Transaction Transformation


One Minnesota bank automates batch processing for real-time results

By Collin Canright

Software that automates the batch-processing routines that are the lifeblood of traditional core processing systems can help community banks provide the latest payments services without a system overhaul. With same-day ACH acceptance having started in October and same-day ACH originations looming in the future, more community banks are considering these systems.

“In a world of real-time and near real-time systems, people want to get their money and payments as fast as possible,” says Dave Buggeln, director of information systems at Frandsen Financial Corp., a $1.6 billion-asset financial holding company for Frandsen Bank & Trust in Arden Hills, Minn.

Even though same-day ACH processing may have called the question, Frandsen Financial’s need for greater payments automation across its operations was much broader, Buggeln says. He sought to automate 90 percent of the items on the bank’s operator checklist with in-house automation software for the bank’s customers and 35 locations across Minnesota, North Dakota and Wisconsin.

Automation software can handle not only the batch file transfers involved in payments but also the verifications and reconciliations performed by operators. Frandsen Financial processes around 14,000 jobs or tasks monthly through the software. By having the ability to execute tasks on nearly any type of operating system, the software can run scripts in varying program languages, transfer files, and even parse through verification emails delivered by surrounding applications and the cloud.

“We have barely scratched the surface,” Buggeln says. A bank of similar size using the same core technology can easily run more than 100,000 jobs monthly, he says.

Reducing waste, errors
The idea is to ensure that the bank can grow with the ever-increasing number of payment options while reducing human error and system downtime. Frandsen Financial’s software handles ACH payments, retail and business mobile deposits, and ATM and debit point-of-sale transactions.

Indeed, Frandsen Financial’s executives saw that same-day ACH processing would put additional stress on a system already near capacity. “We realized that we were at the point where we couldn’t keep up,” Buggeln says.

Before adopting the batch-processing software, the bank’s staff would manually log into the Federal Reserve’s system through a Web-based system, download files and run a batch job to post the file’s data to the core banking system. Now, the automated system checks the Federal Reserve and posts files in near real time.

“As soon as those files arrive, they get transferred to our system and credited to our customers,” Buggeln says.

Currently, Frandsen Financial has an enterprise-level automation solution that connects the bank to the Federal Reserve, runs commands, and prepares files and reports without operator human intervention and in near real time. “It allows us to bridge the gap between our batch process and the real-time processes,” as Buggeln explains.

This required an upgrade in the bank’s Federal Reserve connection to Fedline Command from Fedline Advantage. The connection enabled the automation software to run commands and scripts to download and post ACH files and data to the Fed. In addition to ACH files, the automation system can pull end-of-day reports and automate balancing routines. From a customer perspective, Frandsen Financial is more consistent with its posting times, even with the added work of same-day ACH. “We can post in near real time when we receive files from the Fed. That means customers are going to get credit for those deposits or same-day credits sooner than if a human did the file transfer and posting.”

Customers are noticing, too. When businesses realized that the bank had started posting credits in the afternoon, they adjusted their processes to sweep more funds out of the bank and into their pooling accounts. “It has challenged the treasury management area in the bank,” Buggeln acknowledges.

Dashboard advantage
The Frandsen Financial uses OpCon software from SMA Solutions in Kingwood, Texas, to automate nearly every batch task throughout the organization. Tasks are set up and monitored through a single dashboard, which makes it easier to spot transaction failures and troubleshoot solutions.

“Our exceptions get fixed faster as we know exactly what and where it broke,” Buggeln says.

Tasks monitored through the dashboard include nightly updates; end-of-day processing updates; exception processing updates; X937 file exchange with the Fed, clearing banks, mobile deposit services and merchant deposit services; and database and other system maintenance routines.

Payments, including ACH, have been running hands-free for a year. All account controls and balancing operations are scheduled through the automation tool.

Buggeln says the cost to license OpCon software is less than that for a full-time IT staff member. The system pays for itself because new routines only need to be set up once; then they run without operator intervention. “We have a more secure system,” he says. “It isn’t prone to human error.”

Automation also has opened the door to offering more services. “Every new product we’ve added has been reliably automated,” Buggeln says. Although the bank is not yet offering same-day ACH origination, he believes that it will be able to automate origination processes, including same-day processes, without taxing existing systems.

Now the automation tool can handle both increased volumes and additional risk checking, Buggeln says. The automation solution allows Frandsen Financial to add risk-mitigation processes that normally would be performed by hand, such as anomaly detection and handling for ACH, mobile deposit or online banking transactions.

“If we can automate a lot of the heavy lifting,” Buggeln says, “our staff can focus on more value-added aspects of these projects such as quality control and verification.”

Collin Canright is a payments and financial technology writer in Illinois.