Wrestling Payments

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Episode Summary
In this episode of Wrestling Payments, host Joe Casali welcomes Nanci McKenzie and James Rowe from Affirmative Technology. They dive into the challenges of creating a risk rating for originators in the payments industry.

The conversation highlights the importance of risk management in financial institutions. Nanci and James discuss the need for automated solutions to handle the increasing volume of transactions. They emphasize that manual methods and spreadsheets are no longer sufficient. The discussion also touches on the role of regulators and the pressure they put on institutions to have robust risk management systems in place.

The episode concludes with a look at the broader economic landscape. James, an economist, shares his insights on the potential impact of rising interest rates and the debt ceiling issue on financial institutions. He also offers his perspective on the current state of the economy and its implications for banks. This episode is a must-listen for anyone interested in the intersection of risk management and the payments industry.

Podcast Experts
Name: Nanci McKenzie and James Rowe

What they do: Executive Vice President of Compliance and Product Strategy and Chairman of the Affirmative Technology Board

Company: Affirmative Technologies

Noteworthy: An industry veteran, Nanci McKenzie is known for her expertise in risk management and compliance in the payments industry. / An economist by training, Rowe specializes in leveraging data analytics to solve key business problems in the financial sector.

Where to find them: Nanci: LinkedIn｜James: LinkedIn


Key Insights

Automated Risk Rating for Originators

Wrestling Payments delves into the need for automated risk rating for originators in the payments industry. Nanci and James discuss how their tool, Navigator, can provide accurate ratings for originators based on their transaction history. This system allows financial institutions to prioritize their focus on high-risk originators, enabling efficient risk management. The tool also allows for monitoring originators' risk transition, providing valuable insights into their business activities.

Embracing Data Analytics
James, an economist by training, emphasizes the importance of embracing data analytics in financial institutions. He demystifies terms like AI, machine learning, and big data, explaining that these are simply automated statistical techniques that have been around for decades. James encourages financial institutions not to be intimidated by these terms but to leverage them to make effective decisions.

Regulatory Pressure and Risk Management
The podcast also highlights the increasing regulatory pressure on financial institutions to have robust risk management systems. Nanci points out that regulators are asking institutions how they are risk grading their customers and are taking enforcement actions based on their findings. This underscores the importance of efficient risk management systems, such as the one provided by Affirmative Technologies.

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Episode Summary
It's hard to imagine life without a smartphone, as it has integrated into every aspect of our personal and professional lives. Let's take a look at banking. No one writes checks anymore. Instead, we use mobile banking apps; even our credit and debit cards are tap-and-go or tap-to-pay. We understand it's all technology-driven, often forgetting that there have always been, and probably will always be, people behind all these solutions.

In this episode of Wrestling Payments, Linda Cooper, the VP & senior operations manager at Gorham Savings Bank, joins our host Joe Casali to discuss innovations in banking from the perspectives of FIs and customers. They also touch upon banking in general and the reasons for its bad reputation. Finally, Linda lists what skills are needed to thrive in the field. 

Podcast Expert
Guest name: Linda Cooper

What she does: Linda is the VP & senior operations manager at Gorham Savings Bank.

Company: Gorham Savings Bank

Where to find Linda: LinkedIn

Noteworthy: Linda covers various areas, working with the data processing, loan servicing, and content management teams.

Podcast Insights
Banking has earned a bad reputation, and it's on us to carry that burden. That's because banks take responsibility for any money-related issue, regardless of the level of control they have in a given situation. Linda explains. ''If anything happens, we take the rap for it, whether it is interest rates going up or IRS checks not getting there quickly enough or no matter what. We are on the front end, and it's our problem whether we can control it or not. So it requires large shoulders because that's just the way it is.''

Modern banking means faster banking. But, convenient as it may sound, enjoying the shiny objects of today's banking may have some side effects. ''We go on and on about faster payments in all of their forms, and it just means it's faster to be wrong or fraudulent. You can make mistakes faster. You can have problems faster and with less time to react. So there's that side of it.''

Relying on technology requires you to have plan B. Digital tools are the present and future of any industry, including banking. But one thing we must bear in mind: technology can break, and depending on how severe the breakage is, we must have a recovery strategy. ''You need to be able to create and have manual procedures so that in the case of failure — it's like insurance. The idea is that you would never have to use it, but you still need to have it.''

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This is the third and final episode that was recorded live at the Annual Payments Management Conference, this year NEACH celebrated its 50th Anniversary. The last but definitely not the least. we could have easily kept talking about risk and payments.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali engages in a rich conversation with Nanci McKenzie, Executive Vice President of Compliance and Product Strategy at Affirmative Technologies. Nanci shares her extensive experience in the payments industry, highlighting the importance of risk management in payment processing. She emphasizes the need for financial institutions to scrutinize their payment processors and FinTech partners as closely as they do their vendors, given the potential impact of security incidents.

The conversation then shifts to the evolving landscape of electronic payments. Nanci provides her insights on the future of the industry, particularly the rise of faster payments and app-based solutions. She also discusses the role of third-party payment processors in catering to the banking needs of the younger generation.

Finally, Nanci underscores the importance of consumer education in mitigating financial fraud. She advocates for a collective approach to risk management, where everyone from operations to customer service representatives plays a role in identifying and mitigating risks.

Guest-at-a-Glance
Nanci McKenzie
Executive Vice President of Compliance and Product Strategy
Affirmative Technologies
LinkedIn

Noteworthy: Nanci holds an AAP, an APRP, and a Juris Master's degree in Financial Regulation and Compliance. She is currently pursuing a Master's in Legal Studies with a focus on financial regulatory compliance and cybersecurity and data privacy at Thomas R. Kline's College of Law, Drexel University. Nanci has a rich history in the payments industry, starting as a part-time teller and transitioning into FinTech. She is passionate about risk management and emphasizes the importance of consumer education in preventing financial fraud.

Key Insights
The Importance of Risk Management in Payment Processing

 Nanci emphasizes the importance of risk management in payment processing. She explains the cycle of risk assessment, policies, procedures, audits, reviews, and monitoring. She likens it to a rinse-and-repeat process, similar to shampooing. This insight underscores the need for financial institutions to scrutinize their payment processors and FinTech partners as closely as they do their vendors, given the potential impact of security incidents.

The Future of Electronic Payments

 Nanci provides her insights on the future of the industry, particularly the rise of faster payments and app-based solutions. She discusses the evolution of electronic payments, the ACH developments in app-based solutions, and the introduction of real-time payments. This insight highlights the changing landscape of the payments industry and the need for financial institutions to adapt.

The Role of Consumer Education in Mitigating Financial Fraud

 Nanci underscores the importance of consumer education in mitigating financial fraud. She advocates for a collective approach to risk management, where everyone from operations to customer service representatives plays a role in identifying and mitigating risks. This insight emphasizes the need for continued consumer education and the role of various stakeholders in preventing financial fraud.

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This episode was recorded live at the Annual Payments Management Conference, this year NEACH celebrated its 50th Anniversary.

Episode Summary

In this episode of Wrestling Payments, host Joe Casali sits down with Peter Tapling from PTAP Advisory, LLC. They dive into the world of payments, discussing the importance of continuous learning in the face of constant innovation. Peter emphasizes the need to understand how new faster payment methods can be applied to existing work processes, encouraging listeners to disrupt their routines for the sake of progress.

The conversation then shifts to the concept of directories in payment systems. Peter explains how directories work in popular payment platforms like Zelle, PayPal, and Venmo. He also highlights the lack of a directory in instant payment schemes, sparking curiosity about the future of this feature in the payment industry.

Finally, the duo explores the realm of artificial intelligence (AI). Peter shares insights on the evolution of AI since the 1960s, highlighting the importance of computational resources and data in AI development. He encourages listeners to learn more about AI and its implications in the payments industry. This episode is a must-listen for anyone looking to stay ahead in the ever-evolving world of payments.

Guest-at-a-Glance
Peter Tapling
Managing Director
PTAP Advisory, LLC
LinkedIn

Noteworthy: Peter is a technology expert with over 20 years of experience in the payments industry. His deep understanding of the intersection of fraud, identity, risk, and payments, coupled with his interest in innovation, makes him a valuable resource in the rapidly evolving world of payments.

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Episode Summary
This episode was recorded live at the Annual Payments Management Conference, this year NEACH celebrated its 50th Anniversary.

In this episode of Wrestling Payments, host Joe Casali welcomes Jordan Bennett from Nacha to delve into the intricacies of risk management for ACH payments. They discuss the evolving role of the Risk Management Advisory Group and how it aids financial institutions in mitigating risks on the ACH network. In addition, Jordan shares insights the current Nacha Request for Comment on proposed Rule Changes, emphasizing the importance of feedback and adjustments to perfect the system.

The conversation takes a deeper dive into the proposed rules for combating fraud. Jordan explains the potential use of reversals to return funds to the originator, which could significantly impact how financial institutions handle fraudulent transactions. They also discuss the new use of a return code, R 17, to specifically flag suspicious transactions.

Towards the end, the discussion shifts to the future of ACH payments, with Jordan and Joe pondering the possibility of continuous settlement and the implications for risk management. The episode concludes with Jordan's advice for professionals in operations, encouraging them to stay aware of organizational changes and fill gaps where necessary.

Guest:
Jordan Bennett, AAP, APRP
Senior Director, Network Risk Management
Nacha

Key Insights
The Evolving Role of the Risk Management Advisory Group
The Risk Management Advisory Group plays a crucial role in mitigating risks on the ACH network. Jordan explains how the group is continuously refining rules and regulations to ensure the safety and efficiency of transactions. The process involves gathering feedback and making necessary adjustments to perfect the system. This insight underscores the importance of dynamic risk management in the rapidly evolving payments industry.

Proposed Rules for Combating Fraud
Jordan discusses the potential use of ACH REVERSALs to return funds to the originator in cases of fraudulent transactions. This proposed rule could significantly change how financial institutions handle fraud. Additionally, the introduction of a new return code, R17, is discussed. This code would specifically flag suspicious transactions, providing another layer of security in the ACH payment process.

The Future of ACH Payments
The conversation shifts towards the future of ACH payments, with Jordan and Joe pondering the possibility of continuous settlement. This could have significant implications for risk management in the payments industry. Jordan also encourages professionals in operations to stay aware of organizational changes and fill gaps where necessary, highlighting the importance of adaptability in this rapidly changing field.

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Episode Summary
In this episode, our host delves into the timely topic of ACH's proposed rule changes with guest expert, Sean Carter. The conversation digs into the specifics, including the revised rules around defining entries as ‘PURCHASE’ or 'PAYROLL'. They discuss the implications these modifications could have on the e-commerce and payroll sectors, while acknowledging the necessity of such standardization for seamless data analysis.

The dialogue gets particularly thought-provoking when the discussion shifts towards the potential challenges presented by the proposed standardization of individual names on transactions. Both host and guest candidly express their concerns about the complexity of implementation and compliance with this rule.

The conversation concludes with a strong call to action, urging listeners to voice their opinions during this crucial rulemaking process. Both the host and Sean emphasize the importance of industry feedback in shaping fair and balanced rules. A must-listen for anyone navigating the changes in the payment industry.

Guest-at-a-Glance
Name: Sean Carter
What they do: CEO
Company: NEACH
Noteworthy: Pioneering advocate for modernization in the payment industry.
Where to find them: LinkedIn

Key Insights
The Role of NEACH in the Payments Industry. Both Sean Carter and Joe Casali represent NEACH, an organization focused on enhancing the payments ecosystem. In the episode, they discuss NEACH's efforts to provide resources, educate stakeholders, and drive innovation in the payments arena. They also highlight the organization's role in aiding businesses navigate regulatory changes and how they are actively inviting feedback to help shape their approach.

Episode Highlights
An Invitation to Influence Rule Changes
The podcast delves into the power companies have in shaping regulations that directly impact their operations. Sean emphasizes the importance of participating in the Request for Comment (RFC) process and providing valuable feedback on proposed rules.

"Don't just sit back and let these rules happen to you. It's much better to have an active role in shaping them."

NEACH's Role in Navigating Regulatory Changes 
Both Sean and Joe talk about the role NEACH plays in aiding businesses navigate through regulatory changes. They highlight NEACH's commitment to educating and providing resources to stakeholders, especially when it comes to understanding AML regulations.

"We're here to help, obviously, if you wanna to have us jump on a call with a couple of your staff to go through these things, we do that all the time."

The Permanent Change in the Payments Arena 
The podcast concludes with a strong message about the permanence of changes in the payments industry. Joe underlines that these shifts, particularly in regulations and the rise of RTP, are not temporary disruptions but rather lasting transformations.

"This is changing now, and this is, uh, it's, it's permanent. This is how things will be. If, if, uh, if they all get approved without any comments."

 Top Quotes 

1. Sean Carter [00:20:00]: "Don't just sit back and let these rules happen to you. It's much better to have an active role in shaping them."

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Episode Summary
The COVID-19 pandemic spurred innovation and modernization across different businesses and industries, and banking is one of the fields that had no choice but to keep up. However, innovation is an ongoing process that requires leveraging both new and existing resources effectively.

In this episode of the Wrestling Payments podcast, our host Joe Casali welcomes Linda Cooper, the VP & senior operations manager at Gorham Savings Bank. They talk about the ways to optimize processes and better leverage existing resources, how COVID has driven significant changes in the banking space, and the importance of continuous improvement.

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Guest-at-a-Glance
Name: Linda Cooper
What she does: She's the VP & senior operations manager at Gorham Savings Bank.
Company: Gorham Savings Bank
Noteworthy: Although Linda has been with the Gorham Savings Bank for ten years, she's not a lifelong banker. She has experience in multiple industries, including retail and manufacturing.
Where to find Linda: LinkedIn

Key Insights 
⚡ We need to leverage existing resources better. Implementing new tools is not enough; we also need to leverage the existing resources more effectively. Linda explains, "Something new I've been thinking about as sort of backward innovation, meaning review, as things slow down. The economy’s slowing down; interest rates are up; a lot of us are seeing a decrease in volume of loan activity or whatever. I think that it's a prime opportunity to really review the usage of existing software to make sure you're leveraging all the functionality that's there. A lot of us implement systems for a specific reason or to cover a specific thing. And, 'Oh, we'll get to that later' — the new stuff — and then later never comes. And so, I think that to formalize that a little bit and create the bandwidth and get the right people around the table to really look at those things, to see what we're missing." 

⚡ COVID spurred innovation in the banking industry. If there's anything that the pandemic taught us is that traditional ways don't always work best. Linda says, "People that just would not consider or couldn't wrap their heads around any changes to how we do things — removing paper from the process, doing things electronically — all of a sudden we did it, and we're like, 'Oh, wow. That works pretty well.' And so, it increased the appetite, I think, for change in a way that I'm not sure anything else would have done because we were forced into it. Now, that's not to say that there aren't people that went right back to their paper files, and they're so happy to be printing things, but a vast majority of us, I think, got on that bandwagon, which has changed the appetite, the environment for innovation."

⚡ Modernization is a continuous process. Modernization is ongoing and open-ending. There are no boundaries to innovation, even in the banking space. Linda says, "With the modernization, how can we better leverage these? And it's almost an ongoing process. Continuous improvement, I guess, is really what it is, in order to make sure that you're always using, always thinking, never settling for, 'Yeah, this is good enough.' Always looking to see, 'Is there a better way?'"

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• How the Finance Industry Is Adopting Instant Payments
• Introducing FedNow in New England and How the System Will Affect the Instant Payment Strategies of FIs
• NEACH Survey: Are FIs in an Either-Or Situation With RTP and FedNow?

Episode Summary

NEACH recently conducted a survey with 145 participants about how the finance industry is adopting instant payments in New England. The respondents answered questions about available instant payment solutions and how they affect their strategy.  

In this episode of Wrestling Payments, host Joe Casali touches upon FedNow, a new instant payment system, and shares participants' take on how this new solution will add to their operations. 

Joe also discusses when participants plan to implement their chosen instant payment solution and their biggest concerns regarding the process.


Podcast Insights

🎙65% are either working on or have an instant payment strategy. The survey involved 145 participants answering questions regarding available solutions and a soon-to-be-launched system, FedNow. 

🎙53% of all participants said they are interested in FedNow ''send and receive.'' That means they not only want to receive transactions via the system but also take advantage of the sending option.

🎙About 20% are interested in implementing it in 2023. The same percentage of participants said that they are considering implementing it next year. Around 1.5% want to do it by 2025, while 50% have an undefined timeframe. ''In the financial institution industry, there's a lot of waiting and seeing, 'I want someone else to make the mistakes, and then I'll participate.'''

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• How to Manage ACH Notifications of Change With Joe Casali of NEACH 
• Joe Casali of NEACH on Educating Staff on the Importance of Properly Fixing NOCs 
• Joe Casali of NEACH: Three Tips on How to Avoid Unpleasant Scenarios Caused by Neglecting Notifications of Change

Episode Summary

Welcome to another episode of Wrestling Payments. We dedicate this session to Notifications of Change (NOCs), or as many refer to them, No One Cares. In this episode, our host Joe Casali shares three cases where receiving financial institutions wrestled with NOCs.

 As part of the analysis, Joe describes the causes and the consequences of not addressing the issues. Finally, he shares valuable tips on how to prevent unpleasant scenarios caused by ignoring NOCs.

 *Names have been changed to protect the actors in the cases.


Podcast Insights

🎙Educate your originators on what notifications of change are. While analyzing the background, including the response and the consequences of the first case (you can find out more about it in the highlight section below), Joe says that ODFIs must train their originators on how to act regarding NOCs. Otherwise, they risk penalties. ''They have to know what a NOC is. They have to know how to deal with it. They have to be set up right to get the information.'' 

 🎙If you receive entries you must wrestle with, file a notice of possible rule violation. Based on a case initiated on the suspicion that an originator acted against the norms, Joe suggests notifying Nacha, or ''You can say something directly to an ODFI, not just as a contact registry. You can reach out, but the system fines and rules enforcement will make it official if you need to escalate it to that point.''

 🎙You must receive NOC reports regularly. That's the third and final tip Joe shares in this episode, adding: ''If you don't have any NOCs, something's wrong. That may not be totally true, but you should probably get at least one NOC over a year or two. So check to confirm that you're getting the NOC report, understand what it's saying, and make the changes as soon as possible.''

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Welcome to the first episode of Wrestling Payments by NEACH, a member-based payment association for financial institutions in other organizations supplying payment-related services. NEACH is a recognized and licensed ACH education, publications, and support provider. 

In the show's first episode, we are joined by Sean Carter, the president & CEO, and Sandy Ortins, the SVP of Operations, at NEACH. Sean and Sandy reveal why they decided to start a podcast, who it is for, the issues they will tackle, the guest list, and how they came up with the name.