How Payments Investigations Can Cement Customers’ Relationships With Banks

Untold millions of payments representing trillions of dollars wind their way across the globe each and every day. And for the most part, the funds flow seamlessly — where as many as 98% of transactions get where they’re supposed to be.

Andy Elliott, vice president of strategy at EvonSys, said the other 2% need to be tracked and investigated, which is no mean feat.

“No one remembers the 98% of payments that go well,” said Elliot, “but everyone remembers the 2% that don’t go so well.” The majority of investigations, he said, relate to cross-border payments, and the back and forth between parties can be time consuming.

At a high level, payment investigations entail financial institutions (FIs) enlisting the aid of their partner firms to review and analyze a payment to ensure it is legitimate and in compliance with regulations. Though conventional wisdom might be that such an investigation would be focused on financial crime — and stopping fraudsters in their tracks — Elliott noted that there’s a customer service angle involved too.

After all, as Elliott noted, “If you’re expecting the money in hand to close on a house — and the money doesn’t arrive, well … that’s a pretty big customer service concern. It’s also an opportunity for banks to shine and show where they can excel to remedy whatever’s gone wrong.”

That’s especially true with larger-value transactions, and commercial payments that are transferred across the globe. Elliott and the other principals and founders of EvonSys have long histories with payments investigations, and Elliott himself had worked at a bank as an investigator, fielding requests from FIs or customers about problems plaguing transactions. Payment investigations — then as now — involve canceling payments or reversing debits or credits.

Saving Time and Money

Straight-through processing is no panacea, Elliott told PYMNTS, as at least some transactions must be re-examined. And while it costs a dime to process a payment, it can cost $50 to handle an investigation. Automating at least some of the examinations saves time, effort and money.

The typical investigation starts with a customer phoning into a call center or sending an email or receiving an inbound message from another bank. Larger banks tend to have dedicated teams and investigators in place to examine and effectively handle the thousands of wire transfers that can happen in the span of a day. “There’s a high volume of wires,” said Elliott, who added that “If 2% go wrong, you’ve got a reasonably high volume of exceptions. So, they have a system, they have the people in place who are dedicated to handling these.”

Elsewhere, payment system vendors have at least some capability around investigations within their payments engines. Niche providers are in the mix too — as EvonSys, for example, works with Pega’s Pega Smart Investigate.

“They have some very deep, rich capability around receiving these requests from the various sources, doing the automated research in the background, creating cases, and then figuring out what to do next,” said Elliott. That can touch on everything from reaching back out to customers or having an investigator examine the issues more fully. The automated first lines of defense, he said, eliminate many exceptions, and help banks’ bottom lines by making the entire process more efficient.

Looking ahead, said Elliott, banks are investing in payments modernization, as they move to support real-time payments. That means integrating ISO 20022 messaging, which Elliott maintained contains messaging components that aid with investigations. There’ll be a learning curve to climb, but the shift to the new standards will ultimately prove beneficial. In addition to ISO 20022, he notes that there are banks working on a pilot with Swift Case Resolution to create and embrace a standard investigative protocol.

“By incorporated that new standard,” he said, “the potential for automation increases significantly.”

As he told PYMNTS, no matter the transaction or the use cases, “as a treasury manager at a bank, you want to make sure customers are happy … if a bank does this well, they can cement relationships with high-value customers for a long period of time.”