Intelligence Report | November 2026 - Flipbook - Page 14
“We absolutely must protect information. But we have to be
able to share. If we can’t talk to each other, it’s very difficult
to stop.”
Heather Deneault, The Denison State Bank
consumer accounts. Essentially, these contracts should out-
forums where bankers can share information about the fraud
line that the bank is providing reasonable fraud prevention
they are experiencing, says Heather Deneault, vice president
solutions and encourage the commercial customer to use
of deposit operations and branch management officer at the
those. If the business doesn’t utilize these systems, then the
$454 million The Denison State Bank in Holton, Kansas.
contract can provide that the bank isn’t required to reim-
However, she notes it is important that a bank never violate
burse any funds that are stolen.
a customer’s privacy when discussing these issues. “We abso-
One product that banks should offer and push busi-
lutely must protect information,” she adds. “But we have
nesses to use is Positive Pay. This requires the customer
to be able to share. If we can’t talk to each other, it’s very
to submit a list of checks it has issued each day. The bank
difficult to stop.”
can then compare that to any that have been presented for
There are consortiums that banks can join to combat
payment. Anything that doesn’t match is usually automati-
fraud, money laundering and other illicit activities. These
cally returned, unless the business tells the bank to still pay,
organizations do that by collaborating and sharing informa-
Kalahurka says. Some banks even offer Positive Pay for
tion. Having access to this larger dataset and a broader view
ACH transactions. In addition to that, banks should encour-
of trends can be helpful.
age businesses to set up dual authorization for transactions
Unit21, which is open to banks, fintechs and crypto
like wire transfers. This requires two employees to approve
firms, offers one such consortium that is aimed at preventing
before a payment is made. That slows down the process —
fraud. Members can set up customizable, automated rules
fraudsters thrive on making requests seem urgent — and
that trigger when suspicious transactions occur across the
allows a second person to review the situation.
network. The member can learn how long a potential cus-
If these or other fraud prevention solutions are offered,
tomer has had an account with another member institution,
the bank is likely off the hook for reimbursing the business
though the inquiring bank isn’t given any private information,
for losses tied to fraud. Instead, the institution has the
such as the name of the other institution or any internal
discretion to reimburse customers — and may do so if the
data. The inquiring bank can also learn if the potential
relationship is an important one. “You have a lot more lever-
customer has had a strange pattern of logins, or if another
age,” Kalahurka says. “You might make the business deci-
institution has cancelled the person’s services because of
sion to cover some of it, but then you are really doing it as a
suspicious activity.
service and not as a legal obligation.”
Last year, information from a crypto firm in the Unit21
consortium helped a credit union detect that some of its
3. Work With Your Colleagues
members were being defrauded through a crypto ATM scam,
In general, the banking industry tends to be congenial,
says Dhiraj Bhat, Unit21 product manager. The credit union
and institutions are willing to help their peers. That holds
was able to set up monitoring and stop the transactions. “All
true when it comes to fraud as well. There are a variety of
of these developments in fraud are happening in near real
options. For instance, Cornerstone Advisors started a free
time,” he adds. “By the time the financial institutions edu-
quarterly roundtable where bankers gather to discuss fraud,
cate their end users about this, it is already too late.”
policy and tools. It has roughly 80 participants, says John
Meyer, a managing director at the consulting firm.
State and national banking associations usually have
12 | BANK DIRECTOR INTELLIGENCE REPORT
Jackie Stewart is executive editor for Bank Director.
