When it comes to making a bank transfer, adding a new beneficiary can often cause a delay. This delay, sometimes perceived as a constraint for users, is nevertheless a crucial step in the process of security and compliance of banking transactions. However, some services allow you to bypass these deadlines and offer a smoother experience. So why the discrepancy? And why do traditional banks impose these deadlines in the first place? This article explores the reasons for these delays and how some fintech players manage to reduce or eliminate them.
Why is there a delay when adding a new beneficiary?
Adding a new payee for a bank transfer is not a simple technical process. While this seems like a relatively simple task, there are many factors that come into play to ensure transaction security and compliance with financial regulations. Here are the main reasons for these delays.
1. Verifying the identity of the beneficiary
One of the main reasons why banks impose deadlines when a new beneficiary is added is to verify their identity. Each transaction, especially transfers to new beneficiaries, must comply with compliance regulations. Banks are required to ensure that the beneficiary is a legitimate person, that they are not involved in fraudulent or criminal activities, and that there are no risks of money laundering or terrorist financing.
This involves checks that take time, such as validating IBAN information, confirming identity, and comparing with databases of individuals or entities under surveillance. This process, while crucial, can sometimes lead to delays, especially when it comes to international transactions or new beneficiaries not listed in the bank's system.
2. Strengthened anti-fraud security measures
Banks have a responsibility to protect their customers from fraud and phishing attempts. Adding a new beneficiary is a red flag for security systems, as it can be perceived as an unusual activity. As a result, banking systems set up additional verifications, such as sending confirmation codes by SMS or email, or biometric authentication requests. These measures aim to ensure that it is the account holder who is doing this action and not a fraudster.
3. Compliance with financial regulations
Banks are subject to strict regulations to prevent money laundering, fraud and terrorist financing. This includes protocols for verifying each beneficiary's information, which may vary depending on local and international legislation (such as the PSD2 directive in Europe). To comply with these regulations, banks must apply these rigorous controls, which can cause delays when adding a new beneficiary.
4. Internal processes and data updates
Banks process a massive amount of transactions every day, and their data management systems need to be up to date all the time. Adding a new beneficiary often involves updating internal databases, which requires time. This process can be even longer if the payee is from another bank or located internationally, due to the interbank payment systems and security protocols that govern these transactions.
How are fintech applications reducing these timelines?
While traditional banks impose deadlines when adding a new beneficiary, fintechs and some banking applications seek to circumvent these constraints while maintaining a high level of security. Indeed, some of them use advanced technologies to reduce, or even eliminate, delays without compromising user protection.
The solutions offered by players like Bill Up, for example, incorporate automated verification processes and strengthened security protocols, while simplifying the user experience. Thanks to technologies such as instant authentication via biometrics, real-time data recognition, or the use of instant payment systems, adding a new payee is becoming a faster process. In addition, these applications connect directly to the global databases of financial institutions, allowing beneficiary information to be verified almost instantly, while complying with international regulations.
In addition, the user interface of these applications is often optimized to allow quick and secure management of beneficiaries. Some of them even allow beneficiaries to be registered instantly for future transfers, thus avoiding repetitive steps and delays associated with multiple verifications.
The deadlines imposed when adding a new beneficiary by traditional banks are largely due to security, compliance and information verification requirements. While these procedures are necessary to ensure secure transactions, they can sometimes be seen as a barrier for users. Fintechs and modern applications, such as Bill Up, have understood these challenges and are offering innovative solutions to reduce these delays while maintaining a high level of security. Thus, these technologies make it possible to facilitate payments, improve the user experience and guarantee the security of transactions in an increasingly connected world.
