Regulation E compliance: The Federal Reserve Board’s Regulation E outlines the rights, liabilities and responsibilities for electronic fund transfer (EFT) participants. If a customer claims a claim is fraudulent, then a dispute form must be filed, provisional credit issued, and the bank has a limited time to investigate.

Oconee State Bank recently automated its Regulation E compliance forms and managed to win its staff over to automation while also saving money and avoiding additional hires. The move was an easy decision for the $494.5 million community bank based in Watkinsville, Ga.

“I don’t think I ever anticipated having this much success right away,” said Jennifer Rudd, who led the project as assistant vice president of business services. “It just was so successful that it will open doors for us to look at other processes.”

The Federal Reserve Board’s Regulation E outlines the rights, liabilities and responsibilities for EFT participants, and includes the procedures financial institutions must follow to investigate and resolve errors, such as an unauthorized ATM withdrawal. The regulation also states the extent to which a consumer can be held liable for unauthorized EFTs.

The resolution of disputed transactions had been a manual, paper-based process for Oconee State Bank that involved bookkeeping, spreadsheets and even manually typed notices. The bank faced a choice: Hire another employee or automate.

The bank decided on a back-office automation through an integration with the Houston-based Finboa, which offers a cloud-based Regulation E automation solution. The starting cost is $4,800 a year for up to 100 claims and $9,800 for up to 250 claims a month, according to the provider’s website. The solution allows customers to file EFT disputes online by pulling data from the core to pre-populate the forms, which are sent for e-signatures. After the e-signatures are accepted, the back-office operations can run the automation to provide provisional credit to the customer. Then, there is a period when the bank can investigate a disputed transaction.

Overall, Oconee State Bank reduced the amount of time it took to file consumer disputes by more than 80%, according to Finboa. Most of the automations come pre-packaged in FINBOA’s solution, said Dheeraj Singal, the company’s founder and vice president of compliance products.

“Instead of starting from ground zero, we’re starting at probably like 90% of the solution is already done,” Singal said. “Then the 10% is really dependent on what the bank’s internal needs and requirements are.”

Here are the steps the bank used in its automation:

1. Automate data transfer

First, the bank prepared for the automation by using a reporting tool to transmit basic customer information like names, addresses and account numbers from its core to the FINBOA system it chose to handle the back-office automation. That ensured employees would not have to rekey customer data into the new system.

Another option is for banks to use an API integration to transfer the data directly, said Singal.

2. Invest in electronic signatures

The next step for the community bank was to invest in electronic signatures, something banks must do to automate or digitalize any process. The bank invested in Topaz signature pads to support e-signatures on-premise, though this system also supports e-signatures, smartphone and tablet signatures. The digital paperwork is submitted back to the bank without the need for additional data entry.

3. Organization

Typically, banks have access to up to 20 different Regulation E letters when two or three will suffice, said Singal. Finboa helped the bank decide which few letters are necessary to meet compliance guidelines and stores them as templates in the system.

4. Review solutions and price shop

Oconee considered several options before deciding how to automate, shopping different process automation companies, including a product by a vendor they already used. While price-shopping for comparison, the bank was impressed by a demonstration and time estimate for the project from Finboa, Rudd said. The staff especially liked the promise that it could do the project within the bank’s time frame.

“We immediately saw how much better the whole process could be,” Rudd said, adding that the bank decided to “go with the product that could automate it and help us reduce errors, while also reducing time.”

5. Test-drive the solution

Oconee tried out the automated solution for a month alongside it old, manual process, with Rudd monitoring the automated process to ensure it worked as planned. It did. Since the success of its Regulation E automation, the bank has automated a few other minor workflows, with plans to continue its automation journey. Employees are happy with the result, Rudd said.

“Our company has a huge emphasis on digital growth and automation as a whole,” Rudd said. “So that’s really helping us achieve anything that we can make more efficient.”

Do’s and Don’ts of back-office automation

Do: Find an e-signature solution.

Do: Compare products and shop around.

Do: Integrate with the core to simplify data transfer.

Don’ts

Don’t: Assume it is necessary to hire an expensive consultant or fintech.

Don’t: Neglect the business case for the automation. Decide how to measure its success.

Bank Automation Ignite, on April 13-14, is the event for inspiring automation initiatives and investment in financial services. At the virtual event, financial services professionals can discover new use cases and technologies that are accelerating automation in banking. Learn more and register at www.BankAutomationIgnite.com.