IMAGE IS Everything

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Check 21 technology is nothing new at Leominster Credit Union-the $280-million CU has created check images for more than three years, according to Pete Brytowski, VP-information technology.

"As all the Check 21 rules fall into place, it's going to be a simple matter for us to take our check images and transfer them to other institutions," Brytowski said.

Check 21, or the Check Clearing for the 21st Century Act, authorizes financial institutions to accept and transfer digital images as substitutes for original paper checks. Financial institutions are required only to accept check images beginning Oct. 28.

Leominster Credit Union uses Information Technology, Inc.'s (ITI) Director Check Image solution to capture images at its central operations center.

The credit union started using imaging technology in 2000, but not for the purpose of exchanging images with other financial institutions. The 32,000-member CU wanted to decrease the amount of time it took to shuffle paper at the end of the day, Brytowski said.

"At the time, imaging was new for our size and environment," he explained. "The big push with imaging at Leominster Credit Union was for higher productivity. Instead of handling paper, we wanted to turn every document into an image. Our concern was to get a better handle on all of our documents. With checks, we could throw items in a sorter for encoding, capture an image, and quickly determine the amount of the check."

Brytowski said the "neat little twist" of Check 21 is that the CU no longer will have to transfer paper checks via courier. Potential travel delays, theft, terrorism, and fraud will diminish.

Leominster CU's imaging technology cuts encoding labor almost in half, Brytowski said. Although the current imaging device, purchased in 2000, can't recognize handwritten characters with complete accuracy, there's still less work. "So we save about 45% off the workload there," he said.

Leominster CU also delivers the same check images to members via the homebanking login.

"And our tellers can see the image right at the teller desk," Brytowski said. "Member service representatives used to have to fill out a document whenever a member requested a copy of a check."

The financial industry will spend big money- ranging from $500 million this year to $2 billion next year-on Check 21 technologies, according to many analysts.

Seeing as Leominster CU is set for check imaging, Brytowski said he won't spend on additional Check 21 technologies this year. However, next year he'll include "some amount" to cover possibilities that may arise as Check 21 rules are clarified, he said.

Such possibilities could necessitate new branch equipment, exchange file formats, or fees for transfer agreements with other institutions.

"The other wrinkle is the ATMs," Brytowski added. As Check 21 legislation plays out, CUs may wish to incorporate ATMs with image scanners. That way, items could be processed in one day or less, instead of sitting for days before delivery.

Equipping each of its six branches with capture devices wouldn't be fruitful, Brytowski added. "We're a tightly-knit organization. The furthest branch is 12 miles. However, as Check 21 rules become better known, there may be a reason for each branch to have a device."

Brytowski emphasized the importance of using check imaging technology that talks to other applications. "Our images weren't always integrated with our core system and Internet banking," he said. "We had a big communications problem."

Leominster CU is one of three credit unions nationwide using Director Check Image. ITI recently announced that it had sold a record-breaking 139 Director systems in 2003.

Lincoln, Neb.-based ITI is a subsidiary of Fiserv, Inc., providing bankers and 26 CUs nationwide with technology solutions, including core accounting, relationship management, Internet banking, business intelligence and imaging.

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