jetbluedog
Well-known member
- Joined
- Dec 20, 2003
- Posts
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GOODBYE NIGHT-TIME CHECK HAULERS!!! (eg. Goodbye AIRNET SYSTEMS and OTHERS!)
Check 21 becomes law, allows speedier electronic settlements
It calls for electronic check imaging to be implemented within a year.
News Story by Lucas Mearian
(COMPUTERWORLD) - In what will be a major technological change for the banking industry, President Bush last week signed into law the Check 21 bill, which allows banks to substitute electronic check images for paper checks for the clearance and settlement process. The bill paves the way for the industry to save billions of dollars and speed the processing of checks.
The law calls for the use of "Image Replacement Documents" to be implemented within a year, but does not address the exchange of electronic images between banks in lieu of the original check. Bank IT managers say the success or failure of such systems, which will include branch-based scanning systems, data repositories and automated processing applications, will depend largely on changing customer attitudes.
Doug Smith, senior vice president of planning and engineering at Bank of America Corp. in San Francisco, said the industrywide rollout of electronic check clearance and settlement technology will take years. But the rollout at the nation's top eight banks, which are known as the vanguard banks and comprise over half of the electronic clearing volume, will be implemented in the second half of 2004.
"It's really a social issue. The check processing environment has been built around the comfort and security of handling a piece of paper," Smith said of the more than 42 billion checks cleared each year. "In a check imaging world, we'd give our customers a picture of that check. The customer's willingness to accept that is a social decision. It's really not a technology constraint."
While Bank of America has check imaging systems already in place, allowing customers to view check images online, it does not yet have check clearing and settlement systems to handle the processing of more than 8 billion checks each year.
Like Bank of America, most large banks already have much of the basic technology required for check imaging and processing, according to Breffni McGuire, an analyst at TowerGroup in Needham, Mass. Many smaller banks, however, will wind up depending on their larger counterparts to perform their check image processing.
"It clearly is going to depend on the size of the institution and what kind of preparations they've made," McGuire said.
The cost savings for banks created by check imaging represents billions of dollars, mostly from reduced transportation and check handling costs, Smith said. The clearance and settlement of checks under today's manual processing system can take from one to four days and requires paper checks be shipped by plane and truck to the banks that issued them and involves manual data entry processing.
"The very first bank that receives the check, which may or may not be the issuing bank, now has the authority to digitally image that check, thereby cutting out repeated handing of the [paper] check," said Blake Prichard, vice president in charge of outsourcing services at Unisys Corp. and a former senior vice president at the Federal Reserve Bank.
Under an electronic, automated system, when a check is deposited, the receiving bank scans the check once and uses that image to complete the clearance process. At the same time, it creates a database repository for those images that can be accessed through secure Web-based channels.
"It's clearly a huge issue. It's one of those things that when you go to industry conferences, it's a top-of-mind issue," McGuire said.
Check 21 becomes law, allows speedier electronic settlements
It calls for electronic check imaging to be implemented within a year.
News Story by Lucas Mearian
(COMPUTERWORLD) - In what will be a major technological change for the banking industry, President Bush last week signed into law the Check 21 bill, which allows banks to substitute electronic check images for paper checks for the clearance and settlement process. The bill paves the way for the industry to save billions of dollars and speed the processing of checks.
The law calls for the use of "Image Replacement Documents" to be implemented within a year, but does not address the exchange of electronic images between banks in lieu of the original check. Bank IT managers say the success or failure of such systems, which will include branch-based scanning systems, data repositories and automated processing applications, will depend largely on changing customer attitudes.
Doug Smith, senior vice president of planning and engineering at Bank of America Corp. in San Francisco, said the industrywide rollout of electronic check clearance and settlement technology will take years. But the rollout at the nation's top eight banks, which are known as the vanguard banks and comprise over half of the electronic clearing volume, will be implemented in the second half of 2004.
"It's really a social issue. The check processing environment has been built around the comfort and security of handling a piece of paper," Smith said of the more than 42 billion checks cleared each year. "In a check imaging world, we'd give our customers a picture of that check. The customer's willingness to accept that is a social decision. It's really not a technology constraint."
While Bank of America has check imaging systems already in place, allowing customers to view check images online, it does not yet have check clearing and settlement systems to handle the processing of more than 8 billion checks each year.
Like Bank of America, most large banks already have much of the basic technology required for check imaging and processing, according to Breffni McGuire, an analyst at TowerGroup in Needham, Mass. Many smaller banks, however, will wind up depending on their larger counterparts to perform their check image processing.
"It clearly is going to depend on the size of the institution and what kind of preparations they've made," McGuire said.
The cost savings for banks created by check imaging represents billions of dollars, mostly from reduced transportation and check handling costs, Smith said. The clearance and settlement of checks under today's manual processing system can take from one to four days and requires paper checks be shipped by plane and truck to the banks that issued them and involves manual data entry processing.
"The very first bank that receives the check, which may or may not be the issuing bank, now has the authority to digitally image that check, thereby cutting out repeated handing of the [paper] check," said Blake Prichard, vice president in charge of outsourcing services at Unisys Corp. and a former senior vice president at the Federal Reserve Bank.
Under an electronic, automated system, when a check is deposited, the receiving bank scans the check once and uses that image to complete the clearance process. At the same time, it creates a database repository for those images that can be accessed through secure Web-based channels.
"It's clearly a huge issue. It's one of those things that when you go to industry conferences, it's a top-of-mind issue," McGuire said.
