Great Western Bank, the nation's second-largest thrift, plans to be the first user of image-based item processing systems being installed at Electronic Data Systems Corp.
The Plano, Tex., computer services giant, a subsidiary of General Motors Corp., is installing International Business Machines Corp.'s ImagePlus high-performance transaction system at four of its check processing centers.
EDS is acting as one of the testing sites for the system, which is not yet commercially available.
The new platform, to be installed at two centers in Florida and two in California by the end of 1996, will enable EDS to maintain a single, centralized support center for its check processing operations, and distribute a variety of applications to multiple sites, EDS said.
EDS said it will offer image-based services on the new platform including statements, proof-of-deposit, and archive.
Building on these core applications, the company intends to offer additional services such as check images on CD-ROM. This would let financial institutions provide the images to their correspondent banks and wholesale customers for cash management.
Linda McDowell, EDS check product manager, said the company is enhancing its item processing operations to address the needs large banks that hope to increase fee income and improve service by providing image-based applications.
One such customer is Great Western, which next year will convert to image-based item processing using EDS' services.
Great Western, based in Chatsworth, Calif., is EDS' largest item processing customer. It has been using the company's traditional item processing services at its California operations since 1980.
The bank has renewed that agreement and has signed a related contract for its Florida operation, previously managed in-house. The five-year contracts are valued at more than $150 million.
Under the new agreements, EDS will take over Great Western's item processing centers in Florida and install the same platform currently supporting the bank at EDS centers in El Segundo and San Leandro, Calif.
The bank will be able to take advantage of EDS' image-based services at both locations when they become available.
Jesse King, senior vice president at $42 billion-asset Great Western, said it expects to reduce costs and improve service by consolidating its nationwide check volumes on a common platform.
"We chose EDS as our technology partner in this project for three reasons," he said - "they could help us convert to the proof-of-deposit environment more quickly and with less risk, they could help us drive down our overall transaction processing costs, and they could best support our efforts to reengineer our back office processes.
"The result should be a highly efficient, state-of-the-art back office operation."
Initial savings of around 20% are anticipated through the use of image processing, Mr. King said.
For EDS, the agreements mark the continuation of an important long-term relationship and a strong base in the Southeast for its check operations.
Dan Talbott, managing director of EDS' payment systems group, said the key factors in the company's decision to install the IBM platform were the distributed processing capability and the ability to support a wide range of processing volumes.
"As more financial institutions require nationwide check processing capabilities, it's increasingly important for us to offer standard products on a common platform at multiple locations," he said. "In addition, we need to be able to scale our system solutions to the size of a particular processing site and the volumes that run through it." The new platform "enables us to meet both those objectives with the same host system."
The system provides a number of benefits over the traditional high- performance transaction platform, said Doug Halvorsen, marketing manager for IBM's check image development group, in Charlotte, N.C.
In the conventional image capture environment, images of checks are captured and sent over phone lines to central processing centers. Each check image represents about 40,000 characters. The volume of checks processed by large institutions requires many costly, high-bandwidth phone lines to send the information.
The new system enables banks to capture and store check images at remote sites, sending only the code line at the bottom of the check - which represents about 50 characters - to the central processing site, a less costly solution.
