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Using Check 21 to Capture Commercial Business
by Steve Hill
Director of Business Development, Global Payments Consulting
Question: What should banks consider prior to or in early deployment of products for commercial customers to be able to capture and deposit checks at their place of business?
Answer: The passage of Check 21 opened the door for the electronification of paper checks. One of the offshoots of this process has been the creation of new products for banks that allow the banks' customers to capture checks in their offices and transmit the images to the bank for clearing. The benefits to the customer are significant in reduced handling costs, eliminated trips to the bank to make deposits, and potential enhanced fraud mitigation through faster information access. A number of banks have jumped on this new opportunity and have either launch limited-phased products or are planning to launch a product soon. While the benefits are many, the banks that will ultimately be successful with this new product in the long run will be those that carefully plan and execute a program that provides true value to the customer and simultaneously dovetails with a broader capture strategy for the bank.
The value of such a product to the bank customer can be seen in reduced trips to the bank, accelerated funds availability, ability to do online research, reduced banking partners, and perhaps even apply technology to detect potential fraud at the earliest point. While customer capture has many benefits, the buyer should take time to review the true applicability to their world. For example, the customer should review all the costs (e.g. equipment, transaction fees, implementation, etc.), as well as things like continued need to make trips to the bank to deposit cash, ability to properly dispose of checks, and impact on overall banking relationship. Taking time to review the broader impact to their business should allow the bank customer to make the right decision for their business.
On the bank side there are also many things to consider as they are preparing or even just beginning to move on implementing this new product. The benefits are seen in reduced handling costs, increased customer "stickiness," elimination of geographic barriers, and competitive market advantage through a broader product array. On the flip side the banks that will succeed with this in the long run must make sure that, like their customer, they have taken the necessary steps to create an offering that provides value to the customer while simultaneously fits with their long term payments strategy. Just a few of some of the things the banks must do to be successful are: solicit customer input during early development, make sure that a clearing process has been incorporated on the back end (i.e. IRD vs. image exchange), evaluate all cost impacts on float and enterprise capture strategy, and ensure that new workflows prevent the truncated check from being allowed to enter the payments stream.
In all corporate customer capture is an exciting new proposition to the banks and their customers. The benefits are numerous to both parties assuming they take a wide-eyed look at the impact on their entire respective organizations. The issues raised above are just a few of a number of impact points that must be considered by both banks and their customers. For this to be a successful proposition, the banks offering this product should take the time to fully understand the customer's needs and drive an offering that reflects those needs and simultaneously works in the longer term framework of their capture and payments strategy.
Pressure on earnings, new forms of competition, and evolving payments streams are challenging banks as never before. Carreker's Global Payments Consulting team offers a portfolio of strategic services to help your institution manage change with maximum profitability. For more information contact Steve Hill at 508.485.2283 and/or shill@carreker.com.
About Carreker Corporation
Carreker Corporation improves earnings for more than 250 global financial institutions by providing integrated consulting and software solutions in Risk Management, Payments, Cash & Logistics, Customer Value Enhancement and Revenue Enhancement. Carreker offers a full range of Check 21-related consulting, including implementation and integration services. Carreker's global bank clients include: the top 20 in the United States and 75 of the next 100; the top six in Canada; the top four in the United Kingdom; the top two in Ireland; the top five in Australia; and three of the top four in South Africa. For more information visit www.carreker.com.
First published on BankersOnline.com 5/17/04
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