Mobile Security

By Tiffany Riley, vice president
of marketing,

Guardian Analytics

Account holders are asking
their financial institutions (FIs) to offer expanded mobile banking services,
such as remote deposit capture, bill pay, ACH payments, and wire transactions.
At the same time, however, consumers are reluctant to use mobile banking
because of the security risks. For example, a recent IntoMobile study found
that 60% of consumers identified security as the top reason for not using
mobile banking.

Mobile banking indeed is particularly
susceptible to fraud, at least in part because of how account holders treat
their smartphones - like phones, not like the computers that they are.
Smartphones hold a lot of personal information - friends, phone numbers,
passwords, online banking links, personal information used in challenge
questions - making the phones very attractive to fraudsters. Account holders are
reasonably well trained in how to use their computer safely, but they're not
translating that behavior to their smartphones. They click on links in text
messages from unknown parties, download apps from unsecure app stores, click on
QR codes that fraudsters place over the original, and give their phones to
children who will download and click on anything.

Accordingly, it should be
no surprise that the volume of mobile malware is exploding. A recent
McAfee study found a 600% increase in mobile malware from 2011 to 2012. Fraudsters
have repeatedly demonstrated not only their technical ability to bypass most security
solutions, but also their creativity. For example, a recent scheme spoofed
alerts from Apple regarding availability of the iPhone 5, which they knew
consumers were anxious to read and therefore, more likely to open.

This presents a unique hurdle between financial institutions and
the compelling opportunity presented by mobile banking. Improving mobile
security will increase customers' comfort with using the mobile channel,
thereby increasing revenue-producing adoption of expanded mobile banking
services. And preventing mobile fraud will keep those account holders as
happy, loyal customers for years to come. But to be successful, FIs must secure
the mobile banking channel with the expectation that the device has been

The best fraud prevention solutions utilize an important strategic
benefit that FIs have over the fraudsters - knowledge of each account holder's
unique mobile banking behavior. Readily available behavior-based anomaly
detection solutions can detect and prevent even the most sophisticated fraud
attacks while enabling FIs to conform to the FFIEC guidance that calls for
anomaly detection for all electronic banking channels, including mobile.

Fraudsters have demonstrated their ability to circumvent security
solutions that focus on log-in credentials, challenge questions, malware
detection, device ID, tokens and OTP, and out of band authentication, to name a
few. But fraudsters cannot mimic the mobile banking behavior of each individual
client. Behavior-based anomaly detection solutions build a model of each
account holder's behavior and then compare all subsequent activity, from login
to logout, for every mobile banking session, to those established patterns.
This enables FIs to detect suspicious or anomalous activity patterns that are
indicative of fraud. By monitoring all electronic banking activity FIs not only
will detect fraud early in the account compromise, reconnaissance and set-up
stages when it's much easier to prevent, they will be in a position to contact
account holders proactively before the money is gone, which is a level of customer
service that goes beyond satisfaction into the realm of delight.

Behavior-based anomaly detection solutions have another
advantage. We know that fraudsters will continue to innovate, developing as yet
unseen schemes for emptying bank accounts through mobile devices and online
banking channels. Cyber criminals continually reinvest their "profits" into new
technologies and work together to share successes and failures. As a result,
they quickly scale successful attacks and modify unsuccessful ones, leaving FIs
with a never-ending barrage of new attacks against which they must defend
themselves and their customers.

Behavior-based anomaly detection solutions don't operate
based on which malware is in being used or how the account was compromised. So,
regardless of the attack scheme, fraudsters will do something unexpected,
something that tips off the FI to the fact that this session for this
account holder indeed may be fraudulent.

FIs are encouraged to assume the mobile device has been
compromised, monitor all mobile banking activity from login to logout, be
proactive in detecting the early stages of fraud, and use behavior-based
anomaly detection to take advantage of their best strategic advantage over the
fraudsters - knowledge of their mobile banking customers' legitimate behavior.

About Guardian Analytics - Guardian Analytics is the pioneer and leading provider of
behavior-based fraud prevention solutions for financial institutions. With
nearly 200 customers, more financial institutions trust Guardian's SaaS
solutions to protect their clients' assets and conform to FFIEC expectations
for anomaly detection than any other solution. To learn more, please go to www.GuardianAnalytics.com.

About Tiffany
Vice President, Marketing

Riley has been Guardian Analytics VP of Marketing for over two years, leading
the company's marketing efforts through a period of tremendous success and
growth. She is a regular presenter are industry events and author of
contributed articles, white papers, and blog posts. Tiffany has over 15 years
of enterprise software marketing and product strategy experience having
successfully delivered market leadership, customer satisfaction and
unparalleled brand awareness in emerging and mature markets. Prior to Guardian
Analytics, Tiffany worked for Market Live, Nextance, Blue Pumpkin Software,
Siebel, Scopus and Sybase.

CATO Initiative

Last week,
the Conference of State Bank Supervisors (CSBS), the U.S. Secret Service and
the Financial Services-Information Sharing and Analysis Center (FS-ISAC)
adopted the best practices developed by the Texas Banking
Department to assist banks in reducing the risk and impact of corporate account

account takeover schemes are an increasing risk to our banks and their
customers," said Chris Williston, IBAT's President and CEO.  "We
applaud the efforts of Commissioner Charles Cooper, Chief IT Security Examiner
Phillip Hinkle and the members of the task force who developed these best
practices as guidance for banks of all charter types and sizes." 

announcement from the entities above can be found here. IBAT continues to urge attention to this
issue to avoid unnecessary losses to your bank. 

FDIC Report

In the FDIC's survey of banks' efforts to serve the unbanked
and underbanked, released last week, the agency identified five opportunities
that banks could explore to expand access to mainstream financial services and
help meet the needs of underserved consumers.

1. Expand Offerings of Basic, Low-Cost Checking and
Savings Deposit Accounts

The Bank Survey finds that on the most basic checking
deposit account without direct deposit, 48 percent of banks had minimum opening
balance requirements of $100 or more and 22 percent had monthly maintenance
fees of more than $3. For basic savings accounts, the median opening and
average balance requirements to avoid a fee were $100.

To broaden economic inclusion efforts, banks should consider
offering low-cost electronic, card-based transac­tion deposit accounts that do
not allow overdraft and NSF fees. The survey found that around one in five
banks offered electronic, card-based accounts and some evidence that those
accounts which were strictly card-based and electronic (no paper check writing
feature) had lower aver­age opening balance requirements and monthly
maintenance fees. The design of such accounts also reduces the overdraft risk
banks face with accounts that permit check writing and may make it possible to
eliminate NSF and overdraft fees, further reducing costs for consumers. These
accounts may be even more attractive to consumers when paired with basic
savings accounts with low mini­mum balance requirements.

2. Offering Additional Transaction Services to
Underserved Households

Consumers' use of nonbank financial services providers to
meet their needs points to market opportunities for insured depository
institutions. Some consumers, for example, use money orders in lieu of cash or
checks to pay monthly rent or utility bills. Yet, one in three banks did not
offer money orders to accountholders and two-thirds did not offer this product
to noncustomers. In addition, unbanked consum­ers frequently need a way to cash
checks. And consumers, especially those with family outside the US, often use
nonbank financial services providers to make domestic or international

The Bank Survey found that 71 percent of banks cashed
payroll checks for basic accountholders and 47 percent offered this service to
noncustomers. Moreover, one-half and two-thirds of banks offered international
and domestic remittance products, respectively, to accountholders, but only
nine and eleven percent of banks offered interna­tional and domestic remittance
products, respectively, to noncustomers. Banks seeking to expand financial
services to underserved consumers could consider offering a broader range of
auxiliary transaction services to both accountholders and noncustomers.

3. Enhance Small-Dollar Loan Product Marketing

Most banks (82 percent) offered unsecured personal loans
with a minimum loan amount of $2,500 or less, with many setting no minimum loan
amount. However, 20 percent of households that recently obtained credit from
payday lenders and almost 18 percent that used pawn shops did so primarily
because they thought that banks did not offer small-dollar loans. While some
proportion of borrowers that obtain small dollar credit from nonbank providers
may not qualify for bank loans (about one-third of banks reported that
underwriting was a major obstacle in offering financial products to unbanked
and underbanked consum­ers), the gap between the small dollar loan availability
reported by banks and perceived by consumers suggests that banks could improve
marketing of these products.

4. Utilize Partnerships with Community Organiza­tions to
Promote Checking and Savings Account Ownership

Community outreach through collaborations with commu­nity
groups was identified as the most effective strategy for developing
relationships with these populations. Close to one-half of all banks promoted
both checking and savings accounts through partnerships with community organiza­tions
such as faith/community-based organizations, volunteer income tax assistance
(VITA) sites, and schools. Even so, close to 51 percent of all institutions do
not use partnerships. As such, a relatively large proportion of banks could
benefit from expanding collaborative efforts to promote access to mainstream
deposit accounts.

5. Assess Whether Expanded Retail Strategies Can Improve
Relationships with Unbanked and Under­banked Consumers

Regardless of a bank's size, the most frequently chosen
retail strategies to make branches more convenient or welcoming to consumers
were automated telephone bank­ing, multilingual staff, and off-premise ATM
locations. Banks engaged in these strategies generally reported that they were
very effective or effective tools for developing a relationship with unbanked
and underbanked consumers. Banks that have not deployed certain retail
strategies (e.g., 63 percent of banks do not offer extended hours or services
on weekends) should consider whether adding such options could better position
the institution to build relationships with underserved consumers.

Baker Market Update Special Edition

Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable. Read more in the Baker Market Update.

Lone Star Capital Bank

(December 7, 2012)
-  In its twelfth year partnering
with the Salvation Army Angel Tree program, Lone Star Capital Bank employees
and customers came together to provide holiday gifts to 85 San Antonio area
children and seniors, exceeding their annual goal of 75.

This year, Lone Star
Capital Bank took a more holistic approach with its donations, hoping to make a
greater impact among the adopted Angels. Angels create wish lists that include
both clothing and a toy or special item and, if adopted, typically received one
item from his or her wish list. This Christmas the bank decided to focus on
fewer Angels (last year the bank provided gifts to 117 individuals), but to
donate every item on each adopted Angel's wish list.

"We're so proud and
honored to have such generous employees and customers here at Lone Star Capital
Bank," said Danny Buck, president and CEO. "We look forward to participating in
this program every Christmas and it has become sort of a ‘family tradition'
that I know we will continue for many years."

Angel Tree gives individuals and partnering corporations an opportunity
to adopt less fortunate children and seniors and provide them with personalized
gifts and necessities to those who would otherwise receive very little or
nothing during the holiday season.

Lone Star Capital Bank specializes in providing customized
banking services for entrepreneurs, executives, professionals, small
businesses, and real estate investors. It is a member of FDIC and an Equal
Housing Lender.

Silver Alert


NWS Austin/San
Antonio, Brownsville, Corpus Christi, Houston, San Angelo


LaSalle County Sheriff's Office is searching for Margarito
Gomez, diagnosed
with Dementia, W, M, 83 years old, DOB 06/10/29, HEIGHT 5' 06", WEIGHT 165 lbs,
Black/Gray Hair, Black Eyes.                                                                              

The senior
citizen was last seen at 08:00a.m., 12/11/2012 in Cotulla, TX, driving a Gold,
2006 Toyota SUV with TX License Plate 6DXVL.

enforcement officials believe this senior citizen's disappearance poses a
credible threat to HIS/HER own health and safety.

If you have
any information regarding this missing senior citizen, contact the LaSalle
County Sheriff's Office at 830-879-3041.

News Media
Point of Contact is
County Sheriff's Office at 830-879-3041.

Strengthening Your Debit Portfolio



By Judith McGuire*
Executive Vice President, Product Management

As the economy slowly emerges from the depths of the 2008 recession, consumers are incorporating lessons learned from several difficult years into behavioral choices going forward. For example, the recently published 2012 Debit Issuer Study, commissioned by PULSE, found that debit continued to grow in 2011, showing an increase in both the average number of transactions per card and in average debit spend per card over 2010.

And, earlier this year, Auriemma Consulting Group’s syndicated study of U.S. debit cardholders, The Payments Report, showed that consumers between the ages of 18 and 34 (millennials) strongly prefer debit. That same research reported that all consumer groups, in terms of age and income, are choosing debit more frequently than just a year ago. Debit is the preferred payment choice for many because it gives consumers better control over their finances.

How then can financial institutions capitalize on consumers’ preference for debit to grow revenue, improve customer satisfaction and reduce attrition?  Consider the many initiatives that financial institutions can take to increase debit transactions and dollar volume while simultaneously strengthening customer loyalty by helping customers meet their financial obligations:

Encourage Responsible Spending

  • Communicate through statement stuffers, online, email, text and app messages to reinforce the benefits of using debit to live within one’s budget and plan for unexpected expenses and larger purchases.
  • Promote the prudent use of debit in place of cash to better control impulse purchases and maintain transaction records in one easily accessible and secure location.
  • Advise customers on how they can avoid interest charges by paying with a debit card.

Reward Loyal Behavior with Relationship or Product Incentives

According to the findings in the Debit Issuer Study, 30 percent of regulated issuers have stopped their rewards programs. Given that rewards have historically been popular with consumers, we recommend thinking about rewards with an eye toward retention and in the context of the entire customer relationship.

  • Offer a premium debit product as a retention tool for frequent transactors or high dollar volume debit transaction customers and include customer incentives which drive business growth rather than “rewards” which take time to earn and energy to track.
    • Provide exclusive customer service contact via a special phone number and email address.
    • Offer ATM or account-fee waivers for a specific number of debit transactions within a specified time period.
    • Enable access to special considerations, such as lower overlimit fees, as a reward for a customer attaining an identified debit dollar threshold or direct deposit.
  • Nurture your millennial customer relationships, as these younger account holders are the most active debit users.
    • Conduct research to determine which services appeal to them in order of priority.
    • Help them manage their financial lives so that non-traditional financial services do not displace their debit relationship. For example, you can offer a pay day loan product for customers with a recurring direct deposit. This is popular among younger consumers who may need a short-term loan until their next pay day. When the direct deposit is credited, the loan is paid back automatically.
  • Explore merchant loyalty programs to increase debit transactions.
    • Identify and approach specific local or national merchants that have a congruous image and customer base, either for the majority or the institution’s most profitable debit customers, to develop a mutually beneficial compelling rewards/perks program.

Introduce Additional Ways for Debit to Generate Interchange Revenue

Encourage customers to use their debit cards and PIN online for Internet purchases and payments. Internet PIN debit provides a safe, secure way to enter PINs online with participating e-tailers. This added option appeals to consumers concerned about entering debit card information online.

PINless bill pay also provides increased convenience for debit cardholders and improved collections for companies.  Consumers can often receive credit for their bill payment much more quickly than ACH payments. This secure process is a win-win-win, considering the increase in debit interchange revenue.

Next Steps

How do you decide what to do first? Some steps to consider in deciding which of the above actions makes the most sense for your financial institution include:

  1. Conduct a feasibility analysis to understand which of these strategies and tactics might produce the most revenue or be easiest or quickest to implement without creating unanticipated consequences.
  2. Pilot test your initiatives with a limited segment of your customers to further refine and prepare for a flawless launch.
  3. Conduct market research to help size and prioritize opportunities. Market analysis should also be used to refine product designs.
  4. Create a competitive review of the products, services, fees and incentives that rivals are offering.

What’s to gain? Setting a revenue goal and targeting relationships and transactions following these analyses are sure to yield bottom-line, efficiency and retention benefits.

What’s to lose? Competitors looking at the same landscape also are likely determining which tactics are most desirable to capture the most profitable customer relationships.

*Judith McGuire serves as Executive Vice President of Product Management for PULSE, a Discover Financial Services company and operator of the PULSE® electronic funds transfer network, headquartered in Houston, Texas.

Regulatory Relief on the Way

Late last week,
the IBAT Board of Directors, in their final meeting of 2012, gave the IBAT
staff a thumbs up to proceed in drafting comprehensive federal regulatory
relief legislation.  IBAT President and CEO Chris Williston laid out the
components of a bill that is being vetted by IBAT's blue-ribbon community bank
task force for consideration.

think it is safe to say that the Board was enthusiastic about the prospects of
such legislation," said IBAT Chairman Troy Robinson of BankTexas in
Quitman. "Community bankers need a rallying cry and we are going to
give them one," he added.

one more telephone meeting of the task force scheduled Thursday, December 13,
the legislation will proceed to the drafting stage with hopes that it will be
introduced early in the 113th Congress.  

Jeb Hensarling

As reported
last week, several Texas lawmakers will assume important Chairmanships and
Leadership positions in the coming Congress. Congressman Jeb Hensarling will
play an especially key role for community banking as the Chairman of the House
Financial Services Committee.

Hensarling takes over the reins from Congressman Spencer Bachus (R - AL), who
is term-limited out of the Chairmanship.  Mr. Bachus has been a strong
supporter of community banking issues over the years, and we are appreciative
of his willingness to meet to discuss issues important to our sector of the

has been a champion of reducing government red tape and costs, and recognizes
the detrimental impact of the ever-increasing government intervention on our
economy and industry.  He has been an outspoken critic of the runaway
spending plaguing our federal government.  Additionally, he has been at
the apex of the efforts to address the issues with GSEs, particularly the
problems with Fannie and Freddie.  

Hensarling is an impact player in Washington, DC, and his new position will
provide further opportunities to shape the future of our industry," said
Chris Williston, President and CEO of IBAT.  "We have enjoyed an
excellent relationship with Jeb since prior to his election to Congress, and
very much look forward to working with him to aggressively address the
challenges facing community banking.  He is smart, articulate, thoughtful
and fearless, and we are most pleased to have him at the helm of this important

LegacyTexas Bank

2012 looks to
be another banner year for the mortgage team at LegacyTexas Bank. With 19 of
the region's most experienced and respected lenders on board, the local
community bank is serving a fast-growing number of homeowners during the
current surge in home sales across North Texas. Gerry Taylor, who leads
the Mortgage Division for the bank, says it's all about quality lenders and
service. "We have some of the best loan officers in the industry," he

This year,
LegacyTexas received awards for Best Mortgage Lender and was recognized once
again in D Magazine's Best Mortgage Professionals 2012 publication. While it's
people who are key to the bank's mortgage success, Taylor says they have also
put together one of the top loan platforms in the business. "Now is a
great time to buy, and it's also a great time to save money by refinancing,
even if you've done so within the past year. We have never seen rates this

From FHA to
conventional loans and purchases to refinancing, LegacyTexas Bank offers a full
range of mortgage options. 

Pearl Harbor Day

Please be aware that last night the
President issued an order for today lowering flags in remembrance of Pearl
Harbor Day (Dec. 7).  His order and the federal notice appears

Since no flag may higher than the US flag,
if the US flag is displayed at half-staff, all other flags, including the State
of Texas flag, should be flown at half-staff for the day.  

 All flags should return to full staff
on Saturday, Dec. 8, 2012.  

Texas Leadership in Congress

members of the Texas Congressional delegation will assume new leadership
positions in the next Congress.  

Hensarling has been named Chairman of the Financial Services Committee; Michael
McCaul will take the center chair at Homeland Security; Pete Sessions ascends
to the Chair in the Rules Committee; and Lamar Smith will take the helm at
Science, Space and Technology.

Senator John Cornyn was elected Minority Whip, the second ranking leadership
post in the Republican caucus.  Senator Ted Cruz was named Vice Chair of
the National Republican Senatorial Committee (NRSC), conferring significant
responsibilities in the campaign and fundraising areas to our newly elected

IBAT wishes
to convey sincere congratulations to all of these dedicated public servants,
and looks forward to working with them to address the challenges facing
community banking.

CFPB Remittance Rule

The Consumer
Financial Protection Bureau (CFPB) issued a bulletin on November 27, 2012 addressing a
forthcoming proposal to "refine" three elements of the final rule regarding foreign remittance transfers.
The bulletin outlines the following three topics to be addressed in the

  • How
    the rule will apply to situations in which the account holder provides an
    incorrect account number in a remittance transfer;
  • Guidance
    on how the provider of a remittance transfer service can disclose third
    party fees and other foreign taxes to senders; and
  • Clarification
    on the disclosure of regional and local taxes imposed by sub-national

The proposed
rulemaking is expected to include an extension of the effective date until 90
days after the issuance of the final rule on these three narrow issues.
 That would mean a new implementation date during the spring of 2013.

There is no
indication from the CFPB that this proposed rulemaking would change the safe
harbor threshold of 100 or fewer remittance transfers in the prior calendar
year, and 100 or fewer remittance transfers in the current calendar year for
determining if a provider is subject to the remittance rules.

TAG Program Update

In an
unexpected turn of events, Senate Majority Leader Harry Reid lent his support
to a continuation of the Transaction Account Guarantee (TAG) program by
introducing a bill to extend the expiration date.  Under Senator Reid's
stand-alone bill, the TAG program would be extended two additional years, or
until December 31, 2014. Both IBAT and the ICBA have pushed hard for an
extension of the program and will continue to work for passage of an extension.

In the
meantime, bankers should continue to prepare for the expiration of the program.
 The FDIC advises banks to provide "adequate advance notice" to
non-interest bearing transaction account (NIBTA) depositors of the expiration
of the program.  The term "adequate" is not defined but usually
means 30 days' advance notice when notifying a customer of an account change
not in favor of the depositor.  Unfortunately, that means banks should
provide the written notice to NIBTA depositors prior to any final resolution in

the credit union industry is putting a full court press on Congress to push
their longstanding quest to make even more small business loans. We obviously
believe this to be a terrible idea, and have notified Senators Hutchison and
Cornyn of our fervent opposition to the combination of TAG extension and the
credit union business lending bill.  IBAT has also voiced its opposition consistently over the years to the
Texas Congressional delegation.  

IBAT members
are encouraged to contact Senator Cornyn's office by phone (202-224-2934) or email to ask for his support on these issues.
 ICBA has also issued a call to action which includes optional talking
points for your phone call or email.