Leading American bank holding company implements an external account validation API and early warning system to reduce fraud losses and increase transaction control.Our client, one of the largest bank holding companies in the US, provides banking, investment, mortgage, trust and payment services to individuals, businesses, government entities and other financial institutions.

The challenge As part of its regular business, the bank allows customers to make payments on certain products, such as loans and credit cards, using their external demand deposit accounts (DDAs). A DDA lets customers withdraw deposited funds at any time, without advance notice, via external accounts from other banks. Checking and savings accounts are commonly used as DDAs. However, anyone who knows the bank account information of others can make transactions using these accounts, which can lead to fraud

The two-phased project began with primary validation of accounts using an EWS and secondary validation using microdeposits. The EWS also tracks activities such as check and bank fraud, forgery, check kiting, check alteration and counterfeiting. The system shares information with the bank about a potential customer’s risk and screens some customers for prior history of fraud, account abuse, forgery, counterfeiting, check alterations, paperhanging, check kiting and identity verification.