 Community Business Bank's Success Story | Printer-friendly PDF Version
WHO
Community Business Bank
West Sacramento, Calif.
$129 million asset
Grace Nagel
Senior Vice President & Director of Compliance
WHEN
September 2008 - Present
WHAT
Community Business Bank has successfully utilized Banker’s Toolbox’s Fraud Manager since last fall to meet bank regulator requirements for the ID Theft/Red Flag Guidance. The bank has also enhanced its customer service offerings by monitoring corporate and personal accounts for possible internal fraud.
The Challenge
Community Business Bank ($129 million in assets) is a locally owned community bank that focuses on serving the needs of small-to-medium sized business, professional, and nonprofit organizations in and around Sacramento, California. The bank, which is headquartered in West Sacramento, was founded in 2005 and has experienced steady growth since its inception.
The Fair & Accurate Credit Transaction Act, also known as the “Fact ACT,” was enacted in 2003. In January 2008, Section 114 (commonly called the “Red Flags Rule”) was added to the document to provide clarification on the regulation. Section 114 required financial institutions and creditors to develop and implement written identity theft prevention programs to provide for the identification, detection and response to patterns, practices or specific activities (or, Red Flags) that may indicate identity theft by November 1, 2008.
In summer 2008, Community Business Bank identified a need for the bank to successfully implement an automated system to identify, monitor and track transactions for suspect or confirmed identity theft as required by the pending Red Flag guidance. The system would need to be a cost-effective way to make sure the new regulations would not disrupt the compliance workflow for the bank and at the same time reduce risk for the Bank and improve customer service. To meet the regulatory requirements of this new regulation, the Bank also needed to have a compliant system in place before the November 1, 2008 deadline.
The Solution
Having already utilized Banker’s Toolbox’ BAM (BSA/AML Management System) and WirePro (Automated Wire Fund Transfer System) since 2005, Community Business Bank chose two additional Banker’s Toolbox solutions, Fraud Manager, which is designed to find irregularities in incoming check patterns in relation to client’s check writing, and Kite Manager, a check kiting detection tool, to help it meet its Red Flag requirements.
Bank executives carefully vetted Fraud Manager and Banker’s Toolbox prior to purchasing the system and reported that the implementation was a “simple, rapid one.” In fact, the implementation was complete a few weeks prior to the November 1 deadline set by regulators, which enabled Community Business Bank to fully test and become comfortable with the system.
Metrics built into Fraud Manager enable the bank to automate the process of effectively identifying four key fraud factors: historical dollar amount range pattern; duplicate check numbers; check serial numbers out of range; and number of checks out of range. The system automatically produces check fraud suspect reports on a daily basis against these four factors to help Community Business Bank staff quickly identify patterns and recognize potential instances of identity theft and check fraud.
Part of the Red Flag Rules require financial institutions to keep an archival database demonstrating an ongoing vigilance against identity theft and fraud, and Fraud Manager enables Community Business Bank to meet this need. If a case of fraud is identified, the bank can better minimize its risk and better protect its corporate customers. If no fraud is determined, the bank has an audit trail in place to clearly show why it investigated.
“Having Fraud Manager in place greatly complements our existing internal controls and adds an additional layer to provide greater security for us and our customers,” said Grace Nagel, Senior Vice President and Director of Compliance for Community Business Bank.
The Result
Community Business Bank underwent a scheduled FDIC Safety and Soundness Examination in early December 2008 and was, in fact, one of the first banks in California to have its Red Flag procedures and automation processes formally evaluated.
“The FDIC examiner was very interested in what we were doing with Fraud Manager and was quite complementary of the system, particularly the reporting capabilities and ease-of-use,” said Nagel. “Since the majority of fraud typically happens on the retail side of banking, the examiner was impressed that a business bank like ours had such a sophisticated system in place to protect our customers.”
In addition to helping the bank meet its Red Flag requirements, bank officials cite the “value-add” aspect of improved customer service for its customers as purchase validation as well. With the Fraud Manager system in place, the Bank has the ability to provide better transaction oversight and potentially protect the customer from becoming a victim of identity theft or fraud.
If an instance of fraud does occur, Community Business Bank is now able to go directly to its corporate client executives and provide them with very specific information to help them identify any internal fraudulent activity and better protect themselves, which they value. Additionally, the bank is now positioned to take a more proactive approach to dealing with suspected check fraud activity. For example, a small business owner may keep a blank check in his or her wallet and if used, the bank will call that owner to confirm the out of sequence check. This capability, paired with the bank’s ability to now identify a single corrupt account manager within a corporate customer’s operation, positions the bank to clearly demonstrate its commitment to its customers and solidify those relationships even more.
The use of Banker’s Toolbox’ technology has also driven new account growth for Community Business Bank. Through the use of Fraud Manager, it became apparent that some of the bank’s corporate customers used a single account for multiple purposes, such as payroll and operating expenses, when they would be better served by having separate, dedicated accounts. The bank was able to successfully identify these customers and cross-sell them on opening additional accounts.
“Our relationship with Banker’s Toolbox has been a very valuable one,” said Nagel. “We continue to work with them, because of their high level of service and caliber of skills. Banker’s Toolbox is unique among software companies, because they are bankers, and as such, they clearly understand the industry, its regulatory requirements and how those requirements impact a bank’s operations.”
About Community Business Bank
Community Business Bank serves customers through San Joaquin, Sacramento, Placer, Yolo, Solano and contiguous counties, offering commercial banking services with an emphasis on small-to-medium sized businesses, professionals, agricultural-related businesses and not-for-profit organizations. Since opening in November 2005, the bank has grown to more than $129 million in assets. Community Business Bank stock is traded under the symbol: cbbc.ob. For more information, visit the bank’s web site at: www.communitybizbank.com.
About Banker’s Toolbox, Inc.
North Hollywood, Calif.-based Banker’s Toolbox, Inc., helps banks manage risk and streamline compliance examinations. The company’s product suite consists of affordable solutions for money laundering detection and reporting, risk management through fraud and kite prevention, secure wire processing automation, and commercial real estate loan portfolio risk assessment. The Banker’s Toolbox team is a unique combination of seasoned bankers and information technology consultants who specialize in designing, developing and implementing risk management solutions nationwide while providing unparalleled customer service to regional and community banks. For more information, visit the company’s Web site at www.bankerstoolbox.com. |
back
|
SOLUTIONS for the financial industry
|
American Bank's Success Story