The instant bank verification (IBV) process verifies that the bank account number and account details are valid before a transaction is processed. Verifying account details is especially important when processing a check or ACH payment in order to reduce fraud. At its essence, bank account verification and account validation adds accuracy and speed to a process that used to involve faxing over copies of financial documents, with verification taking up to several weeks to process. With IBV, the result is a speedier and more reliable, real-time accounting of a borrower’s financial picture, which is crucial in today’s fast-paced environment.
The instant bank verification (IBV) process verifies that the bank account number and account details are valid before a transaction is processed. Verifying account details is especially important when processing a check or ACH payment in order to reduce fraud. At its essence, bank account verification and account validation adds accuracy and speed to a process that used to involve faxing over copies of financial documents, with verification taking up to several weeks to process. With IBV, the result is a speedier and more reliable, real-time accounting of a borrower’s financial picture, which is crucial in today’s fast-paced environment.
Remember the fax machine? For most, it’s a distant memory thanks in part to advances in FinTech such as instant account verification (IAV). These days, when a consumer seeks to open a financial account, set up recurring payments or apply for a loan, their bank account and other financial information needs to be verified quickly. This is partly to ensure the consumer’s financials match up with what they report, but also to prevent fraudsters from entering the picture.
How Does The Instant Bank Verification Process Work?
Here’s how it works.
A consumer sets out to find a financial institution to work with, one that will fit all their needs. In order to open the account, they must provide access to their existing financial accounts to validate their identity. A third-party verification provider such as Yodlee makes the connection between the consumer and the financial institution by electronically contacting the bank’s API. What used to take multiple business days — or even weeks — now takes place almost instantaneously.
Why Use IBV?
The benefits of instant bank verification are numerous when compared with traditional verification methods.
The Digital Experience
It provides a digital experience, rather than a paper-based, time-consuming one. This matches up with customer expectations when it comes down to deciding on an app provider to work with. In the past, to verify an account, forms needed to be printed and voided checks needed to be sent via mail, significantly slowing the process. The digital experience of instant bank verification happens in real time, which is something consumers have come to expect in a digital world.
Validate Account Access and Ownership
The process confirms access and ownership of an account, reducing the possibility of fraud. Yodlee can obtain different types of data elements such as name and phone number that can be used to validate the customer’s ownership of the bank account. Other information can be leveraged to help with fraud monitoring, such as whether an account is in good standing with regular transactions such as payments and withdrawals taking place.
The ability to see current and available balances for a given account further helps prevent fraud. These verification methods add up to a seamless and safe experience for both the financial institution and the customer. Yodlee pioneered these changes in the late 2000s, delivering the ability to instantly verify approximately 90 percent of providers via our connections. We look at it as a safety net that offers peace of mind combined with speedy verification.
Who Can Use IBV?
Instant bank verification works for a variety of financial institution types, from banks to FinTechs and more. Banks and investment firms typically use IBV as part of their onboarding process when bringing on new customers. Let’s say a new customer opens a brokerage/trading account. The first step is to add funding to their account so they can begin trading and investing. Yodlee’s Instant Account Verification tools quickly confirms that the customer has available funds, allowing for a near-instant account setup.
Other use cases where IBV comes into play include customers who log on to their cell phone provider’s website to make a one-time or recurring payment. IBV is particularly appealing here because when customers pay with a credit card, the merchant is typically charged a fee between 2 and 2.5 percent.
Get Started With Envestnet | Yodlee
To be certain your users are who they say they are, it’s important to work with a trusted third-party with the chops to accurately and quickly verify your customers’ credentials. Details such as address, email, phone number and other critical information help authenticate the user while reducing the risk of fraud.
Concerned that setting up a verification system is difficult? Yodlee’s financial API walks you through the implementation process in easy-to-understand language for both developers and the less technically proficient alike. Give our Test Drive Tool a spin to see if our Instant Bank Verification tools are right for your organization.
Yodlee is a Preferred Partner of NACHA, the National Automated Clearinghouse Association, which oversees the movement of money through the ACH system in the United States. Our bank account verification solutions meet — and often exceed — NACHA’s Web Debit Account Validation Rule. Rest assured that with Yodlee on your side, your potential customers will be quickly and accurately verified and ready to do business with you in no time.
