Banking & Financial Services White Paper Automated tape storage for check image archival By Darrell Royal, Vice President of Market Development StorageTek As image technology continues to establish its place in the check processing industry, the opportunities and challenges this technology produce have become abundantly evident. There are now demonstrable pockets of implementation success in image POD (proof of deposit), image statements and image cash management which demonstrate that the business case potential for check imaging is legitimate, and that much of the foundation technology is sound. These successes have also served, however, to highlight some of the key challenges which remain. Significant among these challenges is archival. Each major check imaging application has a critical archival component, and invariably the question which must be addressed is, can electronic check images can be stored on a media that is cost-effective and provides the required access time and data security? The data storage challenges which accompany migration to check imaging archival are to some extent self-evident. For instance, the 80 bytes of MICR data per check which banks have traditionally stored are now accompanied by an additional 40,000 bytes of image data per check, creating an immediate 500-fold increase in storage requirements. Until recently, with the relatively low cost of microfilm, there simply has been no way to justify the added expense of archiving high volumes of digital check images. While microfilm is known to be plagued with quality problems and high labor costs associated with retrieval, its place in check archival has remained solid, lacking any clear business case to the contrary. Advanced tape drives and robotic libraries for storage have fundamentally changed the debate concerning image versus microfilm. For the first time, the cost of tape libraries and media for storing and retrieving check images has fallen below the film and developing cost of microfilm. This means that any bank that has decided to adopt check image capture should automatically adopt check image archiving. Tape versus microfilm and optical storage The following table illustrates the advantages in performance and cost of StorageTek's TimberLine high-speed tape and RedWood high-capacity tape relative to microfilm and optical storage. These figures are based upon an average check image size of 40,000 bytes and standard list prices for equipment. The StorageTek retrieval time figures are based on utilization of StorageTek high-speed robotic libraries. The optical times assume use of high-capacity robotic jukeboxes. General concepts in check image archival When designing a check image archive, requirements can generally be separated into two categories: the image enabling of legacy archive applications, and the support of new image specific archive applications. In image enabling legacy applications, image archives typically replace microfilm copies. The benefits of image technology versus microfilm relative to these applications are dramatic and include: * far greater image clarity * accelerated retrieval time * reduced labor cost for retrieval. * improved image distribution alternatives (transmission, CD-ROM) * easier consolidation of retrieval functions across multiple bank processing sites. Any application which currently relies on the use of microfilm copies would benefit significantly from automated access to an image archive. While the most direct cost reduction benefit would be derived in the photo retrieval function, application areas which would potentially interface with this archive include: * research and adjustments * customer service * return items. Beyond these legacy applications are a number of additional archival applications which are more specific to particular image applications. For instance, image statements and image cash management products inherently create archival requirements which did not exist previously. Banks are expressing an interest in maintaining a separate archive which could quickly and exactly reconstruct image data which had been delivered to customers. Typical archive design issues Summarized below are some of the primary considerations which go into defining the automated tape component of a check image archive. Implementation phasing Few banks begin check image implementation with a full POD image capture capability. More commonly, isolated applications such as image statements or image cash management are implemented initially, followed by a gradual phasing in of image POD. An associated challenge is defining how an archive can be flexible enough to pass through these implementation phases on its way to becoming a total bank check image archive. Archival software A number of software vendors--including IBM, Fiserv, IA and BancTec--have delivered check image archival software packages, and are now aggressively enhancing their first-generation products as market demand increases and requirements become more clearly defined. StorageTek storage devices are currently compatible with all of these vendors' operating systems. As customers request it, we will work with each vendor to ensure availability of seamless application interfaces. As important as the software which stores the images is the MICR data indexing software which supports the identification of specific check images for retrieval based upon a wide range of inquiry criteria. Tape vendors should work with research platform vendors to ensure product compatibility. Media migration by age of data An image archive design typically involves the migration of check images from DASD, where they have resided for the first three to five days after capture, to high-speed tape for the next 30-90 days, to low-cost tape for the remainder of the required seven years. In most moderate to high check volume environments, optical storage is no longer cost competitive as a general archival medium. Data organization Clearly, tape archive performance can be significantly enhanced if check images are written to tape in a sequence that reflects how the data is likely to be retrieved. For instance, image statements can be created far more efficiently from tape if the stored image data has been organized by account number rather than by item sequence number. The efficiency can be further increased if checks are stored on tape by statement cycle. Intelligent data organization accelerates retrieval of specific items and also more effectively leverages the large data-buffering capabilities of tape. The advantages of grouping items onto tape in a way that capitalizes on this buffering capability are significant. As the cost of check image storage continues to fall, it is likely that banks will actually support multiple archives of the same items, each of which is organized for efficient support of specific calling applications. Response time requirements It is interesting to analyze the response time requirements of a check image archive for each of a bank's calling applications. While there is a temptation in an image-enabled environment to provide all inquiries with an instantaneous response, it is important to understand the cost versus benefit trade-offs involved. Distributed versus centralized design While approximately 70% of bank-based high-speed check reader sorters currently operate remotely, economies of scale generally favor consolidation of a check image archive. Given the relatively high cost of transmitting check images from remote capture sites to central archive facilities, many organizations are considering writing the data remotely to tape and then physically to the central site for long-term archival. Other tape considerations There are a number of issues pertaining specifically to tape as a storage medium which are especially critical to a discussion of tape's role in check image archival. Legality of tape This issue must be separated into two fundamental questions. First, does storage of electronic images constitute a legally adequate replacement of physical checks or microfilm copies of checks? And secondly, if electronic images of checks are legally adequate for archival purposes, does magnetic tape represent an acceptable medium on which to store those images? There is evidence to suggest that the answer to both questions is "Yes." Donald Skupsky, a noted legal expert in data storage requirements and president of the Information Requirements Clearinghouse, issued the following opinion in March 1995: "After reviewing the legal issues in all United States jurisdictions, we have concluded that an organization may proceed to develop an electronic imaging system with magnetic media storage to replace a paper records system without adverse legal consequences. Such a system may incorporate scanning of original records, storage of images and information on any media (including magnetic tapes), and destruction of the paper records." (The complete text of this opinion is available upon request.) Specifically concerning tape, the National Archives and Records Administration (NARA) in September 1995 issued a regulation stipulating that computer backup tapes would satisfy government requirements for preservation of vital records. Under this rule, vital records are those deemed to be essential to meeting operational responsibilities and protecting the government's legal and financial obligations. Beyond these considerations, it is clear that the Federal Reserve is actively promoting the use of electronic images for archival, as is suggested by its own practices and by public statements by Fed representatives. Longevity of tape Extensive independent review at Carnegie Mellon's testing labs estimates the shelf life of advanced tape cartridges at 15 years. Additionally, it was estimated in those tests that a single tape can safely endure 20,000 read/write passes. As a long-term storage medium for check images, state-of-the-art tape exceeds any realistic requirements. Beyond this protection, however, it records utilization and quality data so that any tape approaching an acceptable threshold of read/write passes or frequency of error corrections can be automatically designated for re-archival to a fresh tape. StorageTek is the world's leading provider of automated tape storage technology. In pursuing our commitment to check image archival, we are aggressively partnering with banks and key vendors to ensure that we deliver a solution which continues as the technological best of breed, and reflects a keen understanding of the business requirements most critical to our customers' success. For more information about Check Imaging applications, contact Scott Willis, Applications Manager, at StorageTek (303) 673-7013. Darrell Royal, with STK since 1995, has spent over 15 years in the banking industry's Operations Consulting and Software Development areas . As an independent consultant, Darrell has helped two large bank holding companies develop their Check Imaging strategies.
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