Banks Gearing Up For Check 21: Huge Operational Changes Anticipated
by GENILEE S. PARENTE
Although the Check Clearing for the 21st Century Act isn't effective until October 28 of this year some experts, such as Unisys Corporation, have reported that their surveys and studies say the industry is lagging in its preparation. However, many banks are already gearing up their imaging capabilities and payment processes to be ready to take advantage of the new law. Check 21, as it's been nicknamed, will allow banks to truncate checks at the point of deposit and move payment electronically.
Sharing Images
Viewpointe, a leading provider of check imaging services, and four of its owner banks recently announced a joint commitment to share check images. The owner banks, which include Bank of America Corp., J.P. Morgan Chase & Co, U.S. Bancorp, and SunTrust Banks, Inc., will exchange images of checks instead of the actual check paper for processing payments.
The banks also agreed to establish quality standards for imaging within the Viewpointe system and said Viewpointe will act as a monitor for those standards.
Preferred Provider
Meanwhile, the Independent Community Bankers of America announced a preferred check and document imaging provider for its 4,600 members. Advanced Financial Solutions has been tapped for the role. The company has designed a series of imaging systems and a systematic approach to training and installation for community banks.
A 2003 survey of ICBA members showed that 39 percent of community financial institutions plan to evaluate check imaging applications in this coming year.
Teller Line Image Capture
On a smaller scale, individual financial institutions are also gearing up for the act. Dickinson Financial Corporation, which has four institutions with 150 branch locations, recently announced that it had installed a system that allows it to capture images of paper transactions at the teller line and transmit the images instantaneously to a central location, thereby eliminating the need for back office proofing systems at branches. At the central location, the images will be merged into the workflow of a proof of deposit system for keying and balancing. For now, the physical items will then be transported to that location. However, correction processes and balancing activities can occur at the same time the physical items are being transported, and the plan is to have the system operating smoothly for the time when truncation becomes a reality.
Help Is Available To All
The American Bankers Association has created a 'Check 21 Tool Box' for its members to help with the implementation of Check 21. According to their press release, the guide contains interactive checklists, economic models, training information and individual sections to address the needs of operations, risk management, IT and communications. If your bank is a member of ABA, the tool kit is available on their web site, www.aba.com.
Another valuable source of information on Check 21, available to all, can be found at www.BankersOnline.com. Articles on how to apply Check 21 to your financial institution, the effect it will have on branches and operations, the vendors - what they can do and how to contact them, what effect substitute checks will have on your bottom line, your liability, and the law itself is all on the BOL web site. Click on 'Check 21' on the main page and you'll be connected to in-depth, usable information.
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