Paperless Banking: Even in the Digital World, Mailing Addresses Still Matter
In our last two posts, we described how the move to paperless banking has unintentionally caused a significant rise in outdated contact information on the customer information file (CIF) – specifically mailing addresses – and explored how financial institutions are paying the price. As banking moves toward a more paperless environment, maintaining the correct and current address is going to continue to become more challenging. Bad address information can and does lead to return mail, more fraud losses and increased compliance costs.
What should institutions do to ensure basic address hygiene and accuracy?
First, they should perform periodic address update processing. By tapping into National Change of Address (NCOA) services as well as other private change-of-address lists, institutions can significantly lower their return mail costs and improve operational efficiency. Institutions should also use an address verification service to ensure correctness once customers notify the institution of an address change. Finally, they must screen customer initiated address changes for the likelihood of account takeover, in order to comply with FACT Act address change requirements for the purpose of protecting their customers from identity theft.
How can institutions bolster and modernize their address update processes to protect themselves and reduce costs?
Hundreds of financial institutions have now adopted automated approaches in order to better prevent account takeover fraud, reduce the cost of address change compliance and streamline address change operations. These solutions run behind the scenes, using massive databases and context-aware analytics to assess the riskiness of the address change request.
To reduce operations costs and investigative expenses, data-driven intelligence can answer the fundamental question: “Based on all of the information available, does this address change make sense?” If the address change is below a certain risk threshold, then the financial institution can accept the change without any manual intervention—and satisfy compliance requirements. In those much more infrequent cases where the solution identifies an address change as suspicious, the institution now has the information needed to take action. This new data-driven approach is more effective as a counter-fraud measure, as it is cheaper, compliant and results in less customer friction than manual processes.
With appropriate diligence, emerging technology and a renewed focus on the importance of physical addresses, financial institutions can transform their weakest link to a strong and effective way to save money, protect customers from fraud and maintain consistent two-way communication they can rely upon for years to come, even as digital banking continues to grow.
Written by Jack Sundstrom
Chief Product and Marketing Officer
Jack has over twenty years of experience in building data strategies and developing advanced analytics solutions on behalf of clients across several industries including financial services, retail, telecommunications, consumer packaged goods, and automotive. He is passionate about developing products that use data to distinguish “good” from “bad” so that clients can make informed and profitable business decisions.