Although a lot of banking is shifting to the digital sphere, many consumers still use safe deposit boxes. Ideal for holding important documents and valuables, these boxes can appeal to a variety of customers, but unfortunately, they can also be tempting for criminals.
Your financial institution may face liability if a box’s contents are robbed, and even if you don’t end up covering losses, your reputation can still be hurt by a heist. To ensure your safe deposit security strategy is as strong as possible, work through this checklist of essentials.
____ Implement a Strong Boxholder ID Verification Process
When people come to access their safe deposit boxes, you need to confirm their identities. Many banks do this by storing the customers’ name and verifying their identity by checking a state-issued ID card. But what if the person in front of the teller is just an imposter with a fake ID?
To minimize this risk, you should store a copy of the boxholder’s ID on file. Then, you can match the details on the ID with the ID being presented to your teller.
____ Track Boxholders’ Access Schedules
Ideally, you should track when your customers access their safe deposit boxes. Most customers have relatively predictable schedules, and tracking when they access their boxes can help you spot aberrations that may be indicative of a potential issue.
____ Eliminate Employee Access
In most cases, your employees do not need access to safe deposit boxes, and they should not be able to access these boxes without the boxholder nearby. For instance, you may want to only allow access if two keys are present (one held by the customer and another by an employee).
Remember internal theft is always a threat, and it can be significant in this arena. In one Texas bank, an employee stole $30,000 worth of assets from a customer’s box.
____ Consider Looking Into Biometrics
To restrict access to boxholders, you may want to implement biometrics in your locking systems. For instance, you may want to let boxholders open their boxes with a fingerprint or facial recognition software.
____ Maintain Accurate Payment Details and Automate Invoicing
In addition to preventing safe deposit box theft, you also want to ensure your customers are paying for their boxes. Double check billing details when customers access their boxes, and to reduce the risk of nonpayment, consider automating your invoices.
____ Invest in Safe Deposit Management Tools
To ensure your safe deposits are as safe as possible, you need a solution that can manage all aspects of your safe deposit boxes, including customer signatures, photographs, rental agreements and billing information.
Sadely, in many cases, customers have lost the contents of their boxes due to mismanagement by banks. For example, when one safe deposit box holder in New York opened his box in 2014, he discovered it was empty and he had lost approximately $10 million in assets.
Ultimately, the bank found his assets — an employee had mistakenly moved them when they were trying to evict another boxholder for nonpayment. If the mistake had not been discovered, this would have been one of the biggest safety deposit box losses ever, and the error simply boils down to a lack of quality deposit box management practices. Unfortunately, issues like this are relatively common in the industry.
____ Update Your Safe Deposit Box Holder Agreements
Legally, there is a lot of grey area in the world of safe deposit box management, and your contract should clearly spell out your expectations for box holders as well as your obligations to these customers. If you don’t accept liability for lost contents, make that clear in your contract.
But at the same time, keep in mind that you have a certain responsibility to your customers, and if you don’t meet basic security standards, they may bring a negligence suit against you.
____ Research Anti-Fraud Solutions for Safe Deposit Boxes
Effective fraud detection and prevention solutions need to be customized for each of the products, services, and payment channels you use in your financial institution. To minimize fraud around safe deposit boxes, you need an anti-fraud solution designed for the unique challenges of this product.
____ Learn More About SQN: Safe Deposit ™
With SQN: Safe Deposit ™, you get access to management tools that include a dashboard showing authorized users’ names along with copies of their photos IDS and signatures. From that screen, you can easily confirm billing details and update the activity log. This solution helps you maintain profitability by minimizing fraud risks, but at the same time, it also generates income reports for your safety deposit box so you can stay on top of other profitability metrics.
Now that you understand the essentials of safe deposit box security, it’s time to contact us to learn more. At SQN Banking Systems, we focus on fraud so you can focus on running your financial institution. Contact us today using our online contact form or reach out over the phone at (609) 261-5500.