Account-to-Account Transfers: Improved, But a Work in Progress
Account-to-account transfers are a convenient way to move money from one account to another. They eliminate the need to write and deposit checks, or physically withdraw money from one account to move it to another.
“It's a great savings tool. Features such as recurring transfers can help people create automatic savings plans without having to remember to return and set up a transfer manually each time,” says Tammi Shapiro, senior director, product strategy at Fiserv, a provider of information management and electronic commerce.
Businesses and individuals have more options than ever when it comes to electronic movement of money, says Brian McGuire, vice president of Treasury Management Services for the Private Bank of Buckhead. “Our clients have the ability to send funds through an external transfer option, as well as person-to-person payments. These allow clients to send money with the click of a button to accounts housed outside the bank, or to send payments to individuals,” says McGuire. There has been an overall simplification of the user experience, says Shapiro. “Once an external account is added, only a few decisions/fields are needed to move money from one account to the other.”
Trouble is, when it comes to account-to-account transfers, each financial institution has its own rules and capabilities, and they can vary widely.
For sure some financial institutions have improved the account verification process and transactions can be done in one business day. “Rather than depending on trial deposits (which require a lag time of up to three days to complete account verification), there has been investment in other methods that allow users to verify external accounts in session. This allows users to transact during their first session and creates a better user experience,” says Shapiro. Other innovations include the integration of risk controls such as knowledge-based authentication questions and one time password to mitigate risk exposure for higher risk transactions, she adds.
However, there are still some kinks to be worked out in the account-to-account transfer process. In this era or instant everything, a week can be a long time.
“From start to finish the process can take a week,” explains Lisa Johnson, vice president web manager for Sandy Spring Bank, which has $4 billion in assets.
Why? When a user enrolls they must show proof of their account. “We are concerned about security,” says Johnson. A user goes online and enters the account number of the other institution and the routing number. “We want to see proof of ownership of the account like a voided check or a recent statement for a savings account,” she adds. Once the forms are received, transfers can be made. “The transfer process usually takes three days,” says Johnson, who admits that the process is shorter for larger institutions.
Those who want to use account-to-account transfers should realize that banks have limits on a per transfer basis, typically between $5,000-$10,000, says Johnson. At her bank it's $5,000. “You're likely to see a higher limit at an online savings bank because they are trying to get deposits,” she adds.
Johnson offers this advice, “Just because the process is electronic, doesn't mean it's instant.” In light of this, she recommends people complete the enrollment process before they need to do a transfer. “It doesn't cost you anything and if you need to use it, you'll be ready.”
While demand for account-to-account transfers is high, says Shapiro, actual adoption varies significantly by financial institution.
Now that mobile check deposits are available, Johnson expects there to be a greater number of people taking advantage of account-to-account transfers. Says Johnson, “People will just take a picture of a check and keep their money moving.”