Double-Posted Payments to Command Line Mistakes: Manual Errors Financial Institutions Can’t Afford (And What To Do About Them)

In financial services, simple human errors can have massive impacts.

Consumers expect perfection from their financial institution, and the smallest mistake or service interruption can have outsized effects that over time will erode an organization’s hard-earned trust and industry reputation.

Common errors in banking range from transaction double posting and sending unencrypted files to mistimed job runs and inaccurate compliance reporting. Every mistake has the potential to impact account holders, staff, and the organization’s bottom line.

Let’s look at the wide-ranging impacts of the most common manual errors and show how automation can be an effective remedy for these areas of risk at your bank or credit union.

Manual Errors Have Costly Impacts

Poor data quality can have significant financial impacts for organizations. According to Gartner, poor data quality causes U.S. companies to lose an average of $12.9 million—over $3.1 trillion in total—each year.

But the costs of human error go far beyond the economic. Financial institutions are built on a foundation of trust, and any mistakes or mispostings that directly impact account holders can do irreparable harm to the organization’s reputation. Trust is the true currency of our financial system, and customers must have confidence that their savings—as well as their personally identifiable information (PII)—is safe at their chosen financial institution.

The same goes for errors that result in service outages, system downtime, or diminished access to funds. If an overnight job doesn’t run due to a command line error, it can bring down the bank’s core processing system or online banking solution, or result in ACH payments not getting posted to customers’ accounts properly. At a minimum, that’s a huge inconvenience for members and customers, and at worst it can have substantial impacts on their daily lives.

As a highly regulated industry, compliance with applicable federal, state, and local regulations is of utmost importance. Regulators don’t abide by missed or inaccurate compliance reporting due to human error, and such miscues can result in fines, sanctions, or even limits on the institution’s ability to grow.

The Most Common Manual Errors—And How To Fix Them

Here are some of the most common—and impactful—manual errors that banks and credit unions face. But don’t be discouraged! All of these can be mitigated—and often eliminated—through the power of automation.

1. Double posted transactions: One of the most common banking errors is the duplicative entering of transactions like withdrawals, deposits, transfers, and payments. These mistakes can lead to inaccurate statement balances and real financial losses for account holders.
   
   Through workflow automation, transaction initiation can be set up to ensure that once a payment or transfer has been completed, it cannot be reprocessed manually. Some automation tools can also detect and flag duplicate entries based on preset matching parameters like transaction identification numbers, amounts, or timestamps.
   
2. Mistyped command lines: Command lines are used to execute code and initiate jobs like file manipulation, running reports, and posting payments. Unfortunately, command lines can be complex and require specialized knowledge to execute properly. Whether it’s a shell script or mv command, these tasks are often subject to human error, and a single mistyped character can result in a missed job run.
   
   Automation such as graphical user interfaces (GUIs) and pre-defined scripts can streamline the command execution process, eliminating errors caused by manual effort. In addition, through advanced automation features like self-service buttons, non-technical staff can be given the ability to execute common tasks and request standardized reports, without the added risk of code-entry errors.
   
   “Because we’ve taken out that human/typing component from so many jobs, our accuracy has gone through the roof,” says Lori Hernandez, Director of Information Services at 1st United Credit Union. “For example, we set up Self-Service tools for our electronic services department because they used to have to type directly into our console. Now the potential for human error has been eliminated.”
   
3. Incorrect posting: When transactions are posted to the wrong accounts, it can lead to financial inaccuracies and account holder dissatisfaction. Additionally, it can take hours of staff time to identify and correct the error, leaving all involved frustrated.
   
   Advanced automation solutions can establish pre-set rules to automatically validate transactions or pre-define proper accounts to eliminate the risk of inaccurate transaction posting. In addition, automated system logging can establish an audit trail to ensure discrepancies are traced quickly and accurately.
   
4. Unencrypted files: How often do employees fail to encrypt file transfers or external emails containing confidential or sensitive information? This practice can introduce significant security and compliance risk for the organization and its account holders.
   
   To remedy the situation, you can program automated workflows to automatically encrypt certain files on creation, transfer, or storage. Plus, automated secure file transfer protocols (SFTP) can be used to eliminate any possibility of manual handling of sensitive data. In addition, modern automation solutions can monitor all transfers and outgoing emails to ensure adherence to file and data encryption policies and block any actions that are non-compliant.
   
5. Omitted or missing data: When important information is missing from a borrower application or file, it can result in incomplete or inaccurate recordkeeping and non-compliance with laws and regulations. It can also impact the account holder experience by resulting in delayed account opening or inaccurate loan decisions.
   
   To address this challenge, you can configure your systems for mandatory field validation, which halts jobs or tasks until all required fields are populated. In addition, automation can scan entries for missing or incomplete information and prompt staff to fill in all required fields with proper data before continuing the process.
   
6. Manual failovers: When a bank or credit union relies on a manual failover process, it opens the door to possible data corruption and service interruption.
   
   For example, VyStar Credit Union utilized a manual failover process that took over two and a half hours to complete and involved 150 discrete manual steps. The Credit Union was unable to serve its members during this downtime, and the opportunity for errors was high.
   
   “If somebody didn’t verify that the core database was completely offline, the database could easily become corrupted,” says Alex Castanheira, Systems Administrator at VyStar.
   
   Through an advanced workload automation solution, VyStar has now fully automated the failover process, reducing core system downtime and eliminating the potential for service impacts and database corruption caused by human error.
   
   “We eliminated both the human error and the human stress levels associated with a manual failover process,” Castanheira says.
   
7. Compliance errors: As one of the most highly regulated industries, financial services organizations must gather and report a high volume of data daily. Unfortunately, relying on manual data entry in regulatory processes like KYC/AML screening, currency transaction reporting, and CRA data gathering can result in errors, leading to potential fines, penalties, and reputational damage.
   
   Fortunately, modern automation solutions can alleviate many of these compliance headaches. For example, an institution may use an integration platform as a service (iPaaS) solution to gather data across multiple systems and populate a report, reducing the risk of non-compliance due to human error during the reporting process. Alternatively, the organization might leverage a robotic process automation (RPA) solution to mimic repeatable tasks, like pulling specific data fields from various sources, adding data to a spreadsheet, or uploading a completed report to a regulator’s database.

Automation Solves For Human Error

A lot can go wrong in financial services. From core processes that kick off at the wrong time to double-posted entries and sending unencrypted files, human error can wreak havoc at your institution. Leading automation solutions like OpCon solve for many of these issues by reducing the opportunity for human error and manual mistakes.

“While we always want to be 100% accurate while running those processes manually, accidents happen. You might mistype something,” says Curtis Lewis, IT Project and Department Manager at OUCU Financial. “By having OpCon handle those processes, you can eliminate human error from the equation.”

Automation also removes stress from your staff’s daily responsibilities, allowing them to enjoy a better quality of life while focusing their efforts on higher-value initiatives that will help drive growth and innovation.