Coronavirus: How to Ensure Wire Transfer Continuity in a Pandemic

The COVID-19 pandemic poses the biggest logistical challenge for alternative fund managers since 9/11. The economy is in turmoil, market volatility is approaching record highs, and the office is off-limits as employees work from home to prevent the spread of infection. Typically designed for contingencies of weeks, not months, the crisis is stressing even the best-laid business continuity plans. While the stress test of a prolonged pandemic will undoubtedly uncover many areas for improvement, we’d like to focus on one that affects alternative fund managers in particular: wire transfers.

Wire transfers play a crucial role in fund management operations. Everyday activities like investments, redemptions, distributions, and payments all require wires. Depending on their size, fund managers can expect to execute a dozen to a few thousand wires each month. With individual wires regularly exceeding millions of dollars, information security efforts to improve the wire process historically focused on wire confidentiality and integrity, or the C and I in the CIA triad security model.

The A in the CIA triad stands for availability, meaning users have timely, continuous access to the services they need. With everyone working from home for the foreseeable future, wire transfer availability is being put to the test. Here are two examples of how the coronavirus is affecting wire transfer availability and fund manager’s ability to efficiently process wires:

• Signature-based Approvals – Despite offering minimal security controls, a surprising number of banks still require physical signatures on wire requests. Never a paragon of speed and efficiency, signature-based approvals are even less timely when authorized approvers are all working remotely, not to mention the increased threat of interception and fraud.

• Hard Token Approvals – Two-factor authorization, or 2FA, was a major advancement in wire processing security and banks deserve credit for implementing 2FA approvals in their wire portals. Unfortunately, many banks still use physical hard tokens for 2FA, meaning employees will have to take the easily lost hardware home with them or brave their commute. More concerning is the use of shared tokens. Despite best practices to the contrary, firms often share hard tokens among employees. Besides being an infection vector for essential personnel who may still be in the office, sharing a token is clearly more difficult when everyone is working miles, instead of feet, apart.

These challenges are compounded by the number of banking relationships. It’s not uncommon for larger alternative fund managers to use a dozen or more banks, which often means dozens of hard tokens to track and manage. What can be done to mitigate these risks and improve wire transfer availability?

• Digital Signatures – Wherever possible, physical signature-based processes should be eliminated in favor of modern authentication protocols. If a bank won’t accept anything but a signed LOA, fund managers could use digital signatures to authenticate approvals and ensure wire requests haven’t been tampered with. Unlike physical signatures, digital signatures are virtual and can be effortlessly executed by personnel working from home.

• Soft Tokens and Push 2FA – Hard tokens are being replaced with software tokens and user-friendly mobile apps with push authentication. App-based 2FA services like Duo are tremendously popular with users and IT because of their easy deployment, administration, and use. Through the ubiquity of smartphones, soft tokens allow everyone to authenticate anywhere at any time. In addition to eliminating the need for keychains of key fobs, soft tokens also make it easy to provide 2FA to each user, eliminating shared token use and improving accountability and auditability.

Banks aren’t known for cutting edge technology and fund managers may be thinking, if the bank won’t change, what can I do about it? Thankfully, wire systems allow fund managers to take matters into their own hands. Wire management software, like IntegriDATA’s CashWire, act as a unified wire portal, replacing individual bank portals and empowering fund managers with consistent workflows and authentication controls across all their banking relationships. Using a centralized wire platform with modern authentication protocols, like Duo and digital signatures, fund managers can be confident wire transfer availability isn’t impeded by pandemics or any other event that might require long term remote work.

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IntegriDATA CashWire is the only wire management system designed specifically for the needs of alternative asset managers. CashWire supports digital signatures, Duo 2FA, SWIFT messaging, and more. Learn how CashWire can improve wire transfer availability and security.