Banks that implement automated duplicate detection strategies in their payment operations are experiencing compelling benefits. And the timing could not be better. Where automated duplicate detection is in place, banks are reducing costs, improving customer experience, and protecting account security. Some have also discovered a connection between the Day 1 identification of payment duplicates and identifying fraud.
Further, there’s evidence that duplicates are on the increase. Our vendor’ findings show an increase from 5 to 7 duplicate items per million payments processed in 2006 to between 40 to 100 duplicate items per million payments processed in 2010, a more than 1100 percent increase.
According to McKinsey and Company analyst Aaron Caraher, it is too early to tell whether the number of duplicate suspects and true duplicates will increase as a result of the adoption of mobile check capture by the broader consumer market.
McKinsey and Company’s 2011 Check Benchmark Study cites duplicate “suspects” as one of the major sources of interruption to check image “straight-through” processing. There is general agreement that duplicates will most likely continue to increase with the push of RDC to broader consumer markets. This is driving banks to invest in sophisticated and expensive systems to provide near real-time views of deposit and clearing activity across channels.
Although duplicate detection software can detect duplicate items within the same bank, no software is available to detect duplicates across banks. There is growing conversation about the need for a shared image archive with the ability to provide duplicate processing across participating banks. In this scenario, the third-party check image exchange vendor might provide duplicate-detection “on-we” services for all of its bank clients.
It is worthy of note that all but one participating bank in the 2011 Check Benchmark Study reports reviewing all items for duplicates, whereas the one outlier only reviews on-us items. The practice of limiting duplicate review to on-us items leads to a dilemma. Should banks take responsibility for “cleansing” their entire payments stream of duplicates as part of a cooperative financial services community? It is a dilemma of both ethics and practicality to selectively allow potential duplicate and fraud items in outgoing items where they can continue to gum up the works and amass costs unnecessarily.
No doubt remains as to the harm and cost of duplicate items staying in the payment stream longer than Day 1. Perhaps the time is right to consider the ethics and practicality of reaching for a universal Day 1 duplicate detection strategy.
Flavia C. Muttera is vice president, Transaction and Call Center Services (TACCS) manager, Bank of the West.