In the fight against fraud, Iowa-based bank holding company Ames National Corporation trusts CLEAR, CLEAR ID Confirm, CLEAR Risk Inform, and CLEAR Adverse Media. These solutions are all part of the Thomson Reuters Risk & Fraud Solutions suite and perform due diligence reviews on commercial loan applicants and highlight possible issues with high-risk transactions. With total assets of more than $2 billion, and six bank brands operating across the U.S. state, it needed a robust, effective tool that would enable its banks to make sound business decisions. Within the first year of deployment, CLEAR helped identify significant concerns about borrowers in at least six potential loan transactions in which the banks concerned ultimately declined to participate, saving significant potential losses.
The opportunity: Improving due diligence reviews on commercial loan applicants
Fraud prevention is critical. But without specific risk and fraud tools, Ames National Corporation was using Google to conduct due diligence reviews on loan applicants, which failed to provide consistent, reliable results. Executive Vice President and Chief Lending Officer Mike Wilson had used CLEAR in a previous role at another financial institution. Because it provides comprehensive, up-to-date information from public records, sanctions databases, and media coverage, he knew CLEAR would be ideal to help the organization grow “safely and soundly.”
“The reason we chose CLEAR was because of the positive experience I’d had with it before. It’s the most thorough and complete due diligence review tool I know of,” says Wilson.
The solution: Easy-to-use tools with extensive data
The corporation uses CLEAR ID Confirm to verify potential customer identities during the initial application process and CLEAR Risk Inform to ensure there are no concerns in the customer’s history. Due diligence reviews are performed for transactions over a certain amount, using the wide range of public records databases available in CLEAR. If any areas are flagged for further investigation, loan managers will run CLEAR Adverse Media to check for negative news stories. They will also use Associate Analytics to get a complete picture of who the borrower is doing business with. Then, to get the whole story, they may decide to run a full CLEAR report.
Alerts can be set up to notify banks about changes in the circumstances of any customers deemed “high-risk.” These changes might include a simple address update, new liens or litigation against them, or new bankruptcy filings.
According to Wilson, “CLEAR has been a terrific one-stop shop for us to enhance our underwriting,” says Wilson. “The magic of CLEAR is the reach it has — the millions of public databases, data points, news services, and websites it can gather data from. And then from that extensive coverage, it assembles that information into a format that’s easy to use. That’s remarkable. It’s that combination of comprehensiveness and user-friendliness that makes CLEAR different from other tools on the market.”
The outcome: Protecting stakeholders by making better decisions
CLEAR helps Ames National Corporation make better-informed and faster business decisions. “If you think you're going to get a full look at the world by using Google, you're kidding yourself,” says Wilson. “CLEAR takes what would otherwise be a very complex task and makes it easy to quickly gain an understanding of what is going on with the person or organization that you're researching to determine if they present an acceptable risk profile to do business with.”
In one example, Ames National was asked by another bank to participate jointly in a new loan for an out-of-state business group. Due diligence reviews through CLEAR revealed critical information that convinced them to decline involvement. They also recommended the other lender conduct further investigations into the prospective borrower. In the first year of having CLEAR, Ames National identified critical underwriting concerns in six other loan requests.
“CLEAR does a great job of identifying areas of concern. It’s helped us ask better questions about those high-risk transactions,” Wilson explains. “But often, you’ll run a company through CLEAR and you won’t identify any significant issues. This is what you’re hoping for. So, then you can be assured that you’re doing business with a responsible borrower that can be depended upon to repay.”
Wilson points out that as a publicly held institution, Ames National has a responsibility to protect the interests of a range of stakeholders when making loan decisions. “Our biggest obligation is to ensure we’re making loan decisions wisely to protect depositors. By operating in a safe and sound manner, we're making sure we're there to serve our customers in the long term. We're also providing better tools to our employees and protecting returns for our shareholders.
One of the standout features of CLEAR is the reverse phone number look-up functionality. If a bank gets a suspicious phone call from a customer, staff can look up the number to see if it is a voice over internet protocol (VoIP) line or a burner phone. Both are red flags that the caller could be a fraudster.
Users can get up to speed with CLEAR quickly with minimal training required, thanks to its intuitive, well-designed user interface. Once they are using it, Wilson reports they feel empowered to understand the potential risks, maintain vigilance, and serve customers better, saying, “Having CLEAR has been a big leap forward.”
The customer service team at Thomson Reuters has been “awesome.” They’ve helped Ames National Corporation identify the Risk & Fraud Solutions that best fit its needs and have been quick to address any issues.
CLEAR proved its worth within the first year. Wilson says, “I can tell you with complete certainty that CLEAR has paid for itself, a few times over, already. We've avoided potential loan losses and pitfalls because we were advised of those risks earlier and could make better decisions. Both our CEO and I are very comfortable that CLEAR has been one of the best investments we've made in recent memory. We needed consistent results we could rely upon. CLEAR has given us that, and it’s worked out wonderfully.”
