AWS for Industries

How does Cloud enable the transformation of Dispute Management in Banking?

The credit card dispute management process in banks is often manual, time-consuming, and because of legacy systems. This inefficient process leads to slow dispute resolution times, poor customer experiences, potential revenue losses and challenges in complying with regulations. Banks and customers face consequences from this problem; banks face operational inefficiencies, high costs, and customer dissatisfaction, while customers experience frustration and poor service.

Migrating dispute management to AWS with solutions like Pega Smart Dispute on AWS enables banks to streamline and automate the process. Capabilities like machine learning, analytics, and intelligent workflows reduce dispute resolution time. Cloud-based dispute management also provides flexibility to manage spikes in dispute volume, ensuring banks maintain service levels. Real-time visibility into dispute data from card networks helps banks easily comply with regulations and card scheme rule changes. By leveraging the cloud, banks can optimize the dispute process end-to-end, enabling first-call resolution, higher straight-through processing rates and cost savings. With accelerated dispute processing in the AWS cloud, banks can focus resources on delivering superior customer experiences rather than manual dispute handling.

In this blog, we explore the new capabilities and benefits that cloud technology enables to help transform credit card disputes and provide guidance on how to modernize the dispute management process.

Dispute Management process and Key Parties involved

Dispute process

In the dynamic world of credit card transactions, disputes are an inevitable reality. However, financial institutions have meticulously crafted a robust dispute management process to ensure a seamless and efficient resolution for their customers. This comprehensive approach encompasses several key stages:

  • Dispute Initiation: Customers can conveniently start a dispute through various channels, including self-service platforms, mobile applications, or by directly contacting customer service representatives.
  • Case Creation and Assignment: Leveraging automation, the system swiftly generates and assigns dispute cases, streamlining the process and ensuring timely handling.
  • Investigation: Skilled dispute resolution agents delve into the case details, transaction information, and any available supporting documents to investigate thoroughly and resolve the dispute.
  • Decision: Based on the investigation findings, agents have the authority to accept the dispute, reject it, or initiate further actions.
  • Resolution: The system diligently tracks the status, progress, and key metrics of each dispute case, providing real-time dashboards and reports to facilitate seamless monitoring and decision-making.
  • Communication: To enhance transparency and reduce manual inquiries, the system empowers customers to track the status of their disputes through self-service channels, fostering a positive customer experience.

This comprehensive dispute management model ensures that financial institutions can effectively navigate the complexities of credit card disputes, delivering a robust and customer oriented resolution process.

Parties involved in credit card dispute processing with their roles:

Key parties in dispute process

Imagine a scenario where a cardholder spots a suspicious charge on their statement. They start a dispute by contacting their issuing bank, providing the details and evidence. The issuing bank then springs into action; meticulously investigating the claim and researching the cardholder and the merchant. Armed with this data, the bank decides to either uphold the dispute or rule in favor of the merchant, guided by the comprehensive regulations set forth by the card network.

If the dispute is deemed valid, the issuing bank promptly credits the cardholder’s account, while the acquiring bank, acting as the merchant’s intermediary, debits the merchant’s account. The card network orchestrates this delicate dance of information exchange and fund transfers ensuring that the dispute resolution process remains streamlined and efficient.

But the story doesn’t end there. The card network also plays a vital role in monitoring the dispute landscape, imposing penalties on banks with excessive dispute volumes to maintain the integrity of the system. It’s a dynamic ecosystem that fosters trust, accountability, and fair competition for all participants.

Capabilities that are needed by banks for enhancing dispute processing

Omnichannel dispute intake: Banks require the capability to accept disputes through multiple channels like phone, email, web portals, and mobile apps, providing customers with a seamless and convenient experience.

Natural language processing (NLP) and conversational AI: The ability to understand customer dispute narratives through NLP is crucial for personalized dispute handling and gathering accurate information. Engaging with customers via conversational AI (chatbots, virtual agents) is also crucial for personalized dispute handling and gathering accurate information.

Document processing and insights: Banks need to extract data and insights from various dispute-related documents, such as statements, receipts, and contracts, automatically. This involves capabilities intelligent document processing, text extraction, and document classification.

Intelligent workflow automation: Banks require intelligent workflow automation capabilities to streamline the end-to-end dispute process, from intake to resolution. This includes automated task assignment, status tracking, and straight-through processing of routine disputes, reducing manual efforts and improving efficiency.

Real-time integration and data management: Seamless integration with core banking systems, card networks, and third-party data sources is essential for real-time data access and dispute processing. Banks also need robust data storage and analytics capabilities to maintain a unified view of disputes across channels and identify patterns.

Fraud detection: Leveraging machine learning models for predictive analytics can help banks identify potential dispute trends, forecast dispute volumes, and detect fraud patterns based on transaction data.

Customer communication and notifications: Banks require the ability to provide real-time dispute status updates and personalized communication to customers through various channels like SMS, email, and push notifications. This ensures transparency and a positive customer experience.

Capabilities AWS unlocks in dispute management process

Transform dispute journey with AWS

AWS empowers issuer banks to transform their dispute resolution processes by helping to leverage cutting-edge technologies. AWS enables a seamless omnichannel dispute intake experience, fostering customer trust through proactive communication.

The platform harnesses AWS Intelligent Document Processing to ease operational burdens and minimize manual errors. Fraud detection becomes expedited, as historical and third-party disputes data train ML models to identify fraudulent transactions. Intelligent workflow automation orchestrates case creation and assignment, while natural language processing and conversational AI enhance customer interactions.

AWS’s robust data storage and analytics capabilities maintain a unified view of disputes, while real-time integration and data management facilitate seamless connectivity with core systems and third-party sources. This holistic approach empowers issuer banks to streamline their dispute resolution journey, delivering an exceptional customer experience.

Disputes Capability Required by Bank: Mapping with AWS Services

  • Omnichannel Dispute Intake
  • Conversation AI for Dispute Interview
    • Ask questions to collect dispute details via chatbot
    • Use natural language understanding to analyze user responses
    • Services: Amazon Lex, Amazon Comprehend
  • Dispute Documentation Management
  • Dispute Workflow Orchestration
    • Define dispute process flows for intake to resolution
    • Assign disputes and track status changes
    • Services: AWS Step Functions
  • Dispute Data Storage and Analytics
  • Predictive Intelligence
    • Fraud detection based on transaction patterns
    • Predict dispute outcomes/volumes
    • Services: Amazon SageMaker
  • Case Management Portal
  • Notifications Engine
    • Send dispute status alerts via SMS, Email, Push
    • Services: Amazon Pinpoint

AWS Reference Architecture to streamline dispute management process

Reference architecture dispute

AWS provides a comprehensive set of services that can be orchestrated to build a modern, cloud-based dispute management solution:

  • AWS Amplify, Amazon Connect, Amazon Polly and Amazon Lex for omnichannel dispute intake and conversational AI.
  • Amazon Textract, Amazon Comprehend, and Amazon Rekognition for document processing and natural language understanding.
  • Amazon SageMaker for building and deploying ML models for dispute detection, prioritization, and decision recommendations.
  • Amazon Forecast for predictive analytics on dispute volumes and trends.
  • AWS Lambda, AWS Step Functions, and AWS AppSync for serverless workflow orchestration and real-time data synchronization.
  • Amazon DynamoDB, Amazon RDS, and Amazon S3 for storing structured and unstructured dispute data.
  • Amazon Pinpoint for sending dispute status notifications to customers.
  • Amazon QuickSight for real-time visibility into dispute metrics and dashboards.

Approach suggested above can results in below mentioned benefit for Bank’s

1. Improved customer satisfaction and loyalty: By offering omnichannel dispute submission, real-time visibility, faster resolution times, personalized experiences, and seamless interactions, banks can enhance customer satisfaction. This can lead to increased customer loyalty and retention, as well as positive word-of-mouth recommendations.

2. Cost savings: Streamlining dispute processes and reducing resolution times can result in substantial cost savings for banks. Traditional dispute processes often involve manual interventions, lengthy turnaround times, and potential fines or penalties for delayed resolutions. An efficient dispute management system can minimize these costs.

3. Fraud prevention and risk mitigation: By incorporating robust fraud detection and prevention measures, banks can better protect customers from unauthorized transactions and minimize the risk of chargebacks and losses because of fraud. Proactive communication and empathetic handling of disputes can also help build trust and strengthen relationships with customers.

4. Operational efficiency: Automating and optimizing dispute management processes can improve operational efficiency within banks. This can include streamlining workflows, reducing manual interventions, and enabling better resource allocation and prioritization.

5. Competitive advantage: Offering a superior dispute management experience can differentiate banks from competitors and provide a competitive edge in attracting and keeping customers. In today’s digital age, customers value convenience, transparency, and responsiveness when dealing with financial institutions.

6. Regulatory compliance: Effective dispute management practices can help banks comply with regulatory requirements related to consumer protection, data privacy, and fair treatment of customers. This can mitigate the risk of penalties and maintain a positive reputation with regulatory bodies.

7. Data-driven insights: By capturing and analyzing data from dispute management processes, banks can gain valuable insights into customer behavior, problems, and areas for improvement. These insights can inform strategic decisions, product development, and service enhancements.

Potential Trade-offs:

1. Legacy system integration: Integrating with existing dispute management systems, core banking platforms, and third-party data sources can be complex and may require interim hybrid architectures.

2. Change management: Transitioning to automated, AI-driven dispute processes causes change management efforts to retrain and reskill employees effectively.

3. Upskilling existing teams on cloud-native development and operations.

Conclusion

By leveraging AWS’s versatile platform of purpose-built databases, analytics, machine learning, automation, and developer services, banks can transform their credit card dispute management process to be intelligent, real-time, and customer-centric. This positions banks to boost operational efficiency, delight customers, and build competitive differentiation in how they resolve card transaction disputes.

Call to Action and Next Steps

To start your journey toward modernizing dispute management on AWS, explore the following resources:

1. Engage with AWS Professional Services or AWS Partners specializing in financial services to create a strategic cloud adoption plan.

2. Attend AWS training programs to upskill your teams on cloud-native application development and operations.

3. Explore AWS solutions and reference architectures for dispute management and other banking use cases.

4. Participate in AWS workshops and events to learn from subject matter experts and connect with the AWS community.

Where can you learn more about the topics?

You can learn more about AWS services and solutions for financial services by visiting the AWS Financial Services Cloud Solutions website (https://aws.amazon.com/financial-services/). Additionally, You can explore AWS Partner solutions, case studies, and whitepapers focused on dispute management and other banking use cases.

Adarsh Naidu

Adarsh Naidu

Adarsh Naidu is a Senior Solutions Architect in the Enterprise Banking group at AWS. Prior to AWS he worked for over 20 years as an Enterprise and Solutions architect in the various financial services firms, including American Express and Assurant. Adarsh holds Chief technology officer program from Wharton School of business, B.S. in Information technology Engineering and M.B.A in general management.