ACH Risk Management Evolution with Guest Jordan Bennett
Wrestling Payments Podcast: Season 1 - Bonus Episode 1
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.
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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
âš¡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.
âš¡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.
âš¡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."
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