Listen: Real-time payments pose real-time fraud risk

Financial institutions should prepare for widespread use of real-time payments in the coming months, as well as the resulting security risks, group president of enterprise banking at core provider Computer Services Inc. (CSI) shares in this episode of “The Buzz” podcast. [caption id="attachment_220853" align="alignright" width="300"] Photo by CanStock[/caption] CSI’s Giovanni Mastronardi discusses how the Federal Reserve-backed instant Automated Clearing House (ACH) transactions, along with the prevalence of real-time payment platforms like Venmo and PayPal, will foster innovation for community banks and their customers. “There’s going to be some competition,” Mastronardi tells Bank Automation News . “You're going to have merchants who can do the ACH and might feel better about it. Can I do a real-time ACH for less per transaction than if I take a debit transaction?” Real-time payments will also afford fraudsters the ability to bypass standard security measures, like two-step authentication and “card not present” purchase alerts, he cautions, adding that financial service providers must adapt their security strategies. “As the entire world becomes real-time, no longer is two-factor authentication going to be considered quite as secure,” Mastronardi says. “We're in the process of looking at things like keystroke and mouse tracking. If I'm on my computer, it can tell it's me and not somebody who's taken over for me.” While community banking customers may initially resist added security measures, the end result is a safe and deeply automated experience, he says. Bank Automation Summit, taking place March 1-2 in Charlotte, N.C., is the first and only event to focus solely on automation in banking. The event will feature the brightest minds from across financial services on intelligent automation strategies and deployment. Learn more and register for Bank Automation Summit 2022 . Subscribe to The Buzz Podcast on iTunes , Spotify , Google podcast , or download the episode .

The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Alijah Poindexter 00:06 Good day. Welcome to The Buzz, a Bank Automation News podcast. I'm Associate Editor Alijah Poindexter. Recently I spoke with Giovanni Mastronardi. Group President of enterprise banking with the core provider CSI. I talked to Mr. Mastronardi, about real time payment in 2022, which will grow in prevalence throughout the year, but will also present new and dangerous fraud risk. We also spoke about the potential for core providers to use automation for good, helping client banks educate customers on the risks of fraud and everyday banking, along with strategies on how to avoid it. Giovanni Mastronardi 00:38 think the biggest thing that's going to happen, it's really going to happen at the beginning of 2023 is real time payments, just because he pushed it back. So now it's pushed back to the firm that everybody has to do real time Ach, starting the beginning of 2023. That will start to play in 2022, though, because that, that now blurs the lines of, you know, do I need to take a debit transaction, you're going to have merchants who can do the ACH and might feel better about it, it's going to have some competition, can I do a real time ACH for less per transaction than if I take a debit transaction, you're now going to have some sharing of databases and sharing of users, you know, so, you know, clearly Venmo slash PayPal, you know, is a dominant and, and useful player in the space of how they do they give the perception at least of a real time payment. Yeah, that may become even more so it was a true real time ACH. However, with metallizing. Now, if everything is real time, you know, fraud is going to be that's just a new fraud world. So we've got to continue to up our game and fraud prevention, we already have to do that. But as the entire world becomes real time, you're so no longer is two factor authentication going to be considered quite as secure. We're we're in the process of looking at things like keystroke and mouse tracking. So if I'm on my it can tell that I'm, you can tell it's actually me and not somebody who's taken over for me, because let's say you somehow got my credentials. And you're just going on to a browser trying to use my stuff. This stuff will be able to tell Wait, Elias is not left handed, he doesn't move the mouse, you know, in a diagonal motion, he's very up and down straight forward with it. So it's going to be able to tell the way you you do keystrokes, it'll be able to tell if somebody's that a single finger type or versus a, you know, traditional typewriter, you know? And so, you're gonna have to put those types of things in place, because you're already seeing fraudsters figure out how to take over simulate somebody's phone. So they've simulated the phone, and your phone is your dual authentication. They've figured that part out, right, so we're starting to see that. So with real, you know, used to be Ach, you felt a little bit safe, because you're like, well, at least we have, you know, till the next day, and we could do a reversal, right? You may not get that now, so. So Alijah Poindexter 03:07 that opens up such an interesting discussion, right? Because, you know, people want it one way, but it tends to go another way people get sick of, you know, in branch banking, you know, physical banking, two step authentication and stuff, but then they switch over to, you know, Venmo or Zelle. And everything, you know, everything is real time. Well, that does certainly come along with, as you said, security and fraud concerns, and I think a lot of people are not thinking about that. They think that they can sort of have their cake and eat it too, so to speak. But there definitely gonna be some drawbacks, I think but no, it's something definitely interesting to ponder over. Giovanni Mastronardi 03:41 When you and you start to change behavior after a while to realize I can tell you, when American Express first started sending me an email for any card, not present, purchase, it annoyed the crud crud out of me, I was just like, Are you kidding me? I'm getting like seven emails a day from me, because every time we went on Amazon, I was getting an email. So that tells you how much my family's on Amazon. Now I'm frustrated if I don't get because there's so much fraud, and things like that out there that like, I can't imagine having a solution that doesn't give me a notification for a Card Not Present transaction. Because I'm so hypersensitive to how much takeover a little bit of that's because I'm in this industry. But I do think people have become comfortable and accustomed to it. And you're certainly seeing of advertising, about things like that, where you're getting notifications, and I think more consumers are going to come to expect it. Because they won't admit that fraud themselves. They'll just have to have had a friend who was a victim of fraud. And then they'll go you know what, I might feel a lot better about this. Not having to go through with my friend just now as I say, I see that actually. I just see people understanding of necessity of it. It's not gonna be happy about it. You're right. It's taking away that but even if you look at like the things like Venmo has gotten so much better. You know, if it's, you know, yeah, I've always worried With Venmo, if I'm sending somebody money, what if I pick the wrong? Bob Johnson? Well, now it says, Is this the Bob Johnson your context? And if it's in your context, or you haven't uploaded, it says, well, what's the last four digits of Bob Johnson's phone number? Or, you know, it goes to some extra step. So I can feel good that I didn't pick the wrong Bob Johnson, right. So so more things like that are going to, we're going to have to, and this is where it's going to be tough for community banks. They never like to push their users and make them uncomfortable, but they're going to have to play a part in the education of it, tell them, you need to do this. And this is why, and they're going to need to stand firm, when somebody complains about oh, I'm so tired of doing two factor authentication, every time I want to send this 20,000 payroll file. Well, the flip side is, how would you like it? If if one got out, you know, even if the bank says they were going to cover it, you still have embarrassment, when it doesn't work, right? You know, or when somebody it gets diverted to something else, and your employees don't get paid? So so they're going to have to push back on their customers and make their customers understand that we're all in the fraud game together? Alijah Poindexter 06:11 Well, do you see core platforms at any point in the near or, you know, middle distant future, being able to take part in that education, maybe providing some of their, you know, technological, you know, 30,000 foot expertise, maybe passing it along to a partner bank, who may, you know, in some circumstances come to you or come to another core provider, you know, core platform provider, and say, Hey, can you help us develop some sort of, you know, we can bring in all sorts of people, but could you help us for our community that we serve, bring in some type of fraud prevention education? Giovanni Mastronardi 06:40 Yeah, we're doing some of that already. I can't speak for everybody else I do think we as an industry are going to need to do and I can tell you that CSI is absolutely doing that. We're talking about having, you know, specific videos, we put out where it's generic, it doesn't need to be branded by the bank, that the bank could then take advantage of, they would do just that it would do an education, you know, whether whether that be it's kind of its own YouTube channel, we would give them something to put on their site. You know, maybe even that we do brand it but but yes, and I think the other thing you're going to see a lot more of in CSI is definitely involved in this is the personalization, and gamification, those elements getting in their way to digital, that personalization will probably also come with personalized videos, you know, kind of educating, so if we could do is, you know, not just have everything be doom and gloom videos that go out to end users. But if we can have some be insightful and educational, like, here's how you can save more money. Here's, you know, other products you could be looking at, and then occasionally say, Here's security things you should worry about. Yeah, we do think that we can push a lot of that out through the personalization engine. I, you know, I have a sense that a couple of my competitors are going to do some of that. I have a sense that a couple aren't, but I I'm not going to. I'll let you figure that out. I don't want to speak ill of competitors. So Alijah Poindexter 08:03 you've been listening to the buzz, a bank automation news podcast. Thank you for your time and be sure to visit us at Bank automation news.com For more automation news. You can also follow us on Twitter and LinkedIn. Please don't hesitate to rate this podcast on your podcast platform of choice. Thank you

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Listen: Real-time payments pose real-time fraud risk

CSI’s Giovanni Mastronardi on how real-time changes security requirements

3 California fintechs funded by Citi Ventures

Federal cybersecurity agency warns RPA use may increase attacks

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