Welcome to the third installment of the BAS Fraud Panel with Informed’s Director of Auto Lending Strategy, Jessica Gonzalez, Kevin Faragher, Senior Director of Product and Strategy at Ally Financial and Michael Reynolds, Business Technology Senior Manager for Service Digitization at KeyBank. The panel was moderated by Whitney McDonald, Deputy Editor Of Bank Automation News.
Picking up where we left off last time, we’ll dive back into the conversation.
Whitney – We started touching on it, but let’s hear more about what you’re hearing from the CFPB and its expansion of the Community Reinvestment Act.
Jessica – CFPB has been adamant about focusing on underwriting and credit approval decisioning. But, we’re actually seeing CFPB outreach expand further, into GAP warranties, waivers and insurance. Things that were once out of CFPB reach – because they’re in funding, not underwriting – are now being impacted.
So before we kind of said, well if we don’t need all of that data, it’s okay. It’s a little bit less leverage. Now we see that it’s imperative to ensure that you have the most accurate information for your consumers. And keeping that data safe is a big imperative for f&Is and fintechs. We’re making sure that all of the data we collect is used efficiently, making sure we’re doing right by consumers.
Regarding the Community Reinvestment Act, it’s about giving back to the communities that we live in, work in. Transparently calculating pay stubs and income on W2s for self employed is important to removing bias within your lending organization. That’s key in automating and using data and ultimately making sure data is secure and compliant from a privacy perspective.
Whitney – You touched briefly on security. Can you explain a little bit about what FIs can do to ensure that they have secure systems, whether it’s technology investment or AI?
Jessica – It’s all of our responsibility – not just lenders, but the vendors you’re doing business with, to make sure you’re compliant in all aspects. We’re an extension of the lenders providing this financial service. There’s new guidance that shows the regulators are starting to go more into the f&i from the fintechs. There was a speaker earlier who discussed the gray lines between banks, lenders, fintechs, etc. But we’re getting to the point where it’s all of our responsibility to make sure we’re doing right by our consumers.
Regulations like the California Privacy Acts say we need to be able to produce the documents and the data that consumers are giving you. So we’re making sure that if any lender wants the information, we can provide it on demand. Make sure that whoever you’re doing business with enables you to provide that data to your consumers. And they don’t make it a headache and force you to jump through hoops. That should be a requirement for people you do business with.
Final Thoughts on Fighting Fraud
Whitney – Before we shift into audience q&a, I did want to ask each of you one piece of advice or a takeaway. Where should people start thinking about leveraging automation in order to detect fraud at their own institutions?
Kevin – Quickly find an effective tool to fight the type of fraud you’re combatting and get it into the right hands. For us that might be our dealer customers, our underwriters and our funders. Also, teach them to work with artificial intelligence like we’re doing with Informed for looking at things like paystubs. But it’s all about speed and getting everything into the system because the fraudsters don’t stop and you’ve got to try and be as creative as they are.
Jessica – That’s great advice. When people come to us they’re kind of overwhelmed, because usually when they’re just starting to think about fraud. Maybe they had an incident or somebody told them to focus on fraud or they got a slap on the hand. So I would say, take a step back, understand what your problems are, and look at it very logically, you know, what is your low hanging fruit? What are the things that are really causing you the most issues?
We’ve talked about holistic ways to approach fraud because there are so many different ways to address fraud. And there are many different types of fraud and many issues you may be facing.That’s why part of my job is to make sure that lenders are able to understand what type of fraud they want to go and attack and understand the issues they’re seeing. And then, what is the best way to handle it? So if it’s image quality that’s making fraud an issue, then we go and attack that. We’ll give you a white labeled digital experience. Get the documents into the system in an easier, clearer, more efficient way.
So having the data to understand what your underlying problems are. What is a step solution that you can do, so that you can crawl, walk, run instead of trying to boil the whole ocean. I would say to step back, understand your situation and create a plan of attack so that you don’t feel overwhelmed or are just shooting for the stars.
Michael – That’s solid advice. The one thing I will throw out is to practice these situations – have desktop exercises where you say hey, what’s your bad day look like? And then you have the teams and communications in place to make sure fixes happen swiftly – that’s what we’re advocating.
Following the panel discussion, Whitney opened it up to audience questions. There were so many that they couldn’t be answered in the allotted time. Next week in the final installment of this series we’ll share the entire question and answer session – stay tuned!
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