|
Channel
|
Accounts w/ Hold |
False Positive Holds |
False Positive Rate |
| Teller |
21,796 |
20,245 |
92.9% |
| ATM |
5,500 |
3,941 |
70.9% |
| Mobile |
73,800 |
65,160 |
88.3% |
$36.8M in fraud exposure sat under hold — representing 51.1% of total fraud exposure. Yet only 7.1% of those holds caught actual fraud.
Root Cause
Without a reliable risk score at the item level, REGIONAL BANK's hold policy was a blunt instrument — uniform rules applied across all deposits regardless of actual risk. This led to two simultaneous failures:
• Over-holding: Low-risk accounts receiving holds, damaging customer experience
• Under-protecting: High-risk deposits sometimes cleared without intervention
The Solution
Valid Systems deployed Check Detect — an XGBoost-based real-time loss alerting model — across Regional's Teller, ATM, and Mobile channels. Each incoming check
deposit receives a real-time risk score, enabling REGIONAL BANK to apply holds precisely
where risk is highest and release holds where risk is low.
Model Performance (Test Period: Jan–Dec 2025)
| Channel |
AUC $ |
KS $ |
Gini $ |
| Teller |
0.971 |
0.849 |
0.942 |
| ATM |
0.992 |
0.925 |
0.983 |
Fraud Dollars Captured at Top Score Thresholds
The model identifies the highest-risk deposits with exceptional precision. By reviewing only the top 1% of highest-scoring items, REGIONAL BANK captures:
• Teller: 76.5% of all fraud dollars
• ATM: 92.9% of all fraud dollars
| Score Threshold (Top %) |
Teller — % Fraud $ Captured |
ATM — % Fraud $ Captured |
| 0.5% |
66.1% |
73.7% |
| 1.0% |
66.1% |
92.9% |
| 1.5% |
82.7% |
95.8% |
| 2.0% |
87.1% |
97.4% |
| 2.5% |
90.2% |
98.2% |
The Results
Applying recommended score thresholds delivers a significant reduction in false positive holds while risking only a minimal increase in fraud exposure per account — a highly favorable trade-off.
Teller & ATM Channels — False Positive Reduction Scenarios
| Channel |
% of Accts
w/ Deposit
& Hold |
Accts w/
Deposit &
Hold |
% Holds w/
No Return |
Accts w/
Hold & No
Return |
Fraud
Exposure $
w/ Hold |
| Teller |
1.7% |
21.7k |
92.9% |
20,245 |
51.1% |
| ATM |
2.7% |
5.5k |
70.9% |
3,941 |
25.5% |
Mobile Channel — False Positive Reduction Scenarios
| Channel |
% of Accts w/
Deposit &
Hold |
# Accts w/
Deposit &
Hold |
%
Holds
w/ No
Return |
Accts
w/ Hold
& No
Return |
Fraud
Exposure
$ w/ Hold |
| Mobile |
8.6% |
73.8k |
88.3% |
65,160 |
55.0% |
The Path Forward
Check Detect gives banks the precision to protect their balance sheet without punishing
customers. By applying item-level risk scoring at the moment of deposit, REGIONAL BANK
can now make targeted hold decisions that maximize fraud protection while minimizing
disruption to legitimate customers.
How Check Detect Works
- Real-Time Scoring — Every check deposit is scored by an XGBoost classifierthe Check
Detect model at the moment of deposit across Teller, ATM, and Mobile channels.
- Item-Level Risk Assessment — The model evaluates account behavior, balance history,
return patterns, and deposit characteristics to generate a precise fraud probability score.
- Targeted Hold Decisions — Holds are applied only to deposits scoring above defined
risk thresholds, dramatically reducing false positives while maintaining fraud protection.
Key Takeaways
-
40% reduction in false positive holds across Teller channel with score thresholds
-
$36.8M in fraud exposure under active hold monitoring — protecting 51.1% of total
exposure
-
$7.2.8M is Charge off loss Reduction
Ready to Reduce False Positive Holds at Your Bank?
Valid Systems deploys Check Detect for financial institutions of all sizes. Our check risk
models are trained on your data, validated against your fraud patterns, and deployed in
weeks not months.
validadvantage.com
