Southwest Bank Prevents Fraud

Financial institution uses TCI to automate credit scoring and fraud detection.

The time it takes for a loan to be processed should obviously be shortened with an automated credit-screening application - and Southwest Bank of Texas (Houston) is proving it with Teledata Communications Inc.'s (TCI) Web-based Fraudscreener. Prior to its December 2003 implementation of TCI's (Hauppauge, N.Y.) Web-based solution, the $5.8 billion bank had relied on a time-consuming manual system.

The financial institution was looking for a way to shorten its credit-scoring and fraud-screening processes, says Bill Palko, senior vice president, credit investigations and commercial loan recovery manager, Southwest Bank of Texas. "We were looking for [a vendor] who could automate our credit report processing system so we could push a button to pull those reports and have them sent to the [banks that requested them] all in a one-step process that would take less than a minute, as opposed to our old manual system," recalls Palko. "Secondly, we wanted to implement a system that would detect and prevent credit fraud."

Under the previous manual credit-scoring system, pulling a report required an employee to first physically locate it. "It took eight to 12 minutes per report," according to Palko. "Now, with TCI, we pull the report and, in not more than one minute, the report is pulled and is sitting in the mailbox of the officer who requested it," he adds. "It's much cheaper than having a person sitting here all day long manually pulling all those reports."

Southwest Bank of Texas initially sought vendors to provide automated credit-screening and fraud-detection processes in January 2001, eventually settling on TCI, which had an advantage over other vendors because it already provided the bank with its manual credit screening process, Palko says. Since Fraudscreener is Web-based, it required less of an investment than installing an in-house product, he adds. "It was relatively inexpensive," Palko continues. "It was a fair amount of dollars for this bank, but the dollars that were spent will more than pay for itself to monitor, detect and prevent credit fraud."

Cost savings and operational efficiencies aside, the ability of an automated credit-reporting tool to monitor and screen for credit fraud was crucial to the bank's efforts to comply with recent regulatory requirements. Palko's primary concern has been protecting customer information. He says responsibility shifted to the bank to monitor information under the new restriction measures of the USA PATRIOT Act and the Bank Secrecy Act. The bank had to be capable "of identifying customers and insuring that they are who they say they are, and businesses are who they say they are," Palko explains.

TCI's Fraudscreener alerts the loan officer when it detects a credit score or fraud warning. A message is sent to the bank to take a closer look at the loan applicant. "The TCI system reads the warnings and spits that out, saying, 'This is an exception under your scorecard because of the safe scan warning. If it is an exception, you need to check out and verify why this is,' " says Palko. "We will determine from that whether or not we need to pull additional reports or go to additional outside informational sources to make sure that we don't have someone here that has, for example, stolen someone else's Social Security number."

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Snapshot

Institution: Southwest Bank of Texas (Houston).

Assets: $5.8 billion.

Business Challenge: Cut costs and save time during loan processing with an automated credit and fraud screener.