Banking & Financial Services White Paper How imaging is changing remittance and check processing By Thierry Leger, VP of Marketing IA Corporation In the fiercely competitive environment of post-deregulation banking, where mergers and acquisitions are an everyday reality, financial service companies are turning to technology--specifically imaging technology--to succeed. Banks are under pressure to not only retain large customers, but attract new customers with differentiated, income-generating products and services. Imaging technology is making sweeping changes in the area of cash management. According to the Treasury Management Association, cash management is defined as the systematic gathering of information about a firm's collections, disbursements and balances, and the use of that information to manage the funds available to the firm. Cash management encompasses many of today's buzzwords: cashflow, just-in-time, fraud prevention and streamlined operations. Improved cash management can save hundreds of thousands of dollars in streamlined operations, attract multi- million-dollar customers and capitalize on additional float and cash deposits amounting to millions of dollars. Contrary to popular belief, the paper check is not going away. Even with the emergence of electronic commerce and EDI, banks will continue to process approximately 50 billion checks per year. They will also face $10 billion in losses to fraud. Banks must not only keep up with the growth of paper-based check processing, but use technology to stay competitive. As financial service companies increasingly adopt imaging to meet these needs, more and more corporate cash management services are becoming image-enabled. According to market researcher the Tower Group, "While corporate cash management services was a newly emerging application area for check imaging technology just a year ago, today at least one corporate cash management service is image-enabled at 25 of the top 50 U.S. commercial banks, and at virtually all of the leading bank providers of corporate cash management services." Trends in remittance and check processing Two cash management processes undergoing significant changes through the use of imaging technology are remittance processing and check processing. In both remittance and check processing operations, there are several emerging trends: * a shift from hardware to software * a shift from physical storage to electronic record management * new centralized image archives * the convergence of corporate and retail services * the use of geographically distributed processes to maximize effectiveness, 24 hours per day * extension of the banking system to customers for real-time information * use of image-enabled software to reduce fraud * use of imaging software to improve customer service and create fee-based services. Moving from hardware reliance to software reliance In the past, remittance or mail-in payment processing was a highly manual task. It required an extensive clerical force and skilled knowledge workers, with shifts round-the-clock, six or seven days per week. Even then, it was an expensive process prone to error and high turnover. The first step in automation was centered on computer hardware. Specific hardware was needed for wholesale versus retail accounts. In addition, to handle multiple accounts on one workstation, the hardware had to be reset manually to accommodate the customized forms and reports for each customer. The process was so complicated that banks would specialize in one type of lockbox or one type of customer. With workflow-based image software, a bank no longer needs to rely on a specific range of hardware or the manual resetting of hardware to manage multiple accounts. Through the software, the same workstation can process wholesale or retail remittance and can complete easy automatic resetting via software any time of day or night. The shift from hardware reliance to software reliance increases the total operational efficiency and provides better round-the-clock hardware utilization. With this added flexibility, banks can also support a greater number and variety of clients with prompter service. Convergence of wholesale and retail lockbox Lockbox is a payment processing service offered by commercial banks and service bureaus to large corporations. Through the service, lockbox processors set up special post office zip codes to receive payments, deposit funds and provide statements electronically to corporate customers. Wholesale lockbox is usually high-dollar, business-to-business transactions, while retail lockbox operations are much higher in volume with different processing requirements. By utilizing advanced workflow software platforms, retail and wholesale lockbox functions are integrated on the same system. The bank can process more customers with more customized service offerings. Banks increase customer deposits with multi-million dollar corporate lockbox customers and also have the advantage of additional multi-million dollar float and cash deposits. Geographic distribution becomes an asset Prior to deregulation, bank operations used to be centralized with standalone facilities. Now that banking operations can cross state lines, and given the additional impact of mergers and acquisitions, operations are increasingly decentralized. When remittance processing relied on hardware rather than software, it was difficult to monitor other locations or shift work across multiple platforms and time zones. But with software-reliant, image-enabled applications, computer utilization can actually be maximized across various locations. When one system is experiencing high volume, traffic can be monitored and automatically sent to another site. Because this doesn't require a manual technician, it can be done 24 hours per day. Extending the bank to the customer site Because banks are now using imaging software, they not only have added flexibility in their internal operations, but also in a variety of services they can offer to customers. With electronic images, there is more information available to customers on a real-time basis. For example, customers can not only see the date, payee and dollar amount entered, they can see both sides of the check and the invoice for quicker and easier reconcilement. Storage and access are also easier because customers can receive their remittance information via CD-ROM or go on-line to the bank straight from their desktop PC. Better customer service When there's a question, customers don't have to call the bank and wait days for a microfilm search and fax back from the bank. They have all the information at their fingertips and can even cut and paste an image into a customer letter or fax within minutes. With more comprehensive and real-time information, bank clients can make better real-time decisions and provide their own customers with better customer service. For example, if there is an exception, the bank client can quickly view the exception images via computer and resolve the problem quickly. This is extremely critical in these days of just-in-time manufacturing operations. Manufacturers no longer hold inventory but rely on suppliers to ship parts just in time for manufacture. With imaging technology, a supplier can resolve a non-payment issue quickly. They do not have to wait to call the bank and receive a fax, but go on-line, in real time, look at the image and resolve the discrepancy. A shipment will not be held up for a mistaken non-payment and there is no disruption to production. Relationship banking Relationship banking has become extremely important in the current competitive environment. Bank clients are asking for these types of services, and banks find it critical to use the best technology to not only retain but attract these clients as well as generate new income. When Harris Bank, a leading provider of lockbox services, had customers begin asking for image services, they quickly responded to those customers and added a new suite of CD-ROM delivery and on-line services to all its corporate customers. Trends in check processing Even with the emergence of on-line banking and other non-paper-based payment methods, the use of checks is expected to continue increasing. Banks processed more than 50 billion checks in 1995 and by 2000, the number will have increased to 60 billion, according to the Tower Group. Shift from physical storage to electronic record management The same trends apply to check processing as remittance processing. There is a shift from manual to virtual processing. One example is check storage. Check storage may seem mundane until you realize that banks are required by law to hold checks for seven years. That means in excess of 350 billion checks must be stored. Previously, checks were stored on microfilm, a time-intensive and labor-consuming process. With imaging technology, banks have a variety of labor- and time-saving options including magnetic disk, RAID, magnetic tape, optical disc, CD and magneto-optical rewritable disc. When combined with powerful archive management and retrieval software, these technologies streamline internal operations and provide better customer service and fee-generating offerings. By using imaging archival, the customers have access to more information more quickly. Instead of taking days to research an answer for a customer, it can be done in minutes. Convergence of corporate and retail services As banks turn to innovative technology to provide new services for corporate customers, they learn to adapt those services for their retail customers providing new income-generating services. One example is the Union Bank of California. One of its largest customers, a high-volume money order issuer, needed a new cash management system to handle its growing volume. The money order company was also concerned about its increased exposure to fraud as the operation grew. Because of its relationship with The Union Bank of California, the company turned to their bank as a business partner to help them find a solution. The Union Bank of California looked into an imaging solution for their customer. The bank not only satisfied the customer's need, but also developed other new services. The Union Bank of California customers now have CD-ROM delivery, next-day on-line viewing of checks, and positive pay features to improve response time and reduce exposure to fraud. Additional retail and wholesale services now offered by other banks because of image technology include: CD-ROM delivery, electronic archival, on-line banking and image statements. Consider image statements as one example. Image statements make it easier to reconcile your account when you can see the entire check image--including name of the payee and memo--instead of just the date and check amount as on a traditional statement. You also don't have to wait until the end of the month to get the information; you can go on-line from your PC. Summary Imaging technology is reshaping the banking industry in the wake of deregulation. Banks no longer question if they need imaging technology; it's more a question of when and what features. While deregulation caused a myriad of problems and opportunities, image technology is equipping banks with the means to solve those problems and capitalize on the opportunities. For example, check fraud alone costs the banking industry $10 billion a year. If image-enabled positive pay was used extensively throughout the industry, check fraud could be virtually eliminated. Imaging technology streamlines banks' internal operations with better utilization of human and computing resources. It provides a product differentiator in these days of fierce competition, while increasing customer service and satisfaction. And most importantly, imaging technology provides new fee-generating services to attract and retain multi-million dollar corporate accounts as well as retail or individual accounts. IA Corp. is a leading provider of high-end, high-volume enterprise application software products that support complex transactions for the financial industry. IA is located at 1900 Powell St., Emeryville, CA 94608-1840. Telephone: 510-450-7000. Fax: 510-450-7099. E-mail: info@ia-us.com. Web: http://www.iaus.com Thierry Leger is vice president of marketing for IA Corp. Advanced work management software It takes a powerful software platform to speed through hundreds of thousands of documents, and millions of accesses and sorts. Banks, in particular, need applications that are extremely high-end, handling high volumes of complex transactions that are scalable, operate with legacy systems and, of course, intensely reliable. To meet this need, the most successful imaging applications are based on work management. Work management automatically and electronically manages and transfers work from one process or activity to the next through to completion. It accelerates the entire process by eliminating the delay between tasks. For example, IA's applications, CheckVision and RemitVision, are based on an object-oriented work management software platform, WorkVision. This work management software incorporates workflow, document management, advanced work monitoring and object storage technologies suitable for high-volume, complex, production-oriented applications. While used primarily for high-end work automation in connection with image and document management, this platform can be used with any type of electronic file including text, image, graphics, voice and video. The platform is modular, consisting of four components: a workflow module to define the routing and rules for the system, a user interface, input and output interfaces and a data storage and distribution module.
	TOP OF PAGE		HOME ++ SEARCH IW ++ DAILY NEWSWIRE ++ CURRENT PUBLICATIONS ++ ABOUT IW BUYER'S GUIDE ++ DIIME ++ SUBSCRIBE ++ COMMENTS
	© 1995, 1996, 1997 Cardinal Business Media, Inc. All Rights Reserved. The names, logos and icons identifying CBMÆs products and services are proprietary marks of Cardinal Business Media, Inc. CBM has no liability for content or goods on the Internet except as set forth in the Terms and Conditions of Service.