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Confirmation of Payee: It’s all in the name

With Confirmation of Payee now upon us, we look at how digital innovation is helping to secure customer transactions.

Last updated: 08 Oct 2020 6 min read

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  • Confirmation of Payee (CoP) has been introduced in the UK to reduce errors and combat fraud
  • It does this by warning customers when a payee name does not match with the account number and sort code
  • NatWest partnered with Dutch fintech SurePay to deliver these outcomes but also to improve the customer experience

Recent years have seen the payments landscape morph from physical to digital. As digital technology has become the essential building block of the global financial infrastructure, individuals and organisations now expect banks and other providers to keep pace with the demand for fast, safe and low (but appropriate) friction.

As behaviours and transactions have migrated online so have fraudsters. In response banks are continuously developing and enhancing security practices, and regulators have also become more active in mandating that the industry as a whole acts in concert to develop new security standards.

A growing need for higher security

With fraudsters becoming more sophisticated, and as the volume of digital transactions has increased, new solutions commensurate with the changing nature of the threat are needed.

Confirmation of Payee (CoP) has become a tool to support customers. By providing customers with real-time feedback on the accuracy of the beneficiary details they enter when making a payment, users can check the name on an account they wish to make a payment to before they make a final decision to proceed. The main purpose is simple: to eradicate misdirected payments either as a result of fraud – typically authorised push payment (APP) fraud, or simply the innocent entering of erroneous information (‘fat- finger syndrome’).

NatWest CoP presents customers with messages about the risks of sending to an account where the name does not match. And provides four possible options:

  1. “It's a match” – all of the details match
  2. “It’s a close match” – the name or the account type doesn’t exactly match what you have provided; contact the intended recipient to check the details
  3. “It’s not a match” – contact the payee to confirm the correct details
  4. “Unavailable/unable to check” – this may occur if the account holder’s bank doesn’t support CoP. Contact the payee to confirm the correct details

NatWest is one of the nine largest banks in the UK as determined by the Competition and Markets Authority, and as part of this ‘CMA 9’, it has been at the forefront of developing a CoP service for its customers. Given the bank’s central role in the country’s financial infrastructure – NatWest currently handles one in four digital payments in the UK – getting it right first time has been crucial. And this isn’t a short-term issue: the new security protocols will not only strengthen and underpin the existing payments infrastructure but will also point the way towards the new era of open banking, where customers are able to move between banks and other financial services providers with more security and ease.

And, while the NatWest CoP service improves the experience of its customers when they send money to accounts outside the bank, the focus on user experience also extended to payments received. This means non-customers sending money to NatWest customers will also benefit from the investment made in delivering a fast and intuitive service.

NatWest considered a range of options to deliver a simple scalable solution with leading user experience. The question for the bank became:

  • build its own technical platforms to deliver CoP, or
  • partner with a specialist

The opportunity to put together a best-in-class offering was too great to miss, so the bank set out to find the right partner to design a system that could deliver technical assurance, flexibility and scope to innovate in the future.

Finding the right partner

Adopting a generic compliance approach offered a short-term fix to meet the new demands. A more forward-thinking approach, however, aims to capture the opportunities that regulatory change can bring. And that, in turn, can inspire the idea of looking outside to potential collaborators who are able to bring things to the table that the bank may not have in-house.

The approach within the bank is always to ask how a mandatory change can be used as an opportunity to improve the customer experience. In fact, thanks to the ability to work with new partners, regulatory change is now one of the main catalysts for innovation.

After a thorough procurement process, Dutch firm SurePay was selected as the bank’s CoP partner. A critical factor in SurePay’s selection was its successful rollout of a similar service in the Netherlands four years ago. SurePay’s Dutch banking and corporate customers integrated the solution and saw a step change in fraud prevention in the payments space. Of particular interest to NatWest in its decision-making process was that Dutch adopters reported an 81% drop in fraudulent payments and a 67% drop in misdirected payments.

Tried-and-tested technology

Critically, SurePay has improved the system through the pioneering use of algorithms to check and track payments. It was that aspect, among several others, that convinced NatWest that working with partners like SurePay offered a way forward into a future of further digital disruption.

SurePay’s experience in the past four years has been instructive: rolling out CoP through the Dutch banking system allowed the company to improve its algorithm, tweaking and improving the system to a point where it is now the best-in-class solution and fit for a new, regulated and competitive market in the UK.

For NatWest, it isn’t the first time partnering with a specialist firm to deliver a new service. Having successfully trialled that approach in previous projects, it became clear that working with the best providers delivers a number of benefits. First, it helps drive improvement. ‘Perfecting’ a service like CoP is never the aim; rather, for fintechs like SurePay, the focus is on leveraging past experience and improving the offering with each iteration.

Second, it creates more space for innovation. Although CoP owes its development to the regulators mandating greater assurance, it doesn’t have to simply tick a box. Tapping into SurePay’s experience and innovative spirit allows the bank to avoid the teething troubles that can plague new projects and jump straight in to delivering a customer-ready offering. This should then leave room for further innovation as CoP evolves.

A system that can flex and scale

The final key to CoP’s integration into the digital payments landscape is the commitment of the banking industry to further embed security and resilience in the new normal. An early demonstration of the system’s effectiveness was when HMRC used NatWest’s CoP offering support the urgent delivery of thousands of Universal Credit payments after the pandemic hit.

Indeed, the pandemic has shown that building robust systems that can flex and scale to meet changing and unforeseen demands is no longer a ‘nice to have’: it’s critical. By turning a compliance exercise into an opportunity for improvement and innovation – and by demonstrating the value of effective partnerships – NatWest is confident it is ready to meet whatever new challenges emerge.

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