Early Adopters Of Check Imaging Cite Payoff
Credit unions are at the forefront of Check 21 image exchange, and they say that fledgling technologies are easing costs and risks-and determining the way the new lawis interpreted.
"Technology will be the driver for the interpretation of Check 21, and right now [our check processor] and Maine Highlands Federal Credit Union are in the driver's seat," said Rhonda Taylor, president at $52-million Maine Highlands CU.
"Maine Highlands is an early adopter of image exchange technology," she continued. "Other financial institutions are watching to see how it goes," she continued. "I predict that it will not be long before most other financial institutions process checks the same way."
Changes Since October
In October, a number of CUs across the country told The Credit Union Journal that they were taking a "wait-and-see" approach to investing in technologies related to the Check Clearing for the 21st Century Act. And Fiserv, Inc. asserted earlier this month that "the industry still has a long way to go" to electronic imaging and presentment.
Today, however, Maine Highlands is just one of the 110 credit union members of the Maine CU League that will not only capture and archive check images but will exchange them with the League.
Since the credit union's "live" date of April 1, Maine Highlands has been electronically exchanging 100% of its check image data with the Maine CU League, which provides item processing. The league's affiliate organization and check processor, Synergent, offers image capture and exchange tools from Atlanta-based VSoft Corp.
Southeast Corporate FCU in Tallahassee, Fla. announced this month that it is also offering VSoft eDesk to its member CUs, while Fiserv, Inc. clients will begin exchanging images with one another and the clearinghouses before the end of the year through an agreement with Metavante's Endpoint Exchange Network.
As financial institutions implement the image capture and exchange tools, the technology seems to be setting the standards for check float times and check image formats.
"More than likely, technology will drive potential future changes to the Check 21 Act, such as the amount of time that an item can be held on deposit as relates to the Federal Reserve Board's Regulation CC," said Hunter King, Synergent's senior vice president. "Availability times will be dramatically reduced as this technology takes off and settlement, availability, and clearing times quicken."
Check 21 gave the OK to financial institutions to accept electronic check images in substitution for paper. But one of the direct outcomes of the Act is that financial institutions are cutting costs and float time by processing that virtual check data electronically through the clearinghouses and Federal Reserve.
"Maine Highlands FCU was immediately operating at a break-even point with the new technology," said Taylor. "By eliminating the third-party processor and third-party couriers, we were able to recoup the additional costs."
Member credit unions can expect to save up to $30 per day on carrier costs, according to Synergent's King. And most CUs will recover their costs for the Check 21-related technologies and maintenance within one year, he said.
Likewise, Synergent expects to save more than $200 per day in courier costs when it begins to electronically transmit checks with the Federal Reserve Board, said Dawn Paquet, manager of check processing and support services at Synergent.
Eliminating Costs-And Risks
As member credit unions begin transmitting check images, Synergent will also save hundreds of thousands of dollars associated with purchasing and maintaining the image capture hardware and sorters used for paper checks, she added.
In addition to cutting costs, Maine Highlands has "eliminated some risks concerning the transportation of checks," said Taylor.
Maine Highlands no longer picks up paper checks from its three branches and delivers them to the Dexter headquarters to be filmed and then to a third-party check processor.
Instead, each branch captures images and transmits them directly to Synergent for processing.
Other credit unions can't wait to start exchanging check images, King added. The demand for image exchange capability by members of the Maine CU League has been "overwhelming in a good way," he said.
For additional information:
* Maine Highlands Credit Union at www.mainehighlandscreditunion.com
* Maine Credit Union League at www.mainecul.org
* Synergent at www.synergentcorp.com