After investigating some recent bank errors where we have deposited and withdrawn money from the wrong accounts, I've learned that at my new shop we do not use a check digit routine when creating account numbers. So transposition errors that hit actual accounts are getting through at a rate that is much higher than I'm used to.

Assigning new account numbers to all existing accounts is cost prohibitive (reording checks, etc) but we were discussing starting a Mod routine for new account numbers. Now Fiserv has told us that none of their banks are using a check digit routine for new account numbers, which is shocking to me.

We were also told that it couldn't be set up for new accounts only which doesn't make sense to me. The routine doesn't need to be validated when we do a transaction, the value is that most likely a mis-keyed number will most likely be invalid and unpost so that we can catch it the following morning and not when (if) the customer brings it to our attention.

Has something changed in the industry that we aren't doing this any longer?! It seems like a simple way to avoid 90% of human error with respect to account errors.

Please share with me what kind of account numbering schemes you are using or any other related feedback.

Thanks!
Dean

When I worked for a large bank, we had to turn off MOD check because of the all the mergers we had. We just couldn't afford to reissue checks every time we bought another bank, so we just turned it off. I managed R&A at the time and did not notice a larger than normal amount of deposits/withdrawals being transposed and hitting other valid accounts.

Your processor is correct that if you turn it on, it will have to be for all accounts because the MOD check is based on R/T AND Account Number.

I guess I would have to ask

Why is your teller system not validating the account number? And if it is, why is your teller not matching names on the teller system to name on the deposit ticket when they take the transaction?

Why is the customer not using a pre-printed deposit ticket? Oh, never mind this question, I forgot that customers don't carry their checkbooks anymore so they don't have their pre-printed deposits with them.

Is the number being transposed in proof or somewhere else?

It really is a training issue not matter where the error is occurring and unfortunately as we still have humans in the mix, there will be errors.

You should be able to turn on a mod routine (at least for new account number generation) and not use the mod routine for inclearings/proof. We turned off our mod routine when we first opened our bank 4 years ago because we gave some employees and directors special account numbers to signify original employees/directors. After we opened those accounts, we turned the mod routine back on. So we have some accounts with no check digit and some with. It hasn't caused any issues with our core system (we're outsourced to Fiserv ITI). But, I think it's only turned on for the new account number generation (and possibly with our check vendor). If you can get it turned on at least going forward with new accounts that will help somewhat. I worked at another institution that had issues with a merger and account numbers, they were able to write a program to use an alternate MICR line to those account numbers and that number printed on their checks and you could look up an account by the alternate MICR. It's been a long time, so I don't remember the specifics of what the problems were. I don't know if that's even a solution for you, but I know it could be a possibility with some systems.

Thank you both, very helpful. I understand the Human element but that is why we put systems in place for support.

Some of our issue has been the result of scanning errors with RBC and are instituting a 'fix' that should reduce those. Training is certainly a component as well.

I'm pleased to hear that others are using a mod routine for new account number generation. It won't help much overnight but over the course of years it should reduce our error rate.

I've become aware of two more similar errors since my original post in my three branch market. My biggest concern remains that sometimes these errors must happen and are never reported... never found. Yikes.

Dean