Risk Management in Payment Processing with Guest Nanci McKenzie
Wrestling Payments Podcast: Season 1 - Bonus Episode 3
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
âš¡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.
âš¡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.
âš¡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?"
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