LexAlign 2024 Topics
The messages below cover a variety of topics related to the LexAlign solution. They are a great source for learning about LexAlign.
Topics for Banks
The messages below cover a variety of topics on how LexAlign helps banks.
Introduction to LexAlign
Hi,
Would you like to prevent losses from BEC, Account Takeover, and other Credit-Push Fraud?
Bankers routinely tell us that they are concerned about meeting regulator expectations for managing the risks associated with their commercial customers doing high-risk, highly regulated activities like remote check deposits, ACH and wire originations. Many have 2024 initiatives to better manage the risk of such remote operations and prevent Credit-Push Fraud that targets their commercial customers. The problem is the time it takes.
Thankfully, there is now a revolutionary solution that does risk management on remote operations, freeing your staff to focus on growth. It’s called LexAlign.
LexAlign automates the onsite security-and-compliance audit function for high-risk, highly regulated activities like remote check deposits, ACH and wire originations performed by your commercial customers. LexAlign gives them the precise and actionable information they need and automatically creates records you need to demonstrate risk management across your customer base.
With LexAlign you can grow your treasury customer list in a demonstrably risk managed way while reducing staff hours spent on compliance. If you’re growing, be careful, and be careful with LexAlign. Do more with less with LexAlign.
Because LexAlign is unlike any other solution available today, the best way to see how it works is to see a demo.
What LexAlign Does
|
Hi, If you are like many of the banks we’ve spoken to, your treasury department has their hands full trying to meet regulator expectations for business customers doing high-risk, highly regulated activities like remote check deposits, ACH, and Wires. LexAlign was created from the realization that the expertise business customers need to understand the rules, risks, and responsibilities that apply to their activities is locked up in the bank and not accessible to the customer, leaving them open to mistakes and fraudsters. LexAlign automates the onsite audit function using a sophisticated diagnostic assessment—not one-size-fits-all questionnaires. The LexAlign diagnostic assessment derives directly and transparently from regulatory guidance (in the form of exam manuals, institution letters, bulletins, supervisory highlights, summaries to rule changes, etc.), so that what is measured (and risk rated) are customer operational deviations from those official expectations. In effect, LexAlign makes expert guidance accessible in a targeted way to the persons actually conducting the activities. When a customer completes the LexAlign diagnostic assessment, they have immediate access to an audit report with gap analysis and action plan that explains their risk factors and how to remediate them. This empowers the customer to manage their own operational risks. |
How to prevent Credit-Push Fraud
Empowering your commercial customers to prevent Credit-Push Fraud.
Credit-Push Fraud results when a sophisticated criminal enterprise takes over your customer’s account or deceives them via business email compromise or other social engineering into sending funds to a fraudulent account.
Nacha has called this the now dominant form of fraud across payment channels and is pushing urgently for a New Risk Management Framework for the Era of Credit-Push Fraud. It says:
“Effective end-user education will require new and innovative ways to reach the end users of the payment system. Working together within and beyond the ACH community, participants in the payment system all have roles to play in combatting fraud. “
Like nothing before it, LexAlign uniquely responds to this call by effectively making the customer part of the risk management framework.
LexAlign does this by recruiting the customer to be the front layer in the layered security approach expected by regulators by:
- Sensitizing the customer to their vulnerabilities & responsibilities
- Empowering them with targeted & actionable guidance and
- Providing them with the foundation for a risk management program.
LexAlign also makes it possible for your staff to do Remote Operations Risk Management that is proactive, targeted, demonstrable and efficient.
In particular, LexAlign’s Security Diagnostic addresses the precise vulnerabilities that the criminal enterprises are exploiting: gaps in the customer’s operations, security, training, and sophistication.
LexAlign is designed to be an essential part of the new risk management framework Nacha is calling for.
As LexAlign is a new offering, we recommend a demo to fully understand the capabilities.
ACH Part 1: Security
Hi,
In our conversations, many of you have expressed interest in how we can automate your annual customer ACH audits. Based on our conversations with Nacha, there are two parts to the ACH audit:
ACH Part 1: Security
In our Nacha conversations, we heard that assessing the customer for IT and information security is a required part of the annual audit. This is not trivial, as it’s gaps in your customers’ security that fraudsters are exploiting in the extraordinary explosion of credit-push fraud, which Nacha has called the now dominant form of ACH fraud.
But here’s the good news: we also heard that the LexAlign Security Diagnostic would satisfy this requirement.
The LexAlign Security Diagnostic enables customers to do a self-assessment against what the Federal Trade Commission recommends as appropriate and prudent practices. Financial regulators defer to the FTC for guidance on business security to address the extraordinary risk of fraud that targets them.
The LexAlign Security Diagnostic was designed to satisfy Part 1 of the ACH audit and addresses Nacha’s call for A New Risk Management Framework for the Era of Credit-Push Fraud by recruiting, sensitizing and empowering the customer as the front layer in the layered approach to security that regulators expect.
ACH Part 2: For Originators
Part 2 of the annual audit assesses and helps the customer with adherence to the Rules on, among other things, the appropriate use of SEC codes, transaction accuracy, and third-party notices, authorizations, and cancellations. LexAlign will be launching Part 2 for Originators in 2024.
Start with Security
We recommend starting with Part 1 to help customers defend against Credit-Push Fraud. In addition to helping the customers identify and remediate gaps, the LexAlign Security Diagnostic also furnishes the customer with a customized Security Policy as required under the Rules in case they don’t have one.
How to prepare for the auditors
LexAlign automatically creates the records that demonstrate remote operation risk management for any size customer portfolio.
This is what a bank told us at Emerald:
“Last year, when I had 680 RDC customers, my auditor told me that I had 680 bank branches. We gave up trying to do on-site compliance audits years ago — it’s just not possible given the staff time it takes. Now we have 750 RDC customers and I need a better solution.”
We hear that more and more: Examiners and auditors are pressing banks harder on remote operation risk management for RDC, ACH and Wires, to comply with the requirements for detailed audits and training set forth in exam manuals, various institution letters, and other authoritative guidance.
Over the last few years, even as fraud related to customer ACH, Wires and RDC has exploded, LexAlign created a solution that automates the onsite audit function in the form of an online diagnostic interview. The solution takes your customer through an intuitive but powerful self assessment of their operations, knowledge, practices and future plans. Your customers instantly get a detailed, customized audit report containing a Gap Analysis and Action Plan to empower them with knowledge on how to remediate their gaps in line with regulators’ stated expectations. They also get a Policy Packet with materials to train their staff and keep records. Your Treasury staff get a dashboard with a centralized console showing where the risk exists across their customer portfolio, including which customers present the most risk to your institution.
To combat fraud, start with customer security (here's how)
Hi,
Your deposits aren’t secure unless your customers are secure.
We’ve spoken to a number of banks who are interested in our forthcoming ACH Diagnostic, expected in the first half of 2024. The ACH Diagnostic will complete our offering for treasury, with Diagnostics for RDC and Security available now. For those waiting for ACH, here’s why you shouldn’t delay starting with the LexAlign Security Diagnostic.
Security is crucial for all of your commercial customers but especially those doing RDC, ACH, and Wires.
This is why it’s important to get started with the LexAlign Security Diagnostic:
- LexAlign makes the expertise contained in regulatory guidance easily accessible and actionable for your customers.
- LexAlign shows them precisely where their operations deviate from what regulators require or recommend for online banking.
- LexAlign empowers your customers with actionable information and tailored resources to be the fortified frontline against fraud while automatically demonstrating proactive and effective risk management by the bank.
- LexAlign provides your customers with a security policy that regulators expect them to have.
How we demonstrate risk management for remote operations
Can the LexAlign solution help your bank solve remote operational risk management for high-risk, highly regulated activities like RDC and ACH?
Below, please find some points to consider.
- The LexAlign solution derives directly and transparently from regulatory guidance (in the form of exam manuals, institution letters, bulletins, supervisory highlights, summaries to rule changes, etc.), so that what is measured (and risk rated) are customer operational deviations from those official expectations.
- That means, simply by using LexAlign, you demonstrate alignment with regulator expectations in how you manage customer RDC and ACH compliance.
- LexAlign diagnostic interviews and products are designed to recruit (i.e., sensitize, empower and equip) the customer as the fortified frontline or front layer in a layered security approach, recognizing that it’s the gaps in customer operations and sophistication that fraudsters are exploiting to reach deposits. In effect, LexAlign makes that expert guidance accessible in a targeted way to the persons actually conducting the activities.
- Your LexAlign dashboard and the records that are automatically created when customers do a self-assessment are designed to demonstrate risk management, and there are embedded tools to automate (and demonstrate) follow-up remedial efforts on the data.
- By going from manual questionnaires to using LexAlign, banks have seen a completion rate increase from 30% to over 70%, while resolving audit findings and reducing staff hours on remote operational risk management by 75%.
- LexAlign ACH Part 1 (Security) satisfies Nacha’s call for A New Risk Management Framework for the Era of Credit-Push Fraud, which is now the greatest source of fraud loss across payment channels.
You've got to see a demo to believe it
It’s new, it’s different, and it’s never been done before.
This week we focus on the importance of how crucial a demo is to understand what LexAlign can do for your bank. As with most things new, it’s hard to really understand until you see it for yourself.
As an example, we recently demoed to the COO of a Bank who said she didn’t understand the full value of LexAlign until she saw the demo. She also said the examiners “were in her house” as we spoke. She then thanked us for being persistent in getting her to see a demo. They are launching LexAlign this month.
LexAlign automates the onsite compliance audit function. This is something you probably have not contemplated as possible so you are operating in a manual compliance audit world with its enormously costly efforts that can only reach a subset of your customers, even as the losses from fraud and costly mistakes continue to surge.
LexAlign automates laborious expert processes, enabling you to reach all of your customers, avoid an auditor/examiner finding, reduce losses from fraud and mistakes, refocus your time on growth rather than compliance, and boost your non-interest income. Yes, all those things!
How LexAlign reduces RDC customer attrition
Customers are far more forthcoming in revealing pertinent concerns to LexAlign than they are directly to their bank.
For example, we’ve heard from many treasury managers that customers are less likely to report concerns about their scanners than they are to switch banks. In the LexAlign RDC Diagnostic, customers are asked specific questions about scanner functionality. When relevant, the system delves deeper. We find that customers readily report device concerns when completing a LexAlign Diagnostic.
Because on average 75% of customers complete their LexAlign Diagnostic, it’s not uncommon for the bank to discover 20% or more of their customers have device issues. By generating a report listing the customers and their specific device concerns, banks that use LexAlign can proactively address those issues, preserve the relationship, and realize higher average deposit volumes.
KYC is better with LexAlign
With LexAlign, you can have more meaningful and impactful conversations with your customers, helping you get to know them better.
LexAlign enables greater trust and a more fruitful relationship with customers by furnishing you with rich data about their operations, sophistication, and thoughts about the future, all of which you can use to foster a deeper relationship. With LexAlign, you can:
- proactively approach customers that signaled attrition risk via LexAlign, to discuss their banking needs
- determine which customers are trying to use scanners provided by a different bank
- increase average deposit volumes by addressing very common (but otherwise hidden) device issues
- demonstrably reduce the risk of credit-push fraud,
- forecast deposit activity over the next year, and
- grow your customer base significantly without the need for additional headcount/resources for risk.