Are bankers ready to start accepting same-day ACH credits later this week? Yes, definitely. Are they thinking about originating those credits themselves? Well, we’ll have to get back to you on that.
The National Automated Clearing House Association (NACHA) anticipates American banks and credit unions will be ready to start receiving same-day credits on Thursday, when Phase 1 launches, said Janet O. Estep, the organization’s president and CEO.
In Phase 2, a year from now, credits and debits will be available by the end of the receiving institution’s processing day, and Phase 3, two years from now, introduces the requirement of funds availability by 5 p.m. local time for receiving institutions.
According to NACHA, most of the major receiving depository financial institutions are largely ahead of schedule, with 71 percent of respondents to a May 2016 survey set to provide Phase 3 funds availability later this week – well ahead of the March 2018 deadline for that phase of same-day ACH rollout. And 78 percent of respondents indicated they were ready to post credits “by window” and make funds available to customers during the day. The group drew those conclusions from a survey of 41 of the top 48 receiving institutions, who NACHA said comprise about 44 percent of the total ACH volume.
“During our rulemaking process, we really worked to balance these many differing perspective from all of the network participants,” Estep said. “Our goal is to develop a workable solution for all of the parties.”
She said NACHA reached out to core processors and software providers in the industry to get them on the same page, too.
“Fiserv is anticipating a smooth deployment for our client base,” Susan Meyer, the company’s senior product strategy manager of financial and risk management solutions, told Banker & Tradesman by email. “Fiserv and our clients have partnered together to meet the September deadline and to make same-day ACH a new opportunity to service customers.”
Banks, for their part, say they’re prepared to start receiving same-day ACH credits – even if they aren’t all ready to think about originating them yet.
“It depends on the type of bank we’re talking about,” said Scott C. Baranowski, the director of the internal audit services group at Boston-based Wolf & Co. “Those more focused on the commercial side are definitely all in. They’re looking forward to it.”
He said that same-day ACH represents an opportunity for those banks to provide a higher level of service to their commercial customers who may be interested in using same-day ACH for payments and payroll services – and to boost their fee income in the process.
“I would say we’re cautiously optimistic about it,” said Mike Missle, payment services director at Middlesex Savings Bank.
Middlesex Savings Bank is not yet planning to originate same-day ACH transactions – that part is optional anyway – but Missle said that the bank’s first priority was talking with its vendors to make sure its existing systems would be able to accommodate same-day ACH credits in the first step of the rollout.
But Citizens Bank is planning to roll out origination capabilities on day one, said Matt Richardson, head of product solutions for Citizens Commercial Banking’s Treasury Solutions.
“We feel it’s important for our clients to have flexibility with their payments so same day is an important new option to settle certain payments quickly while still at a reasonable cost,” he told Banker & Tradesman. “We have gone to great lengths to educate our clients on the features and benefits of same day and will continue that work as real time payments become a reality in 2017.”
Faster Payments, Faster Fraud?
Although the banking industry is already very well regulated – and consequently, very secure – there exist in the payments chain other potential weaknesses that opportunistic thieves can exploit, and often have.
Last week at a cybersecurity conference hosted at the Boston Fed, representatives from the FBI and the OCC warned of spear-phishing and other types of social engineering attacks that can appear legitimate and function essentially by fooling lower-level employees into wiring money to the fraudster.
The message was clear: As payments move faster, controls will also need to move faster if bankers are to stay one step ahead of the bad guys.
“Banks, for the most part, are fairly well protected,” Baranowski noted. But he said that same-day ACH may necessitate some updates to banks’ policies and procedures.
Much of that also comes down to an age-old banking principle: know your customer.
“People have always said this in banking, know your customer, but it really is true,” Missle said. “You really need to know your customer and have a strong understanding as to what they’re trying to do. That’s the most important thing, just sitting down with them to understand why they want to do these types of transactions.”
