Kris Bishop, CEO of Fintegrate, talked with BankBeat about how tech is helping banks resolve disputes.
How much money are community banks spending resolving disputes and collections?
Kris Bishop: For some broad perspective, McKinsey estimates the top 15 U.S. banks spend approximately $3 billion annually on disputes processing, with 50 million to 100 million disputes occurring annually in the U.S. The cost per dispute typically ranges from $10 to $50.
For community banks, the impact is significant. With the rise in electronic transactions and the potential for increased disputes, these costs can add up and impact the financial institution’s bottom line.
Financial institutions often allocate a substantial portion of their resources towards the management of dispute resolution and collections. Institutions incur costs such as the dedication of staff time, processing of extensive paperwork and manual data entry into multiple systems, and the risk of potential losses resulting from disputes that remain unresolved. These disputes can arise from a variety of sources, with the most common issues relating to transaction errors, claims of fraudulent activity, and misunderstandings on the part of the customer.
How has tech made a difference in handling D&C?
K.B.: The handling of disputes and collections has traditionally been managed through methods that involve a great deal of manual processing. These methods, while familiar, can often be incredibly time-consuming and susceptible to errors, which can lead to delays and potential non-compliance issues. This antiquated approach can be a drain on resources, requiring substantial manpower and often resulting in less-than-optimal outcomes due to the inherent inefficiencies and likelihood for human error.
In light of these challenges, new technologies have been developed to address these issues, such as Fintegrate’s FusionDMS. This innovative solution automates these previously manual processes, ensuring the timely resolution of disputes and ensuring compliance with regulatory deadlines, which is crucial in today’s legal environment. This workflow automation not only speeds up the process but also reduces the possibility of costly errors or oversights.
The adoption of new tech represents a significant step forward in the handling of disputes and collections. By automating time-consuming manual processes and integrating with existing systems, these solutions offer a more efficient, accurate, and timely approach to dispute resolution and collection management.
Is there a regulatory framework to deal with any new methods?
K.B.: Regulatory compliance is a critical concern that plays a significant role in the fields of dispute resolution and collections. Many organizations face challenges in maintaining compliance, especially with the ever-changing nature of regulations.
Our product is designed with these challenges in mind, aiming to be a valuable tool to help ensure strict adherence to these regulations. One of the key regulations that our system assists with is Reg E. Through the implementation of automated reminders and follow-ups, good tech ensures that all necessary actions are taken promptly, and no crucial steps are missed.
Furthermore, the best systems provide a complete and detailed audit history of all dispute resolution activities, providing transparency and accountability at all levels of the process. The integrated document storage offers a streamlined and efficient way to store, access, and manage all necessary documents. This aspect aids in maintaining compliance but also enhances overall operational efficiency.
What are some of the new tools making the most impact in this field and why?
K.B.: For those involved in the complex and often challenging fields of dispute resolution and collections, the advent of new tools brings significant advantages that will streamline operations. These benefits range from an increased level of efficiency in operations, a reduction in error rates, to improvements in compliance with regulations and standards.
The automation of many previously manual processes is a key aspect to tech in this sphere. This automation not only reduces the potential for human error but also frees up valuable time that can be better utilized in other areas. These are significant improvements over traditional methods that often involve waiting for periodic reports or manually checking the status of a dispute.