SouthTrust Corp. plans to join the growing number of financial institutions that have applied image technology to their check operations.
Beginning in June, the $17 billion-asset, Birmingham, Ala.-based bank will provide both corporate and retail customers with images of canceled checks rather than the actual items, according to Randy Griffith, manager of image development at the bank's data processing arm, SouthTrust Data Services.
More important, the bank will also move to install an image application for its proof-of-deposit operations by the end of the year.
Proof-of-deposit, in which check amounts are read and encoded on the items in magnetic ink, is one of the most labor-intensive tasks in the check processing area.
Applying image technology - in which special cameras take digital, computer-friendly pictures of paper documents - to this function can reduce check processing costs by 20% to 30%. But, because of the high cost and complex nature of check image proof systems, only a handful of pioneering institutions have installed them.
SouthTrust is part of the second wave of banks to adopt imaging - banks that hope to build on the experience from the first installations at Comerica Inc., Signet Banking Corp., Barnett Banks Inc., and Huntington Bancshares.
Unisys Corp., based in Blue Bell, Pa., will provide the bank with its image system, which is valued at $1.8 million.
Unisys was the first technology provider to successfully install an image proof-of-deposit system for large-scale check operations. International Business Machines Corp. also provides such systems.
On the shoulders of these two major vendors, check image's acceptance is growing, though it is currently used by a minority of banks.
According to 1994 research conducted by Tower Group, Wellesley, Mass., less than 1% of the 60 billion checks processed in the United States each year are imaged for proof-of-deposit functions. Less than 5% are imaged for all applications combined, including proof-of-deposit, statement generation, and other functions, the firm's findings say.
Community banks exhibit the largest growth in imaging acceptance, though most of these smaller institutions employ image statement applications, which are cheaper and less risky than proof-of-deposit applications, experts said.
Large banks are slower to adopt imaging because the high volume of checks they process means higher costs and system risk, experts said.
The SouthTrust system will consist of a host-based image application processor, an image-enabled Unisys document processor, and advanced imaging software.
Also integrated into the system are two of Unisys' new U6000/500 series Unix servers, based on Intel Pentium microprocessor technology. These platforms run CheckVision statement formatting software from IA Corp., Emeryville, Calif.
SouthTrust has also contracted with Strategic Solutions Inc., a Birmingham-based document design company that will help the bank create its statements.
The bank plans to produce color statements that combine customer checking and savings account data on one statement.
The statement will also include bar graphs and pie charts to give customers graphical comparisons, such as automated teller machine transaction frequency versus check activity in a given account.
By next year, the bank expects to increase its range of check image services. It may use image technology to distribute account information to commercial customers on CD-ROM. The bank will also allow corporate clients to use PCs to access images on-line.
On the retail side, SouthTrust is considering getting into home banking with personal computer-based personal financial management products such as Quicken.
The bank will move to full proof-of-deposit image capture in its Atlanta processing center in the fourth quarter, said Mr. Griffith. At a later date, this capability will be expanded to the bank's remaining Birmingham and Orlando processing centers.
SouthTrust's plans illustrate that check imaging can be both a cost cutter and revenue generator, observers said.
