model

Caleb Avery discusses the complexities and the evolution of the payment facilitator (PayFac) model. Traditionally, becoming a PayFac involved a lengthy, costly process, often taking years and significant investment. This challenge inspired Caleb to innovate and create 'PayFac as a Service,' streamlining this process for businesses.

 

Developing Product Management Skills

Caleb reflects on the importance of honing product management skills in the technology sector. He emphasizes the complexities in decision-making, from feature prioritization to system design. Relying on customer feedback, intuition, and experience, Caleb underscores the pivotal role these skills play in achieving product-market fit.

 

Adapting to the Competitive Payments Landscape

Caleb observes the increasing competitiveness in the payment space, particularly noting the shift among traditional financial players. He points out that banks and acquirers are now more attuned to the vertical software landscape, recognizing both threats and opportunities in the evolving payments ecosystem. This insight showcases the dynamic nature of the industry, where established entities must adapt to remain relevant amidst the rise of new, agile competitors in the software-led payments world​​.

Episode Highlights

Caleb's Early Career and Introduction to the Payments Industry

Timestamp: [00:01:13]

Caleb Avery shares his journey into the payments industry, starting at 19 with door-to-door sales, then progressing to angel investing and consulting in vertical software businesses. This experience allowed him to understand the payments landscape deeply, from direct merchant interaction to broader industry insights. His journey highlights the importance of grassroots experience in understanding and innovating in the payments sector.

"I started my career in the payment space at 19 years old going door-to-door selling payment processing services to small business owners... over time skilled up that first business and really between that first company until I started doing a lot of angel investing and consulting with vertical software businesses."​​

Role of ISOs in Payment Distribution

Timestamp: [00:15:59]

Caleb discusses the historical role of Independent Sales Organizations (ISOs) in distributing payment solutions to small business owners in the U.S. This segment sheds light on the traditional models of payment distribution and how they have shaped the current landscape.

"Historically, ISOs and agents have been the majority of the way that payments have been distributed at least here in the US."​​

Tilled's Business Partnerships and the 'Frenemy' Concept

Timestamp: [00:13:36]

In his role at Tilled, Caleb talks about the diverse types of partnerships they foster, including banks, acquirers, processors, ISVs, and payment consultants. He touches on the unique dynamics in the payment space, describing many relationships as 'frenemies'—a blend of competition and collaboration.

"At Tilled, we've got a variety of different types of folks that we partner with... there's a lot of what I consider like frenemies, where we're all kind of competing, but we're partnering, and we're working together."​​

The Payment Facilitator Model and Its Advantages

Timestamp: [00:06:36]

Caleb elaborates on the payment facilitator (PayFac) model, popularized by companies like Stripe and PayPal. He describes the extensive vetting process and the streamlined onboarding and complex fund flow capabilities this model offers. This part emphasizes the evolving nature of payment processing and the innovative approaches being adopted.

"The payfac model... is predicated on the idea that the payment facilitator is going through this very extensive vetting process with the banks, the acquirers, the card brands to get registers of what's considered a master merchant."​​

 

Episode Summary

In the Season 1 finale show of Wrestling Payments, Joe Casali delves into the dynamic world of financial technology and seeks audience input or crowdsourcing of the critical issues for 2024.

Joe discusses a list of important, interesting, and pressing issues with a request of the audience to suggest how the Association should direct resources and energy in 2024.

Download Episode Transcript
Cast Your Vote for Season 2 Podcast Topics

 

Key Insights

⚡Rise of Fast Payment Systems: FedNow's Impact
Joe Casali discusses the rapid growth and adoption of FedNow, emphasizing its role in expanding payment options. With over 300 participants quickly joining, FedNow represents a significant move towards faster, more reliable transactions. The dialogue revolves around the operational and strategic implications of adopting such technologies. Casali questions how institutions should adapt their policies, risk management, and compliance in response to these faster payment systems, urging listeners to consider their impact on the broader financial landscape.

 

⚡Navigating Payment Innovations Amidst Risks
The episode highlights the double-edged sword of technological innovation in the payment sector. Casali points to a recent ransomware attack affecting several credit unions as a case study for understanding the intertwined relationship between emerging technologies and their inherent risks. He calls for a robust understanding and preparation for these risks, emphasizing the need for proactive risk assessment and management strategies. The discussion extends to the broader implications for regulatory compliance and operational resilience in the face of these emerging threats.

 

⚡Regulatory Landscape: A Moving Target
Addressing the ever-evolving nature of regulations, Casali speaks on the necessity of staying informed and adaptable. With regulatory frameworks constantly shifting, organizations must be vigilant and proactive in understanding and preparing for these changes. The conversation delves into how regulations impact various aspects of payment strategies and risk management. Casali encourages listeners to stay engaged with regulatory developments to effectively navigate the complexities and ensure compliance in a dynamic environment.

 

Episode Highlights

The Crowdsourcing Initiative in Financial Services

Timestamp: [00:01:00]
Joe Casali introduces the concept of crowdsourcing for the podcast's content in 2024. He invites listeners to participate actively by voting on topics they want the podcast to cover. This participatory approach aims to shape the future episodes based on real interests and pressing questions in the financial services sector.

"So I'm going to ask for your help. Now, if you were listening earlier, I used the word crowdsource. What we're going to do is go through a few topics, discuss the pros and cons of that particular topic. And direct you to vote on the inclusion or exclusion of our focus for 2024."

The Evolution of Faster Payments and User Choices

Timestamp: [00:06:00]
Casali delves into the evolution of payment systems, particularly focusing on faster payment options like FedNow and RTP. He discusses the exponential increase in payment choices and the complexities that these new options present. The conversation underscores the importance of understanding these evolving systems to make informed decisions.

"It literally is a new choice. In my mind, it adds to the available options and I'm not sure — someone who knows math could say — but by expanding the denominator of possible choices it's added X many possible choices to all the choices."

The Rise of AI in Financial Services

Timestamp: [00:05:00]
In this segment, Joe Casali addresses the rapid adoption and implications of Artificial Intelligence (AI) in the financial services sector. He explores its applications in areas like fraud prevention and the need for industry players to understand and leverage AI's capabilities effectively.

"Just this year we've seen almost like — and I'm not a professional at this survey stuff — but the world has embraced AI for everything, and you know it comes with its own pitfalls, comes with its own advantages. But our point is, should we look at AI and is it either in its tipping point or right about around it."

Navigating the Regulatory Landscape

Timestamp: [00:10:00]
Casali discusses the shifting regulatory landscape, emphasizing the constant movement and updates in regulatory frameworks. He talks about the importance of staying informed and prepared for regulatory changes, particularly focusing on the risks and management strategies related to third-party relationships.

"What can we say about regulation? Risk management and technology is certainly something to follow. What are the regulators looking at, right? Because we know that changes from time to time, searching for what are they examining? And again, that changes from time to time."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

 

Episode Summary

In this insightful episode of Wrestling Payments, Joe Casali dives deep into the complexities and challenges of payment operations. He emphasizes the critical role of problem-solving in the industry, highlighting how essential it is for professionals to understand the rules and mechanisms of different payment systems. Joe narrates a real-life story, maintaining anonymity, to illustrate the intricate process of payments, particularly focusing on the Real-Time Payments (RTP) system.

Joe begins by explaining the fundamental flow of an RTP transaction, involving the sender, sending bank, network, receiving bank, and receiver. He details the rapid and efficient process, emphasizing the speed and precision of these transactions. The episode takes an interesting turn as Joe introduces a third-party service provider in a transaction scenario, exploring how their involvement can complicate the payment process.

The heart of the episode lies in a case study where a transaction goes awry due to a mismatch between the receiving bank's system and the RTP network. Joe explains how a seemingly straightforward RTP transaction gets complicated by additional checks and balances introduced by the receiving bank. This leads to an insightful discussion on the importance of understanding payment network rules and the pitfalls of automated systems in handling exceptions.

Download Episode Transcript

 

Guest-at-a-Glance

💡 Host: Joe Casali

 

Key Insights

⚡The Importance of Problem-Solving in Payment Operations

In the rapidly evolving world of payments, problem-solving emerges as a crucial skill. Joe Casali discusses the changing landscape of payment operations, emphasizing the need for professionals who can navigate complex scenarios. He points out that understanding the rules and mechanics of payment systems, such as Real-Time Payments (RTP), is vital. This insight highlights how problem-solving goes beyond technical knowledge, requiring an adaptable mindset to address unforeseen challenges in payment transactions.

 

⚡Navigating Complexities in Real-Time Payments (RTP)

The episode dives into the intricacies of the RTP system, illustrating its operational flow involving senders, banks, and receivers. Joe Casali explicates the speed and efficiency of RTP transactions, but also sheds light on potential complications. A key insight is the complexity introduced by third-party service providers in the payment process. This discussion underscores the necessity for thorough understanding and coordination among all parties involved in RTP transactions, highlighting how a single mismatch can lead to significant operational challenges.

 

⚡Handling Exceptions and Automated Systems in Payment Networks

A compelling segment of the podcast revolves around a case study where an RTP transaction is disrupted by additional security measures. The episode reveals how automated systems, while efficient, can falter in handling exceptions, especially when they don't align with the payment network's protocols. This insight stresses the importance of balancing automation with human oversight. It serves as a cautionary tale about the pitfalls of over-relying on technology in payment systems, advocating for a more nuanced approach that considers the unique aspects of each transaction.

 

Episode Highlights

The Role of Operations in Payments

Timestamp: [00:01:04]

In the opening segment, Joe Casali discusses the evolving role of operations in the payments industry. He emphasizes that the key attribute sought in professionals in this field is the ability to solve problems. Joe explains that this skill is critical for those working in operations at financial institutions and third-party service providers. The industry's focus is shifting towards hiring individuals who can navigate and resolve complex issues in the payments landscape.

"One of the skills, we've done a lot of research around the new role of operations, how operations are changing, and what are the characteristics of the workers, the employees we're looking to find to work in payments."
 

Understanding Payment Flows in RTP

Timestamp: [00:04:58]

Joe takes time to explain the flow of a transaction in the Real-Time Payments (RTP) network. He outlines the roles of the sender, sending bank, the RTP network, the receiving bank, and the receiver, illustrating how a transaction moves from initiation to completion. Casali emphasizes the importance of each participant understanding their role and the flow to ensure efficient transactions.

"Sender, Sending Bank, Network, Receiving Bank, Receiver. It flows straight through. It's a message. [...] A lot of things are going on. And what the first thing going on is, is when the Sending Bank goes to send the transaction, they're making sure that there's money in the sender's account. Right? They don't want to send out a payment that doesn't have any money behind it."
 

Challenges with Third-Party Providers in Payment Transactions

Timestamp: [00:07:29]

This part of the discussion focuses on the complexities introduced when third-party service providers are involved in payment transactions. Joe shares an instance where a third party’s involvement led to complications in an RTP transaction. He points out that while third-party services can facilitate certain aspects of payments, they can also introduce unexpected challenges, especially when their systems do not align seamlessly with established payment networks.

"So in the case of this receiver, they're, I don't know if I want to say they're smaller, but they've chosen to use a third party to really run these processes."
 

Handling Exceptions in Automated Payment Systems

Timestamp: [00:14:21]

Towards the end of the episode, Joe discusses the criticality of handling exceptions in automated payment systems. He presents a scenario where an automated response to an exceptional situation led to a complex problem, underscoring the need for well-thought-out systems and processes. This part highlights the risks associated with automation in payment systems, particularly when unexpected situations arise that the system is not configured to handle effectively.

"They certainly solved it the wrong way because, and we haven't talked to this and we're not going to talk to this, but they originated an entry out of thin air. There was no authorization."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary

In the latest episode of Wrestling Payments, host Joe Casali and guests Dennis Walker and Stephen Dillon engage in a candid conversation about the complex world of third-party sender relationships in the realm of banking and ACH payments. Drawing from their extensive experience in the industry, Dennis and Stephen share valuable insights and practical wisdom that can help financial institutions navigate this intricate landscape effectively.

The discussion kicks off with an exploration of the key factors that define third-party sender relationships. Dennis and Stephen highlight that understanding and educating the entire workforce within a financial institution is paramount. They stress the importance of being proactive in risk management, recognizing red flags, and implementing preventive measures to maintain the integrity of ACH transactions.

Throughout the conversation, they emphasize the significance of regular annual reviews and check-ins with customers, especially the larger ones. These reviews serve as a crucial opportunity to assess any material changes in a customer's business, their sophistication level, and their evolving risk profile. By staying engaged and informed, financial institutions can adapt their risk management strategies to meet the evolving needs of their customers effectively.

Download Episode Transcript

Guest-at-a-Glance

💡 Name: Stephen Dillon, APRP, AAP, CTP and Dennis Walker, CIA, CISA, CRCM, CFSA, CRMA

💡 What they do: Stephen: Vice President

💡 Company: Stephen: Eastern Bank

💡 Noteworthy: Stephen Dillon boasts a career in banking and treasury services, with a keen understanding of the intricacies of ACH payments and risk management. / Dennis Walker possesses a diverse background in banking and financial services, bringing extensive experience and knowledge to the discussion on third-party sender relationships.
 

Key Insights

⚡Proactive Approaches to Spotting Third-Party Senders in Banking

Dennis and Stephen discuss strategies for identifying third-party senders in the banking industry. They highlight the importance of keyword analysis, company name checks, and reviewing client portfolios to spot potential third-party senders. Additionally, they stress the need to leverage annual reviews and customer engagement to stay vigilant in risk management.

 

⚡Balancing Risk Mitigation and Customer Engagement with Third-Party Senders

Dennis, Stephen, and Joe underscore the significance of robust risk management practices and consistent customer engagement in dealing with third-party senders. They emphasize conducting risk assessments, due diligence, and maintaining open communication with clients. These practices help banks and financial institutions safeguard their interests and build trust with customers.

 

⚡Deciphering the Gray Areas: Classifying Third-Party Senders in Banking

Stephen and Joe explore the complexity of classifying entities as third-party senders in the banking sector. They dive into scenarios where the distinction may not be straightforward, particularly in cases involving common ownership or management. The discussion highlights the need for institutions to make informed decisions and apply due diligence when determining third-party sender status.
 

Episode Highlights

Determining Third-Party Senders in the Banking Industry

Timestamp: [00:20:20]

In this part of the podcast discussion, Dennis and Stephen highlight the challenges and strategies involved in identifying third-party senders in the banking industry. They stress the importance of conducting thorough due diligence, asking key questions about a customer's business, and looking for red flags that may indicate third-party sender activity.

"So they've got ACH with you. They fall into one of those categories. And maybe go visit their website. See if their website offers payment services to their clients. Maybe look at the online banking setup at your financial institution and see if their ACH service is set up with a variety of company names or company IDs being used under it. These can be indicators." - Stephen
 

Mitigating Risks and Ensuring Compliance in Banking

Timestamp: [00:25:11]

Dennis and Stephen discuss the critical importance of managing risks and ensuring compliance when dealing with third-party senders. They emphasize the need for ongoing reviews, client questionnaires, and strong risk management practices. The conversation underscores that it's essential for banks to work closely with clients and educate them about regulatory requirements.

"If the customers aren't willing to work with you, those are the red flags. If you've corrected them and say, you can't do this, you can't originate this [...] Those are some of the red flags that you can kind of say, 'Hey, there's something different here.'" - Dennis
 

Real-Life Scenarios: Third-Party Sender or Not?

Timestamp: [00:33:49]

Stephen and Dennis dive into real-life scenarios that challenge the distinction between third-party senders and originators. They discuss scenarios involving property management companies and subsidiaries of conglomerates. While these situations may seem complex, they clarify that common ownership and management can determine whether an entity is a third-party sender or not.

"I would say this, they are a third-party sender. The condo owner paying their monthly condo fee to the condo association, and the management company is the third party." - Stephen
 

The Value of Collaboration and Resources in Banking

Timestamp: [00:37:17]

In this section, the conversation shifts to the importance of collaboration and resources within the banking industry. Dennis Walker and Stephen Dillon highlight the role of industry organizations like NEACH in providing valuable networking opportunities and resources to professionals navigating complex regulatory landscapes.

"Not to just give you a plug, but really, NEACH as a resource, such a valuable resource. [...] It's, as Dennis says, it's the frontline people, the people who are the operations side, the upfront side, and talking things through, it's hugely helpful." - Stephen

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary

In this episode of Wrestling Payments, Joe Casali delves into the evolving landscape of real-time payments. He highlights the recent developments at The Clearing House, emphasizing the organization's efforts to enhance transaction speeds. Casali also discusses the integration of new hires in the payment industry, underscoring their role in bringing fresh perspectives and innovative approaches to traditional financial systems.

The conversation shifts to regulatory changes, focusing on the Consumer Financial Protection Bureau's (CFPB) new rules for digital wallets. Casali explains the implications of these regulations for consumers and businesses, outlining the balance between security and convenience. He also discusses Zelle's recent challenges with fraud, detailing their strategies to increase reimbursements and implement additional safeguards.

Lastly, the episode features insights on Keith Melton's contribution to the RTP network. Casali explores Melton's strategies for future growth and the potential impact of these plans on the payments industry. He also touches on CFPB's proposals concerning technology companies in the financial sector, highlighting the need for a nuanced understanding of these new regulations.

Download Episode Transcript

 

Key Insights

 

⚡Innovation in Real-Time Payments at The Clearing House

The episode highlights significant innovations at The Clearing House, particularly in the realm of real-time payments. Casali discusses how these advancements are reshaping the landscape of financial transactions, with a focus on increasing speed and efficiency. He also delves into the role of new hires in the industry, emphasizing their contribution to fostering innovative approaches in traditional banking systems.

 

⚡Impact of CFPB's New Rules on Digital Wallets

A major point of discussion revolves around the Consumer Financial Protection Bureau's (CFPB) new regulations for digital wallets. Casali explains the potential effects these rules have on both consumers and businesses, balancing the need for security with the convenience of digital transactions. He also addresses the broader implications of these regulations on the financial industry.

 

⚡Zelle's Strategies Against Rising Fraud

The episode sheds light on Zelle's recent measures to combat increasing incidents of fraud. Casali examines Zelle's response, which includes enhanced reimbursement policies and the implementation of new safety features. He provides a detailed analysis of these strategies, considering their effectiveness and the ongoing challenges in ensuring secure digital transactions.

 

Episode Highlights

Keith Melton's Joining the Clearing House

Timestamp: [00:02:00 - 00:04:00]

Joe Casali discusses Keith Melton joining the Clearing House as Senior Vice President and RTP Strategic Program Management. He highlights Melton's background at the Federal Reserve and IBM, focusing on his innovative approach. Casali speculates on the potential impact of Melton's hiring on the RTP network and the Clearing House's future.

"Keith comes from the Federal Reserve System; prior to that, he comes from IBM. And he's all about innovation."

 

New CFPB Regulation for Digital Wallets

Timestamp: [00:05:00 - 00:08:00]

The conversation turns to the Consumer Financial Protection Bureau's (CFPB) new regulation aimed at large non-bank technology providers, particularly digital wallet and P2P payment apps. Casali discusses how this regulation, affecting companies with over 5 million transactions, aims to level the playing field between tech companies and financial institutions.

"This rulemaking proposal is to put a little more requirements and put large technology P2P digital wallet companies under regulation with the CFPB."

 

Zelle's Response to Increased Fraud

Timestamp: [00:11:00 - 00:14:00]

Casali addresses the rise in fraudulent activities on Zelle. He notes how scammers exploited the system, leading to significant financial losses for users. Casali then covers Zelle's response, including starting reimbursements for fraud victims from November 13 and introducing additional fraud controls.

"Zelle, feeling the pressure, began reimbursing customers for many of those fraudulent transactions. Some of them have already been worked out."

 

Improvements in Zelle’s Fraud Control Measures

Timestamp: [00:14:00 - 00:16:00]

Continuing on the topic of Zelle, Casali delves into the network's steps to improve its service in response to fraud. He describes the introduction of additional verification steps and the sophisticated technology employed by Early Warning, the company behind Zelle, to enhance transaction security.

"Zelle has also Early Warning, has also taken steps to improve the product. If you're a Zelle user, you may have seen there's new additional screens: 'Are you sure?’ ‘Do you know this person?'"

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali sits down with Mark Dixon, the Vice President of Education at NEACH. Mark dives into his journey in the banking and payment sector, highlighting his passion for the industry and the intersections of technology, disruption, and the future of banking. He emphasizes the importance of payments in various business sectors and the excitement of navigating the ever-evolving landscape.

Mark introduces "NEACH U," a reimagined educational platform designed to cater to various professionals in the payment space. From operational roles to treasury management, compliance, and risk management, NEACH U aims to provide individualized learning paths for all. The platform's goal is twofold: to benefit organizations by enhancing their employees' knowledge and to foster professional development for individuals.

Set to launch in 2024, NEACH U promises to be a transformative tool for payment professionals, guiding them towards the next steps in their careers and offering valuable insights into the world of payments.

Download Episode Transcript

Guest-at-a-Glance

💡 Guest: Mark DIxon

💡What he does: VP of Education

💡Company: NEACH

💡Noteworthy: Mark Dixon: Vice President of Education at NEACH, passionate about payment evolution.

💡Where to find Mark: LinkedIn

 

Key Insights

⚡Mark Dixon's Passionate Journey in Payments

Mark Dixon's professional trajectory in the banking and payment sector is both intriguing and inspiring. Starting his career in banking, he didn't initially envision a future in the sector. However, as he dived deeper, especially into electronic banking, he discovered a fervent passion for payments. Mark's enthusiasm is not just about the technicalities of payments but also about understanding their intersection with various business sectors and the role of technology.

 

⚡Headline: Introduction of NEACH U: A Game-Changer in Payment Education

NEACH U is Mark's ambitious project, aiming to revolutionize payment education. This platform is not just another educational tool; it's designed to offer individualized learning paths for professionals in the payment space. Whether one is in operational roles, treasury management, compliance, or risk management, NEACH U promises a tailored learning experience.

 

⚡NEACH U's Vision: Individual Growth and Organizational Excellence

Mark emphasizes that NEACH U is more than just a learning platform; it's a roadmap for professional growth. Recognizing the diverse paths in the payment space, from operational to strategic roles, NEACH U is designed to guide professionals based on their unique needs and aspirations. The platform will not only serve as a knowledge hub but also as a catalyst for career advancement.

 

Episode Highlights

The Genesis of Mark's Interest in Payments

Timestamp: [00:02:58]

Mark Dixon dives into the origins of his interest in the payment sector. He traces back to his time in electronic banking, where he found a genuine passion for payments. This passion was further ignited when he attended various NICHA events and sessions, which played a pivotal role in shaping his perspective on the payment side of things.

"I had gotten that into payments back in 2015, and I actually attended all of NICHA's stuff. I did all the AAP boot camps, the on demand sessions. That's what ignited my passion for the payment side of things."

 

Mark's Role at NEACH and His Vision for Education

Timestamp: [00:01:58]

Mark discusses his role at NEACH, emphasizing his responsibilities in the educational department. He talks about developing educational programs, delivering sessions on various topics, and finding innovative ways to present content to cater to different learning styles.

"I work in our educational department and offerings. So what that involves is developing educational programs, delivering different sessions and different topics to our members and to different audiences that we serve."

 

The Intersection of Banking, Payments, and Technology

Timestamp: [00:05:34]

Mark highlights the crucial role of payments in the business sector and how it intersects with technology. He emphasizes the importance of understanding the future of the industry, banking, and payments, and how technology plays a pivotal role in shaping this future.

"And the more I've gotten into payments, I start to see the intersection between different business areas and different business sects. And there's so much that money movement is so crucial, and yet we kind of integrate it into all these different areas and really don't focus on it. On top of that, you have all the technology considerations well. So my intersection I would say is technology disruption, what's going on in the future of the industry and banking and payments."

 

NEACH U's Comprehensive Approach to Learning

Timestamp: [00:07:50]

Mark introduces the concept of NEACH U, describing it as a reimagined educational platform. He explains the various components of NEACH U, emphasizing its design to cater to individual learning paths, from operational roles to treasury management and beyond.

"So, NEACH U is designed to help you get there. What we're hoping to do is have a path for our traditional operational audience. The folks that are - I'm working in operational roles, I want to learn more about payments. I want to understand what I need do in order to get my job accomplished, but I want to be a resource for my organization."
 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode, Joe Casali sits down with Sean Carter, the top man at NEACH and NEACH Payments Group. They dive deep into the world of risk management in payments. Sean emphasizes the power of interpersonal skills and the value of curiosity in the industry.

The talk shifts to the intricate dance between Enterprise Risk Management (ERM) and Strategic Risk Management (SRM). Both play pivotal roles in shaping the future of payments. Sean shares insights on how these concepts intertwine and their impact on the broader payment landscape.

Tune in to grasp the nuances of risk management from an industry leader. It's a conversation packed with expertise and actionable insights.

Download Episode Transcript

Guest-at-a-Glance

💡 Name: Sean Carter

💡 What he does: President & CEO

💡 Company: NEACH

💡 Noteworthy: Sean Carter: Newly minted Accredited Payments Risk Professional (APRP).

💡 Where to find Sean: LinkedIn

 

Key Insights

⚡The Power of Imagination in Risk Management

Sean Carter emphasizes the importance of operations personnel in risk management. These individuals possess a wealth of institutional knowledge, allowing them to predict potential issues based on past experiences. Sean suggests that a combination of strong communication skills and the ability to envision various scenarios (imagination) can be invaluable. This imaginative foresight helps in anticipating challenges, especially those not immediately obvious.

 

⚡The Role of Interpersonal Skills in Operations

Sean highlights the significance of interpersonal skills in preventing blindsides in operations. Building good relationships across departments and consistently asking questions can prevent unexpected challenges. Being inquisitive and maintaining open channels of communication can preemptively address potential issues. Moreover, making others feel important can lead to more open sharing of information.

 

⚡Understanding Risk Appetite vs. Risk Tolerance

The distinction between an organization's risk appetite and risk tolerance is crucial. While risk appetite is the overall level of risk an organization is willing to accept, risk tolerance pertains to the degree of risk they're willing to take for a specific goal. Effective communication is essential to ensure everyone understands these concepts, aligning individual actions with the organization's broader risk strategy.

 

Episode Highlights

Introduction to the Podcast and Risk Management

Timestamp: [00:01:09]

Joe Casali introduces the podcast and the guest, Sean Carter. They set the stage for the episode's theme, which revolves around risk management in payments. Joe mentions his recent exposure to new risk management concepts, prompting Sean to share his insights.

"I do think it's gonna be an interesting conversation, and that's what it is. It is a conversation with teeing it up. We're hoping that the conversation will continue, whether it's in Members Corner, LinkedIn, or in some comments on the podcast themselves. We really want to hear what your thoughts are around this, and it is about risk management and payments."

 

The Challenge of Unforeseen Risks

Timestamp: [00:08:47]

Sean Carter dives into the challenges that arise when unforeseen risks emerge. He discusses a situation where an employee didn't follow the procedure, leading to a breakdown. The risk was known, but how it manifested was unexpected. This highlights the importance of understanding both known and unknown risks.

"And so what they didn't know was that an employee was gonna do that. It really wasn't taken into account, probably that this is something that could have happened. The risk itself was known, but how it was gonna represent itself was the unknown."

 

The Importance of Communication in Risk Management

Timestamp: [00:12:47]

Sean emphasizes the significance of effective communication in risk management. He talks about the dangers of information silos and the need for open conversations. Ensuring everyone is aligned with the organization's risk appetite and risk tolerance is crucial.

"So that's the same in kids and adults. Everybody goes with their own, 'Hey, here's my career path. Here's what I want to become at a financial institution. How does that fit into the overall success of the organization?"'

 

The Role of Interpersonal Skills in Operations

Timestamp: [00:23:39]

Sean highlights the value of interpersonal skills in operations. Building relationships across departments and being inquisitive can prevent blindsides. Making others feel important can lead to more open sharing of information, which is crucial for effective operations.

"I think that's just somebody that would have good relationships across the bank is probably not gonna get blindsided. The other thing could be just somebody that's always asking questions, 'Hey, what's going on with the IT people?"

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode, Joe Casali from NEACH dives deep into the world of ISO 20022, the international standard for payments messaging. While ISO 20022 might be a fresh face in the US, its significance can't be understated. Drawing a unique parallel, Joe likens the fervor for ISO 20022 to that of a "mark" in wrestling - someone deeply passionate and invested in the industry's narratives. As the conversation unfolds, it's clear: Joe is all in on ISO 20022, seeing its potential to reshape the payments landscape.

Download Episode Transcript

Guest-at-a-Glance

💡 Name: Joe Casali

💡 What he does: Host

💡Company: NEACH / Website

Key Insights

⚡ The Rise of ISO 20022 in Payment Systems

ISO 20022, an international standard for payments messaging, is gaining traction globally. While it's not entirely new, it's becoming more prominent in the US. Various organizations, from SWIFT to the Federal Reserve, are adopting ISO 20022 for their messaging systems. The Clearinghouse's RTP and the Federal Reserve's Fed Now both utilize versions of ISO 20022, showcasing its versatility and widespread acceptance.

 

⚡ The Debate Over "Rich Data"

There's a buzz around ISO 20022's ability to include "rich data" in its messages. However, Joe Casali challenges this notion. While ISO 20022 can carry additional data, the depth and richness of this data are up for debate. For instance, while it can include a URL or a 140-character message, questions arise about the security and practicality of such features.

 

⚡ ISO 20022 vs. EDI: A New Era of Messaging

Comparing ISO 20022 to Electronic Data Interchange (EDI), Joe highlights the evolution of computer-to-computer communication in payments. While EDI had its challenges, ISO 20022 offers a more streamlined approach. Companies can send payment messages directly to financial institutions, ensuring smoother transactions and reducing the need for manual interventions.

 

Episode Highlights

​​The Concept of a "Mark" in Wrestling and Payments

Timestamp: [00:01:34]

Joe Casali introduces the term "mark" from the world of professional wrestling. A "mark" is someone who is deeply passionate about wrestling and its narratives. Joe cleverly likens this term to those who are enthusiastic about ISO 20022, suggesting that he himself is a "mark" for this payment messaging system.

"Professional wrestling or at a carnival. This came out of a carnival back in the day because they would literally put a chalk mark on the customer's back to say he's the mark, he's our target. [...] I am a mark, I'm a mark for ISO 20022."

 

The Evolution of EDI and ISO 20022

Timestamp: [00:07:33]

Joe discusses the history and evolution of Electronic Data Interchange (EDI) and contrasts it with ISO 20022. He emphasizes the ideal of computer-to-computer communication, where transactions are seamless and require no manual intervention.

"My accounts payable go into your accounts receivable. My company knows I paid you. Your company knows you got paid. No one has to press a button. No one has to touch anything. No one has to rekey anything that's the ideal straight through the world."

 

The Challenge of "Rich Data" in ISO 20022

Timestamp: [00:11:58]

Joe challenges the popular notion that ISO 20022 can seamlessly incorporate "rich data" into its messages. He raises concerns about the depth and utility of such data, especially when it comes to security and practicality.

"The claim you hear when they're talking about ISO 20022 is that it includes rich data. [...] Maybe I'm overthinking this or not thinking this enough, but the rich data I'm having trouble with."

 

The Global Adoption of ISO 20022

Timestamp: [00:07:56]

Joe highlights the increasing global adoption of ISO 20022 in various payment systems. From SWIFT to the Federal Reserve, many organizations are embracing this international standard, indicating its growing importance in the payments landscape.

"RTP back in 2017, RTP said, we're gonna come up with an instant payment network, and we're gonna use as our messaging system a version of ISO 2 0 0 22. [...] SWIFT is a messaging system that says we need to pay someone in a foreign country. We have the network to communicate that message. There's no settlement involved, but they're now using ISO 20022 as their messaging system; they adopted it."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali sits down with Kevin Olsen, the Payments Professor. Kevin shares his unexpected journey into the payments field, sparked by a job loss during the dot-com bubble. His path led him to become a leader in the industry, teaching others about the intricacies of electronic payments.

The conversation shifts to the creation of Kevin's podcast, the Payments Podium. Kevin reveals how a casual comment from a colleague led him to start recording his discussions about the payments industry. He shares his approach to finding guests, focusing on individuals with years of experience and knowledge to share.

The episode wraps up with a discussion about the future of payments, particularly the importance of instant payment capabilities. Kevin emphasizes the need for the U.S. to compete globally in this area. This episode is a must-listen for anyone interested in the evolution of the payments industry and the power of lifelong learning.

Download Episode Transcript

Guest-at-a-Glance

💡 Name: Kevin Olsen

💡 What he does: The Payments Professor

💡 Company: Payments Professor

💡 Noteworthy: Kevin Olsen, a tech graduate turned teacher, found his way into the payments industry by accident during the dot-com bubble burst.

💡Where to find Kevin: LinkedIn / Podcast

 

Key Insights

⚡ The Birth of Payments Podium

Kevin Olsen shares the story behind his podcast, the Payments Podium. A casual comment from a colleague inspired him to record his discussions about the payments industry. He began by inviting people he knew to be guests and then expanded his network by asking each guest to recommend others. This approach has led to a wide variety of guests, each with their own unique experiences and insights to share. The podcast has become a valuable resource for anyone interested in the payments industry.

 

⚡ The Importance of Fun and Joy in Learning

Kevin discusses the importance of making learning fun, especially when it comes to complex topics like electronic payments. He emphasizes the effectiveness of 'edutainment,' a blend of education and entertainment, in facilitating learning. He also highlights the importance of bite-sized, easily digestible content that busy professionals can revisit and relearn at their own pace.

 

⚡ The Future of Payments

The conversation concludes with a discussion about the future of payments. Kevin underscores the need for the U.S. to develop instant payment capabilities in order to compete globally. He believes that staying abreast of changes in the industry is crucial for success and that financial institutions must strive to be more than just 'afloat' – they should aim to lead.

 

Episode Highlights

The Role of Strategy in Operations

Timestamp: [00:10:27]

In a deep dive into the role of strategy in operations, Kevin Olsen and Joe Casali discuss the importance of strategic thinking at all levels of an organization. Kevin emphasizes that strategy isn't just for the boardroom; even senior operations staff can contribute to strategic planning.

"People learn best in one of two states. Fear and joy. The other thing is these people with busy schedules, juggling a lot of balls, make bite-size [decisions], make it easy for them to be able to ingest, make it something that they can over time revisit. But on the other side is that board. The other side is the executive management team."

 

The Power of Asking Questions

Timestamp: [00:16:27]

Kevin shares his approach to learning and growth in the industry, emphasizing the power of asking questions. He encourages listeners to follow industry leaders they admire and to not be afraid to ask questions.

"So learn how you learn. Follow the people in the industry who you want to be like. If you wanna be like them, you follow 'em. If you don't wanna be like them, don't follow 'em and ask the questions."

 

The Evolution of the Payments Podium

Timestamp: [00:20:15]

Kevin shares the evolution of his podcast, the Payments Podium. He talks about how he started by asking his friends to be guests and then expanded his network by asking each guest to recommend others.

"So the first thing I did was I started asking my friends. Hey, can you guys be on this podcast? Can we talk about this next thing?"

 

The Importance of Instant Payment Capability

Timestamp: [00:22:45]

In a discussion about the future of payments, Kevin emphasizes the need for the U.S. to develop instant payment capabilities to compete globally.

"No doubt in my mind we have to have instant payment capability in the U.S. If for no other reason, but to compete globally."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali, along with guests Sean Carter and Mark Dixon from NEACH, dive into the world of payment systems. They tackle the pressing issues of misinformation and conspiracy theories in the payment industry. Carter, NEACH's president, views these as outside interference, while Dixon, Vice President of Education, sees them as a pulse of public sentiment.

The trio also discusses the concept of banking as a service, the role of financial institutions in supporting FinTech, and the importance of understanding disclosures when dealing with apps like Venmo and Cash App. They debunk the rumor of the government switching all benefits to FedNow and forcing every institution to join the platform.

Lastly, they address the theory of FedNow being the government's new cryptocurrency set to eliminate cash. They clarify that FedNow transactions are in US dollars, not digital dollars and that laws would need to change before a digital dollar could be implemented. Tune in for a deep dive into these topics and more.

Download Episode Transcript

 

Guest-at-a-Glance

💡 Name: Sean Carter and Mark Dixon

💡 What they do: President & CEO / Vice President-Education

💡 Company: NEACH

💡 Noteworthy: Sean Carter, President and CEO of NEACH, is a seasoned leader in the payment industry. He's known for his keen insights on misinformation and its impact on the payment system. Mark Dixon, Vice President of Education at NEACH, is a thought leader in the payment space. He's recognized for his understanding of the evolving landscape of banking and financial services.

💡Where to find them: Sean: LinkedIn / Mark: LinkedIn

 

Key Insights

⚡ Misinformation as a Pulse of Public Sentiment
Misinformation in the payment industry is viewed differently by our guests. Sean sees it as outside interference, a tool used by some to confuse and scare the public for their gain. Mark, on the other hand, perceives it as a pulse of public sentiment, a reflection of what people are thinking and feeling about the payment space. This difference in perspective highlights the complexity of dealing with misinformation and the need for a nuanced approach.

 

⚡ The Role of Financial Institutions in Supporting FinTech
Mark discusses the concept of banking as a service. He highlights how proactive institutions are entering this space, backing FinTech partners and providing support. He emphasizes the importance of understanding disclosures when dealing with apps like Venmo and Cash App. This insight underscores the evolving landscape of banking and financial services and the need for consumers to be informed.

 

⚡ Debunking the Rumor of FedNow
The podcast addresses the rumor of the government switching all benefits to FedNow and forcing every institution to join the platform. The hosts clarify that FedNow transactions are in US dollars, not digital dollars and that laws would need to change before a digital dollar could be implemented. This insight dispels misconceptions about FedNow and emphasizes the importance of accurate information in the payment industry.

 

Episode Highlights

Introduction and Views on Misinformation

Timestamp: [00:00:48]

In the opening segment, host Joe Casali introduces the guests, Sean Carter, and Mark Dixon, and poses a question about their views on misinformation in the payment industry. Carter views it as outside interference, while Dixon sees it as a pulse of public sentiment. This sets the stage for the discussion that follows.

"Sean Carter, president and CEO of NEACH, and I see this as outside interference. I think people have things to gain by sharing misinformation, whether it's, you know, not another payment system over one over the other, but by getting people confused and scared. [...] Mark Dixon. I'm the Vice President, Education here at NEACH, and I would say it's probably somewhat like a booing in the crowd, but I think of it as a pulse as to how people are thinking and what they're feeling related to the payments space and what's happening."

 

Central Bank Digital Currencies

Timestamp: [00:07:05]

The guests delve into the topic of Central Bank Digital Currencies (CBDCs), discussing their potential uses and the challenges they pose, such as privacy concerns. They emphasize that CBDCs are still experimental and not yet in practice in the US.

"They worked on the mechanics. How would the program work? How could we process Central Bank Digital Currencies? The Federal Reserve Bank system itself is doing some research around how would the Central Bank digital currency help with the exchange." - Joe

 

FedNow and the Rumor of Government's New Cryptocurrency

Timestamp: [00:16:14]

The hosts debunk the rumor that FedNow is the government's new cryptocurrency set to eliminate cash. They clarify that FedNow transactions are in US dollars, not digital dollars and that laws would need to change before a digital dollar could be implemented.

"It is a bank to FedNow to bank service, just like a check, just like an ACH transaction. Okay, just like a wire transfer. These payments are happening today. It's no different." - Joe

 

Banking as a Service

Timestamp: [00:28:49]

Mark discusses the concept of banking as a service, highlighting its influence on the industry. He emphasizes the importance of understanding disclosures when dealing with apps like Venmo and Cash App.

"So you have proactive institutions that are entering that space, and they are backing like a FinTech partner. So I'm technically banking with FinTech. But I'm powered and supported by the financial institution."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali welcomes Nanci McKenzie and James Rowe from Affirmative Technology. They dive into the challenges of creating a risk rating for originators in the payments industry.

The conversation highlights the importance of risk management in financial institutions. Nanci and James discuss the need for automated solutions to handle the increasing volume of transactions. They emphasize that manual methods and spreadsheets are no longer sufficient. The discussion also touches on the role of regulators and the pressure they put on institutions to have robust risk management systems in place.

The episode concludes with a look at the broader economic landscape. James, an economist, shares his insights on the potential impact of rising interest rates and the debt ceiling issue on financial institutions. He also offers his perspective on the current state of the economy and its implications for banks. This episode is a must-listen for anyone interested in the intersection of risk management and the payments industry.

Download Episode Transcript

 

Guest-at-a-Glance

💡 Name: Nanci McKenzie and James Rowe

💡What they do: Executive Vice President of Compliance and Product Strategy and Chairman of the Affirmative Technology Board

💡Company: Affirmative Technologies

💡Noteworthy: An industry veteran, Nanci McKenzie is known for her expertise in risk management and compliance in the payments industry. / An economist by training, Rowe specializes in leveraging data analytics to solve key business problems in the financial sector.

💡 Where to find them: Nanci: LinkedIn｜James: LinkedIn

 

Key Insights

⚡Automated Risk Rating for Originators

Wrestling Payments delves into the need for automated risk rating for originators in the payments industry. Nanci and James discuss how their tool, Navigator, can provide accurate ratings for originators based on their transaction history. This system allows financial institutions to prioritize their focus on high-risk originators, enabling efficient risk management. The tool also allows for monitoring originators' risk transition, providing valuable insights into their business activities.

 

⚡Embracing Data Analytics

James, an economist by training, emphasizes the importance of embracing data analytics in financial institutions. He demystifies terms like AI, machine learning, and big data, explaining that these are simply automated statistical techniques that have been around for decades. James encourages financial institutions not to be intimidated by these terms but to leverage them to make effective decisions.

 

⚡Regulatory Pressure and Risk Management

The podcast also highlights the increasing regulatory pressure on financial institutions to have robust risk management systems. Nanci points out that regulators are asking institutions how they are risk grading their customers and are taking enforcement actions based on their findings. This underscores the importance of efficient risk management systems, such as the one provided by Affirmative Technologies.

 

Episode Highlights

The Importance of Risk Management

Timestamp: [00:12:02]

The conversation delves into the essence of risk management in financial institutions. Nanci explains the need to identify risks and implement controls to mitigate them. She emphasizes the importance of automation and business intelligence in managing risks effectively.

"Risk management is just the need to identify what those risks are and to determine, do I have the controls in place to mitigate those risks into a more acceptable level so that my financial institution can be more confident in knowing that we're gonna limit the amount of risks."

 

The Role of Data Analytics

Timestamp: [00:04:11]

James, an economist, discusses his background and the role of data analytics in solving key business problems. He shares his experience at Capital One, where data analytics was used to identify and solve business problems.

"I specialize in leveraging data and data analytics in a way that helps businesses solve important problems. [...] What Capital One did was apply data analytic techniques to help identify and solve key business problems."

 

The Impact of Economic Variables on Financial Institutions

Timestamp: [00:36:25]

James provides insights into the potential impact of economic variables such as interest rates and the debt ceiling issue on financial institutions. He explains how increases in interest rates could strain the balance sheets of banks.

"Continued increases in interest rates are really gonna put a lot of strain on balance sheets of banks because [...] when interest rates go up, that government debt becomes worth less."

 

The Role of the Board in Risk Management

Timestamp: [00:32:07]

The discussion turns to the role of the board in risk management. Nanci emphasizes that while the board can delegate risk management responsibilities to a committee, they are ultimately responsible for the risks of the institution.

"They are ultimately responsible for the risks of the institution overall. There is no getting around that. It is their responsibility, and they need to know what is going on under their noses."

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali engages in a rich conversation with Nanci McKenzie, Executive Vice President of Compliance and Product Strategy at Affirmative Technologies. Nanci shares her extensive experience in the payments industry, highlighting the importance of risk management in payment processing. She emphasizes the need for financial institutions to scrutinize their payment processors and FinTech partners as closely as they do their vendors, given the potential impact of security incidents.

The conversation then shifts to the evolving landscape of electronic payments. Nanci provides her insights on the future of the industry, particularly the rise of faster payments and app-based solutions. She also discusses the role of third-party payment processors in catering to the banking needs of the younger generation.

Finally, Nanci underscores the importance of consumer education in mitigating financial fraud. She advocates for a collective approach to risk management, where everyone from operations to customer service representatives plays a role in identifying and mitigating risks.

Download the Episode Transcript
 

Guest-at-a-Glance

💡 Name: Nanci McKenzie

💡What she does: Executive Vice President of Compliance and Product Strategy

💡Company: Affirmative Technologies

💡Noteworthy: Nanci holds an AAP, an APRP, and a Juris Master's degree in Financial Regulation and Compliance. She is currently pursuing a Master's in Legal Studies with a focus on financial regulatory compliance and cybersecurity and data privacy at Thomas R. Kline's College of Law, Drexel University. Nanci has a rich history in the payments industry, starting as a part-time teller and transitioning into FinTech. She is passionate about risk management and emphasizes the importance of consumer education in preventing financial fraud.

💡 Where to find Nanci: LinkedIn

 

Key Insights

⚡The Importance of Risk Management in Payment Processing

Nanci emphasizes the importance of risk management in payment processing. She explains the cycle of risk assessment, policies, procedures, audits, reviews, and monitoring. She likens it to a rinse-and-repeat process, similar to shampooing. This insight underscores the need for financial institutions to scrutinize their payment processors and FinTech partners as closely as they do their vendors, given the potential impact of security incidents.

 

⚡The Future of Electronic Payments

Nanci provides her insights on the future of the industry, particularly the rise of faster payments and app-based solutions. She discusses the evolution of electronic payments, the ACH developments in app-based solutions, and the introduction of real-time payments. This insight highlights the changing landscape of the payments industry and the need for financial institutions to adapt.

 

⚡The Role of Consumer Education in Mitigating Financial Fraud

Nanci underscores the importance of consumer education in mitigating financial fraud. She advocates for a collective approach to risk management, where everyone from operations to customer service representatives plays a role in identifying and mitigating risks. This insight emphasizes the need for continued consumer education and the role of various stakeholders in preventing financial fraud.

 

Episode Highlights

The Role of Financial Institutions in Risk Management

Timestamp: [00:21:48]

Nanci discusses the crucial role of financial institutions in risk management. She emphasizes the importance of due diligence when dealing with payment processors and FinTech partners, highlighting the potential impact of security incidents. Nanci also underscores the need for regular audits and risk assessments, not just within the financial institution but also among their third-party service providers.

"We need to make certain that our risk management and the due diligence behind that is going to be in depth to make certain that it is a person that you still want to do business with. And if you are going to be working with a payment processor, and they're not doing a SOC2 [...] Are they doing anything? Is there any risk management program at all?"

The Evolution of Electronic Payments

Timestamp: [00:25:12]

Joe and Nanci delve into the evolution of electronic payments. They discuss the developments in app-based solutions, the introduction of real-time payments, and the future of the industry. Nanci also shares her predictions for the next decade, hinting at the rise of faster payments.

"I see a path that we are definitely on, and we have been talking about faster payments for several years now. And as a matter of fact, as we're recording this, RTP has been out there for seven years; It's a long time. It took ACH a long time to take a grip of all of the industry and send it off soaring."

Nanci McKenzie's Journey in the Payments Industry

Timestamp: [00:01:36]

In the opening segment of the podcast, Nanci talks about her academic pursuits, highlighting her focus on financial regulation and compliance. In addition, Nanci shares her journey in the payments industry. Starting as a part-time teller, she has climbed the ranks to become the Executive Vice President of Compliance and Product Strategy at Affirmative Technologies.

"I've been doing this for just over 37 years, and I started as a drive-up, part-time teller at a commercial bank in Sioux City, Iowa. So then I went from commercial banking. I was a vault teller for a while where armored car carriers were my customers."

The Importance of Consumer Education

Timestamp: [00:32:03]

Towards the end of the podcast, Nanci emphasizes the importance of consumer education in preventing financial fraud. In addition, she advocates for a collective approach to risk management, where everyone from operations to customer service representatives plays a role in identifying and mitigating risks.

"Everybody needs to be involved in risk management. So operations, they see the risk. So do the call center people, and so do the tellers. So do the branch managers. So do the fraud and risk people and the compliance and audit people. We all see; IT sees it. We all need to be working together and talking, and we should be, at least annually, sitting around and discussing what are our new risks. Let's identify those, and how are we going to mitigate them?"

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali sits down with Peter Tapling from PTAP Advisory, LLC. They dive into the world of payments, discussing the importance of continuous learning in the face of constant innovation. Peter emphasizes the need to understand how new faster payment methods can be applied to existing work processes, encouraging listeners to disrupt their routines for the sake of progress.

The conversation then shifts to the concept of directories in payment systems. Peter explains how directories work in popular payment platforms like Zelle, PayPal, and Venmo. He also highlights the lack of a directory in instant payment schemes, sparking curiosity about the future of this feature in the payment industry.

Finally, the duo explores the realm of artificial intelligence (AI). Peter shares insights on the evolution of AI since the 1960s, highlighting the importance of computational resources and data in AI development. He encourages listeners to learn more about AI and its implications in the payments industry. This episode is a must-listen for anyone looking to stay ahead in the ever-evolving world of payments.

Download Episode Transcript
 

Guest-at-a-Glance

💡 Name: Peter Tapling

💡What he does: Managing Director

💡Company: PTAP Advisory, LLC

💡Noteworthy: Peter is a technology expert with over 20 years of experience in the payments industry. His deep understanding of the intersection of fraud, identity, risk, and payments, coupled with his interest in innovation, makes him a valuable resource in the rapidly evolving world of payments.

💡 Where to find Peter: LinkedIn
 

Key Insights

⚡Never Stop Learning: The Key to Navigating the Payments Industry

Peter emphasizes the importance of continuous learning in the face of constant innovation in the payments industry. He encourages listeners to step out of their comfort zones and learn about new faster payment methods and how they can be applied to existing work processes. This is where innovation occurs, he says, when we disrupt our routines for the sake of progress. He also stresses the need for education at all levels, from frontline staff to executives, to understand the implications of these innovations for their customers and businesses.

 

⚡Directories: The Unsung Heroes of Payment Platforms

Peter delves into the concept of directories in payment systems. He explains how directories work in popular payment platforms like Zelle, PayPal, and Venmo, allowing users to send payments without needing to know the recipient's bank details. However, he notes the lack of a directory in instant payment schemes, sparking curiosity about the future of this feature in the payment industry.

 

⚡Innovation Starts Small: Unleashing Potential in Everyday Tasks

Peter shares an interesting perspective on innovation. He suggests that innovation isn't always about big, disruptive ideas; it can start small, with improvements to day-to-day tasks. He encourages listeners to identify opportunities for innovation in their current jobs, even if it's as simple as streamlining a 17-step process. This approach, he argues, can lead to significant time savings and efficiency gains, proving that everyone has the potential to innovate in their own way.
 

Episode Highlights

AI: The Game Changer in Payments

Timestamp: [00:12:09]

Peter discusses the role of AI in the payments industry, highlighting its ability to analyze large amounts of data to make decisions. He explains how AI engines like ChatGPT and Bard use large language models to understand and respond to requests in various languages. This, he believes, is a fascinating development in the industry.

"With ChatGPT and Bard and the likes of those offerings, the third thing they've added is this concept of a large language model [...] Now apply all my AI issues, and when I get something of a response, use that large language model again to present in complete sentences in the language I've been asked what this answer might look like. And so, the combination of those three things is fascinating."
 

Innovation: It's in the Small Things

Timestamp: [00:16:23]

Peter encourages listeners to find opportunities for innovation in their day-to-day tasks. For example, he suggests an "Innovation Friday Lunch" where employees share ideas to innovate in their current job. This, he believes, can lead to significant improvements in efficiency and productivity.

"Everybody in their day job has something that they think to themselves, why am I doing this? This is so stupid. That is an opportunity for innovation."
 

Learning: The Key to Success in Payments

Timestamp: [00:08:16]

Peter discusses the importance of learning in the payments industry. He believes that understanding new faster payments and innovations is crucial for both frontline staff and executives. This knowledge, he says, can help them better serve their customers and stay ahead in the industry.

"When you learn about these new faster payments and innovations that we're talking about, think about, how does that apply to the work, this 17th step process. Because that's where innovation occurs when I upend the 17th step process."
 

Education: A Must for All in Payments

Timestamp: [00:08:49]

Again, Peter stresses the need for education at all levels in the payments industry. He believes everyone needs to understand the implications of innovations for their customers and businesses.

"At the executive level, you're not necessarily trying to learn what's an ISO 2022 pacs 008 message and what does the debtor account name mean? None of that is really important, but you do need to be able to internalize and articulate, what does this mean to my customer? What does it mean to my business customers?"

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

Episode Summary

It's hard to imagine life without a smartphone, as it has integrated into every aspect of our personal and professional lives. Let's take a look at banking. No one writes checks anymore. Instead, we use mobile banking apps; even our credit and debit cards are tap-and-go or tap-to-pay. We understand it's all technology-driven, often forgetting that there have always been, and probably will always be, people behind all these solutions.

 

In this episode of Wrestling Payments, Linda Cooper, the VP & senior operations manager at Gorham Savings Bank, joins our host Joe Casali to discuss innovations in banking from the perspectives of FIs and customers. They also touch upon banking in general and the reasons for its bad reputation. Finally, Linda lists what skills are needed to thrive in the field. 

Download Episode Transcript

Podcast Expert

💡 Guest name: Linda Cooper
💡 What she does: Linda is the VP & senior operations manager at Gorham Savings Bank.
💡 Company: Gorham Savings Bank
💡 Noteworthy: Linda covers various areas, working with the data processing, loan servicing, and content management teams.
💡 Where to find Linda: LinkedIn

Podcast Insights

⚡Banking has earned a bad reputation, and it's on us to carry that burden. That's because banks take responsibility for any money-related issue, regardless of the level of control they have in a given situation. Linda explains. ''If anything happens, we take the rap for it, whether it is interest rates going up or IRS checks not getting there quickly enough or no matter what. We are on the front end, and it's our problem whether we can control it or not. So it requires large shoulders because that's just the way it is.''

 

⚡Modern banking means faster banking. But, convenient as it may sound, enjoying the shiny objects of today's banking may have some side effects. ''We go on and on about faster payments in all of their forms, and it just means it's faster to be wrong or fraudulent. You can make mistakes faster. You can have problems faster and with less time to react. So there's that side of it.''

 

⚡Relying on technology requires you to have plan B. Digital tools are the present and future of any industry, including banking. But one thing we must bear in mind: technology can break, and depending on how severe the breakage is, we must have a recovery strategy. ''You need to be able to create and have manual procedures so that in the case of failure — it's like insurance. The idea is that you would never have to use it, but you still need to have it.''

 

Episode Highlights

There's No Magic in Modern Banking; It's People Ensuring Everything Goes Well

''There is a perception in the general public, as well as most people, of what's involved behind the scenes with all of the things that are integrated or are proposed to be integrated, but they're not. 

There's an interface, or the integration is you are exporting a list of things, transporting it over here, and then getting sucked into another system. By all practical means out on the front, it's integration, and it's happening, but there's a whole bunch of us behind the scenes that are monitoring all this stuff all the time to make sure that things are processed. [...]

There's this impression, perhaps with some folks, that people aren't keying in the transactions. It's all happening automatically. So we don't need people anymore; it's all gonna just work. And that's the fallacy. It doesn't always just work, and when you don't pay attention is likely gonna be the time when something goes wrong.''

Has the System Changed Due to Changes in How We Do Transactions?

''It's not that different at its core. There's still an amount showing up someplace. The amount is being captured. They might not be keying it in, but it's coming from their invoice automatically. You are tapping your card or swiping it, and then it's going to be settled someplace, and the money arrives in your account. 

So, it's faster. There's a less manual process. There's no physical document. There are no card slips that are being sent somewhere or checks that are being written. But at its core, it's still doing the same thing.'' 

Skills You Need to Thrive in Banking Today

''We talked a bit about the content management team at Gorham, my baby and my pride and joy. And one of the things that were always talked about in interviewing for those positions is we are the ones who often write the procedures. So we're the ones that have to learn how these things work to train other people.

So there is a lot of learning on the job and through experience, and of course, you can have a fantastic process and procedural documentation, but there's always gonna be outliers, and you need to have staff — not necessarily the people that are doing the job, but other people that can help when you go off that path. [...]

We talk about how a lot is changing in banking because you used to have an army of people that could do a lot of data entry — numeric and other — at high speed with high accuracy. All items were being manually posted. Now we're talking about APIs and system integration and understanding how to use technology in a much more intimate way. And finding those people that can translate that for other folks.'' 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

 

 

Episode Summary

In this episode of Wrestling Payments, host Joe Casali welcomes Jordan Bennett from Nacha to delve into the intricacies of risk management for ACH payments. They discuss the evolving role of the Risk Management Advisory Group and how it aids financial institutions in mitigating risks on the ACH network. In addition, Jordan shares insights on refining rules and regulations, emphasizing the importance of feedback and adjustments to perfect the system.

The conversation takes a deeper dive into the proposed rules for combating fraud. Jordan explains the potential use of reversals to return funds to the originator, which could significantly impact how financial institutions handle fraudulent transactions. They also discuss the new use of a return code, R 17, to specifically flag suspicious transactions.

Towards the end, the discussion shifts to the future of ACH payments, with Jordan and Joe pondering the possibility of continuous settlement and the implications for risk management. The episode concludes with Jordan's advice for professionals in operations, encouraging them to stay aware of organizational changes and fill gaps where necessary.

Download Episode Transcript

Guest-at-a-Glance

💡 Name: Jordan Bennett, AAP, APRP

💡What he does: Senior Director, Network Risk Management

💡Company: Nacha

💡Noteworthy: Jordan brings a wealth of experience from his time at the Federal Reserve and his current role at Nacha, particularly in risk management for ACH payments.

💡 Where to find Jordan: LinkedIn

Key Insights

⚡The Evolving Role of the Risk Management Advisory Group

The Risk Management Advisory Group plays a crucial role in mitigating risks on the ACH network. Jordan explains how the group is continuously refining rules and regulations to ensure the safety and efficiency of transactions. The process involves gathering feedback and making necessary adjustments to perfect the system. This insight underscores the importance of dynamic risk management in the rapidly evolving payments industry.

 

⚡Proposed Rules for Combating Fraud

Jordan discusses the potential use of reversals to return funds to the originator in cases of fraudulent transactions. This proposed rule could significantly change how financial institutions handle fraud. Additionally, the introduction of a new return code, R 17, is discussed. This code would specifically flag suspicious transactions, providing another layer of security in the ACH payment process.

 

⚡The Future of ACH Payments

The conversation shifts towards the future of ACH payments, with Jordan and Joe pondering the possibility of continuous settlement. This could have significant implications for risk management in the payments industry. Jordan also encourages professionals in operations to stay aware of organizational changes and fill gaps where necessary, highlighting the importance of adaptability in this rapidly changing field.

Episode Highlights

The Importance of Feedback in Rule Refinement

Timestamp: [00:21:27]

Jordan and Joe discuss the importance of feedback in refining rules for ACH payments. They highlight how every comment received is considered, and adjustments are made accordingly. This process ensures that the rules are as effective as possible in managing risks on the ACH network.

"We are gonna go through every single comment that comes in, and then we're gonna make the necessary adjustments, and then the direct members and the payments associations will vote."

Career Advancement in Operations

Timestamp: [00:22:39]

The conversation shifts to career advancement in operations. Jordan advises listeners to pay attention to what's happening in their organizations and be proactive. Such a strategy, he suggests, can lead to career progression and personal growth.

"I'd say pay attention to what's going on in your organization and always do what's necessary. Go out, and if you see something, you see a gap, fill it."

The Future of Continuous Settlement

Timestamp: [00:28:11]

Jordan and Joe touch on the future of ACH payments, specifically the possibility of continuous settlement. They consider the implications of this for risk management and the need for constant monitoring to prevent systemic risk.

"You can't just have payments flowing without anybody there. Because there are tools that the Fed is using to make sure there's no big systemic risk going on."

The Need for Fraud Detection

Timestamp: [00:14:41]

Jordan emphasizes the need for commercially reasonable fraud detection in the ACH network. He argues that all participants should be doing something to prevent fraud, highlighting the importance of proactive measures in combating fraudulent transactions.

"Every participant except for originators, consumer originators don't count. But as far as your third party centers, your ODFIs, RDFIs, you should be doing something to prevent fraud."

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

In this episode, our host delves into the timely topic of ACH's proposed rule changes with guest expert, Sean Carter. The conversation digs into the specifics, including the revised rules around defining entries as ‘PURCHASE’ or 'PAYROLL'. They discuss the implications these modifications could have on the e-commerce and payroll sectors, while acknowledging the necessity of such standardization for seamless data analysis.

The dialogue gets particularly thought-provoking when the discussion shifts toward the potential challenges presented by the proposed standardization of individual names on transactions. Both host and guest candidly express their concerns about the complexity of implementation and compliance with this rule.

The conversation concludes with a strong call to action, urging listeners to voice their opinions during this crucial rulemaking process. Both the host and Sean emphasize the importance of industry feedback in shaping fair and balanced rules. A must-listen for anyone navigating the changes in the payment industry.

Download Episode Transcript  

##

Guest-at-a-Glance

💡 Name: Sean Carter

💡 What they do: CEO

💡 Company: NEACH

💡 Noteworthy: Pioneering advocate for modernization in the payment industry.

💡 Where to find them: LinkedIn
 

##

Key Insights

⚡ The Role of NEACH in the Payments Industry. Both Sean Carter and Joe Casali represent NEACH, an organization focused on enhancing the payments ecosystem. In the episode, they discuss NEACH's efforts to provide resources, educate stakeholders, and drive innovation in the payments arena. They also highlight the organization's role in aiding businesses navigate regulatory changes and how they are actively inviting feedback to help shape their approach.

 

##

Episode Highlights

An Invitation to Influence Rule Changes

The podcast delves into the power companies have in shaping regulations that directly impact their operations. Sean emphasizes the importance of participating in the Request for Comment (RFC) process and providing valuable feedback on proposed rules.

"Don't just sit back and let these rules happen to you. It's much better to have an active role in shaping them."

 

NEACH's Role in Navigating Regulatory Changes

Both Sean and Joe talk about the role NEACH plays in aiding businesses navigate through regulatory changes. They highlight NEACH's commitment to educating and providing resources to stakeholders, especially when it comes to understanding AML regulations.

"We're here to help, obviously, if you wanna to have us jump on a call with a couple of your staff to go through these things, we do that all the time."

 

The Permanent Change in the Payments Arena

The podcast concludes with a strong message about the permanence of changes in the payments industry. Joe underlines that these shifts, particularly in regulations and the rise of RTP, are not temporary disruptions but rather lasting transformations.

 

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

The COVID-19 pandemic spurred innovation and modernization across different businesses and industries, and banking is one of the fields that had no choice but to keep up. However, innovation is an ongoing process that requires leveraging both new and existing resources effectively.

In this episode of the Wrestling Payments podcast, our host Joe Casali welcomes Linda Cooper, the VP & senior operations manager at Gorham Savings Bank. They talk about the ways to optimize processes and better leverage existing resources, how COVID has driven significant changes in the banking space, and the importance of continuous improvement.

Download Episode Transcript

##

Guest-at-a-Glance

💡 Name: Linda Cooper

💡 What she does: She's the VP & senior operations manager at Gorham Savings Bank.

💡 Company: Gorham Savings Bank

💡 Noteworthy: Although Linda has been with the Gorham Savings Bank for ten years, she's not a lifelong banker. She has experience in multiple industries, including retail and manufacturing.

💡 Where to find Linda: LinkedIn

##

Key Insights

⚡ We need to leverage existing resources better. Implementing new tools is not enough; we also need to leverage the existing resources more effectively. Linda explains, "Something new I've been thinking about as sort of backward innovation, meaning review, as things slow down. The economy’s slowing down; interest rates are up; a lot of us are seeing a decrease in volume of loan activity or whatever. I think that it's a prime opportunity to really review the usage of existing software to make sure you're leveraging all the functionality that's there. A lot of us implement systems for a specific reason or to cover a specific thing. And, 'Oh, we'll get to that later' — the new stuff — and then later never comes. And so, I think that to formalize that a little bit and create the bandwidth and get the right people around the table to really look at those things, to see what we're missing."

⚡ COVID spurred innovation in the banking industry. If there's anything that the pandemic taught us is that traditional ways don't always work best. Linda says, "People that just would not consider or couldn't wrap their heads around any changes to how we do things — removing paper from the process, doing things electronically — all of a sudden we did it, and we're like, 'Oh, wow. That works pretty well.' And so, it increased the appetite, I think, for change in a way that I'm not sure anything else would have done because we were forced into it. Now, that's not to say that there aren't people that went right back to their paper files, and they're so happy to be printing things, but a vast majority of us, I think, got on that bandwagon, which has changed the appetite, the environment for innovation."

⚡ Modernization is a continuous process. Modernization is ongoing and open-ending. There are no boundaries to innovation, even in the banking space. Linda says, "With the modernization, how can we better leverage these? And it's almost an ongoing process. Continuous improvement, I guess, is really what it is, in order to make sure that you're always using, always thinking, never settling for, 'Yeah, this is good enough.' Always looking to see, 'Is there a better way?'"

##

Episode Highlights

Fraud highlights collaboration

"We look at fraud in a lot of different places, but fraud really highlights collaboration. It just becomes more and more; everybody's involved in prevention and detection. All of the new payment rails have rules and just more involvement in that area. So, I think that just remains relevant to everybody that has any involvement with NEACH and payments in general."

Optimize the existing processes as much as possible

"It's a huge amount of time. Now, granted, you may be talking two and a half hours across ten people. But still, nonetheless, it's a ton of time that was basically being wasted that we were able to capture with just simply implementing something that was there all along. Those are the kinds of things that really can pay off and that operations across all areas, of any industry really, should be looking at their systems to say, 'What is out there that I could do?'"

Innovation takes courage

"I think that oftentimes it takes a person or some people making that noise, not taking themselves too seriously and throwing things up against the wall to see if they stick. And you've got to have thick skin because some things aren't going to work, and sometimes they make perfect sense, and they still aren't going to be adopted; they're not going to be allowed for whatever reason. So, I think that's really it. Just looking at things always with the perspective of, 'I might not know everything about this.'"

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen above.

Episode Summary

NEACH recently conducted a survey with 145 participants about how the finance industry is adopting instant payments in New England. The respondents answered questions about available instant payment solutions and how they affect their strategy. 

In this episode of Wrestling Payments, host Joe Casali touches upon FedNow, a new instant payment system, and shares participants' take on how this new solution will add to their operations.

Joe also discusses when participants plan to implement their chosen instant payment solution and their biggest concerns regarding the process.

Download Episode Transcript

Podcast Expert

Host name: Joe Casali
What he does: Joe is the executive vice president at NEACH.
Company: NEACH / Podcast
Where to find Joe: LinkedIn

Podcast Insights

🎙65% are either working on or have an instant payment strategy. The survey involved 145 participants answering questions regarding available solutions and a soon-to-be-launched system, FedNow.

🎙53% of all participants said they are interested in FedNow ''send and receive.'' That means they not only want to receive transactions via the system but also take advantage of the sending option.

🎙About 20% are interested in implementing it in 2023. The same percentage of participants said that they are considering implementing it next year. Around 1.5% want to do it by 2025, while 50% have an undefined timeframe. ''In the financial institution industry, there's a lot of waiting and seeing, 'I want someone else to make the mistakes, and then I'll participate.'''

 

Episode Highlights

How Vital Is FedNow to Your Strategy?

''One of the interesting numbers here is, 'We are waiting on FedNow to go live, see how it goes, and then make a decision.' That was 31%. The highest one — getting its responses at almost 40% — was, 'We're waiting on our cores.'

That's an interesting comment. Are the cores ready for instant payments? That's a question. If you're a financial institution, you'll ask your cores to see where they are. Interestingly, 20% said there's no plan to connect, and 13% said it is especially important.''

How Vital Are Real Time Payments (RTP) to Your Strategy?

''15% have said, 'We're already on it,' and another 22% or 23% said, 'It is especially important.' Those are good numbers. We're looking at 37% are either on it or it's especially important. 34% are waiting on their cores. So there's a trend here. And no plans to connect to RTP, that was 26% of respondents. We had 141 of the 145 respond to that one.''

FedNow and RTP Have a Request for Payment Feature

''The request for payment lets a biller send an instruction that says, 'Hey, I want your financial institution to pay me, so I want your institution to be a sender.' It has all the instructions in there to get a bill paid.

But it's not that they're sending a payment; they're sending an instruction for your institution to send a payment to that receiver. That's a newer feature of instant payment systems. And it looks like there's a lot more interest in the FedNow request for payment than the RTP request for payment. But 10% and 15%, it's relatively the same number.''

The Biggest Concern Regarding Instant Payment Systems

''The biggest concern was fraud. We're at 59% of all respondents, probably the highest on the presentation. So 59% said, 'We are concerned about fraud.'

I have to do my part here and say that it is not faster payment fraud; it's a fraud. Just like ACH fraud is not ACH fraud; it's an account takeover; it's phishing; it's an email compromise. So it's any number of vectors of fraud, but it just happens to be in the ACH network.

The concern here, and I think it's a heightened concern, I don't think the fraud is any different. Maybe the implications are bigger. And this is my opinion only.''

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen below.

Episode Summary

Welcome to another episode of Wrestling Payments. We dedicate this session to Notifications of Change (NOCs), or as many refer to them, No One Cares. In this episode, our host Joe Casali shares three cases where receiving financial institutions* wrestled with NOCs. As part of the analysis, Joe describes the causes and the consequences of not addressing the issues. Finally, he shares valuable tips on how to prevent unpleasant scenarios caused by ignoring NOCs. *Names have been changed to protect the actors in the cases.

Download Episode Transcript 

Podcast Expert

Host: Joe Casali
Company: NEACH

Podcast Insights

🎙Educate your originators on what notifications of change are. While analyzing the background, including the response and the consequences of the first case (you can find out more about it in the highlight section below), Joe says that ODFIs must train their originators on how to act regarding NOCs. Otherwise, they risk penalties. ''They have to know what a NOC is. They have to know how to deal with it. They have to be set up right to get the information.''

🎙If you receive entries you must wrestle with, file a notice of possible rule violation. Based on a case initiated on the suspicion that an originator acted against the norms, Joe suggests notifying Nacha, or ''You can say something directly to an ODFI, not just as a contact registry. You can reach out, but the system fines and rules enforcement will make it official if you need to escalate it to that point.''

🎙You must receive NOC reports regularly. That's the third and final tip Joe shares in this episode, adding: ''If you don't have any NOCs, something's wrong. That may not be totally true, but you should probably get at least one NOC over a year or two. So check to confirm that you're getting the NOC report, understand what it's saying, and make the changes as soon as possible.''

Episode Highlights

#1 McCormick Bank and Its Originator Failed to Respond to Notifications of Change

''We have ODFI, the originating sending bank, whatever you wanna call it. The sending institution received a notice of possible NOC violation involving its originator, Pritchard Employer Group.

We can figure out that that's maybe a payroll company working through McCormick Bank, something's happened, and because Nacha can only talk to the sending bank or the receiving bank, they're talking to the sending bank because the receiving bank has been fixing something and it's not getting fixed.

They've been sending NOCs; no one's paying attention to them. So McCormick Bank and Pritchett Employer Group acknowledged this initial violation and stated they would resolve the issue. [...] McCormick Bank responded by saying, 'Guilty. We did it. We've ignored him. We're going to fix it.'

Nacha continues to receive additional reports of possible violations from RDFI, citing the same rules and fraction. So even though Pritchard Employer Group said they were going to fix it, and McCormick Bank said, ‘We're going to fix it.’ It didn't get fixed.''
 

#2 Riley Bank Received a Notification of Possible Rules Violation Regarding a NOC Involving Its Originator, Bonner Employer Group

''Riley Bank and Bonner Employer Group acknowledged the violation. [...]

A discussion with Riley Bank revealed that Bonner Group thought that as long as its customers, the receiver, and the person received the money owed to them, and the transaction wasn't being returned, Bonner Employer Group didn't need to act on the NOCs.

So there's a case where these entries come in, RDFIs wrestle with them, get them in the right place, but then send the note to say, 'Hey, can you change the account number? Hey, this is a checking account, not a savings account. Can you fix it?' And in this case, Bonner Employer Group was ignoring them and saying, 'Hey, everyone's getting paid. What do we care?'

The ACH Rules Enforcement Panel reviewed the issue and determined that the ODFI is responsible for the originator to act properly on each NOC.

As a violation submission had escalated to class two status, they were subject to a fine between $0 and $100,000 per month until the issue was resolved. And the ACH Rules Enforcement Panel decided in this case to issue a one-time fine of $10,000.''
 

#3 Emerson Bank Received a Notice of Possible Rule Violation Regarding an NOC Involving Originator, Riley Health Group

''Emerson Bank and Riley Health Group acknowledged the violation and stated they would resolve the issue. Again, critical because it looks bad from a review perspective if you said, 'Nope, we're not ignoring NOCs.' But then the evidence shows you weren't responding to NOCs.

So the original incident, and now we have 15 additional months of reports of violations that they're ignoring NOCs from several RDFIs. So it's not just one institution complaining; it's systemwide related to the same rule infraction. Each time, Nacha escalated the issue with Emerson Bank via ongoing notice of possible rule fines and imposing escalating fine amounts for each infraction. Emerson Bank met with the Health Group to address this ongoing issue.

This is great; this should probably happen in each case so the parties understand what's happening. What's going wrong? Why are you continuing not to address NOCs?

Riley Health Group determined that the underlying cause of the unresolved NOCs related to an internal issue with the delivery of their NOC file. Whoa. We got an operational issue.''

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen below.

 

Episode Summary

Welcome to the first episode of Wrestling Payments by NEACH, a member-based payment association for financial institutions in other organizations supplying payment-related services. NEACH is a recognized and licensed ACH education, publications, and support provider. 

In the show's first episode, we are joined by Sean Carter, the president & CEO, and Sandy Ortins, the SVP of Operations, at NEACH. Sean and Sandy reveal why they decided to start a podcast, who it is for, the issues they will tackle, the guest list, and how they came up with the name. 

Download Episode Transcript

Podcast Expert

Name: Sean Carter, Sandy Ortins
What they do: Sean is the president & CEO; Sandy is the SVP of Operations.
Company: NEACH
Noteworthy: Sean has been with NEACH for around 25 years. He started in accounting and is currently responsible for the company's strategic direction. Sandy has a banking background, and before working at NEACH, she worked at a community bank. She oversees education membership at NEACH. 
Where to find them: Sean: LinkedIn; Sandy: LinkedIn 

Podcast Insights

🎙Digitalization concerns both FIs and their users. It's one of the most critical changes in the finance space. And so, as digitalization has entered every pore of the business world, the financial space must adapt to it. Therefore, a partnership between a bank and a vendor is a prerequisite for growth. ''There's no growth strategy that doesn't include some form of digitalization. And a lot of that is related to payments. So people didn't think about that when we were just starting. We were excited when we would get an originating depository institution. That was a big win for us to say, ‘Oh, we have a new member FI that originates payments.’ And now the conversations are more about what network are you playing in, where are you driving your customers, who are your partners, what are you looking to invest in next?" says Sean.

🎙Our podcast is not only for FIs and associated institutions. Instead, it's for everyone who can encounter any payment issue at an individual or an organizational level. ''Many of the challenges in payments today are because of the end users, either the sender or the receiver of the payment, which is not the financial institution. So I think for corporations, especially with all the changes that the banks go through, that ends up in their lap. So if a bank is going more digital, ultimately, their customers have to get digital. So I do think there's a broader audience," explains Sean. 

🎙We must initiate and encourage conversations with FinTech companies, as we are the link to bringing their offer closer to the customers and resolving any concerns customers can come across when considering a particular service provider. ''It's important for those conversations to happen for us because we can support the members through not pre-qualifying or — I can't think of the word. But almost when we're working with a vendor or FinTech that wants to deal with an FI, we can help those conversations and help the FinTech be a little more aware of what they should be discussing,'' says Sean.

Episode Highlights

How Payments Have Evolved And Changed Over Time

''I was on a call earlier talking about the AAP exam, and people brought up how, back then, it was two SEC Codes, no international payments in ACH, and no new settlement windows. So a dramatic change over the last ten years, specifically in ACH. And that's just a small piece.

The world around payments has changed rapidly. We saw it in ACH with the rise of third parties that are so critical to the network, but then you have to govern them and make sure that everybody's managing the risk in the network. [...]

And the same thing is happening for FIs today, looking for their FinTech partnerships that allow them to innovate and all that touches payments. [...] The biggest change is that the discussions are so different now than ever,'' says Sean.

Sandy's Background in Banking Is a Value Add Because She Brings a New Perspective

''I guess I have a different perspective than you guys probably have. We've had conversations, I remember. Joe, years ago when the healthcare payment CCD+ Rule came, and you were like, ‘Everyone needs to know this.’ And I was like, ‘Nobody cares.’ 

It is because I worked in that industry. You care about what gets you through the day. Having a CCD+ and knowing the re-association number, no one cares about that. 

They're trying to get through the day, meet all their deadlines, get everything out the door that they're supposed to; disasters always happen, but finding out what a re-association number is not one of 'em,'' explains Sandy.

The Rationale Behind the NEACH Team's Decision to Start a Podcast

''NEACH, at its core, is a trade association. We are here to bring information to our members so they can strive in whatever they try. And so, a podcast is another way to get that content out to people. And we can do it in a way that makes it easily more relatable to the listener.

Think about going to a workshop. There might be four hours in a workshop, and maybe an hour and a half of that applies to your job, and you need to learn, know, and understand it. Whereas podcasting allows busy people, folks trying to get through the day, but they still need to develop; they need to be able to bring information back to management or to help themselves become management. So this gives them the ability to do that,'' says Sean.

Why NEACH Uses ''Wrestling'' in the Show's Name

''For the payments industry, it is a perfect metaphor for what they're doing. What's the number one move in wrestling? It is the grapple. So you have to grapple each day with time, resources, and where we are going to deploy. What's at the heart of wrestling? It's competition.

And so, now you see all these new players. We have FedNow; we have RTP. They're not fighting each other, but it is a competition between who's offering the better product at the better price and who's easier to connect to. So the financial institution and the corporate end users have to grapple with which direction works for them and their business,'' explains Sean.

To hear this episode and many more like it, subscribe to Wrestling Payments on Apple Podcasts, Google Podcasts, Spotify, or anywhere else you listen to podcasts, or listen below.