Credit unions here are keeping pace with the nation's pioneering big banks as they move to exchange check images, part of a process that would fully realize the promises of Check 21 in the next 10 years.
"We're right up there with the banks in adopting electronic check clearing and settling," said Preben Ebbesen, senior vice president-process improvement at Navy FCU.
In Pittsfield, Mass., Greylock FCU last month sent its first check data file to the Federal Reserve for electronic clearing, said Michael Jerome, vice president of deposit operation at the $815-million CU.
"The electronic process has increased the same day availability of our funds deposited with the Fed and improved the efficiency of the collection process," Jerome said.
The Credit Union Journal reported last month that hundreds of CUs have started accepting check images and depositing them with outsourced clearinghouses, saving time and money on courier services.
More At Stake
Navy and Greylock FCUs, however, have more at stake than most credit unions. Because the two credit unions pay their own checks, they must also electronically process the check data in-house, as well as settling and clearing the data directly with the Federal Reserve, banks and other credit unions.
The technology required to pull off the wholly electronic check environment cost Navy FCU a pretty penny, Ebbesen continued. Although he did not provide a budget figure, Ebbesen said Navy FCU's investment in Check 21-related technologies will pay off in about three years.
Greylock realized that leaving electronic check clearing to a third party would be the more expensive choice, Jerome said. "Our analysis determined significant cost savings for maintaining an in-house operation when taking into consideration the anticipated reduction in processing hours," enabled under Check 21.
Despite the costs, Navy FCU's conversion to electronic check exhange was inevitable, said Ebbesen. Compared to other credit unions, the $24.5-billion CU operates on a huge scale, with 105 member service centers worldwide and 20 more to come in the next two years, he said.
Each member service eenter maintains costly deposit relationships with local banks and check couriers, he explained, and the CU processes about 450,000 checks per day.
"The questions were, 'how can we afford not to participate in electronic exchange, and how can we fund the project?'" said Ebbesen.
Each Navy FCU member service center will capture check images and electronically transmit the check data for settlement and clearing at the check processing center in Vienna, Va. "We'll save a lot of money on deposit relationships and we'll reduce our risk of fraud," Ebbesen said.
Navy Federal Credit Union will spend this year preparing to exchange images with the Federal Reserve and other banks as it implements the ImageMark suite of virtual check solutions-the Passport check capture and balancing solution at three member service centers; the Transaction Manager validation, balancing and consolidation solution at its Vienna processing center; and the archive storage solution.
ImageMark is provided by Dayton, Ohio-based NCR Corp. NCR also supplies the credit union's image exchange application via Metavante's VECTORsgi Solutions system, out of Addison, Texas.
A Five-Year Project
After the initial implementation at selected member service centers, Navy FCU must complete the installation of ImageMark Passport at every center and then convert its fleet of 290 ATMs to image capture and consolidation technology.
"I can't even guess how long that will take," Ebbesen said. "At least five years."
And how long before Navy FCU's branch and ATM checks are completely virtual?
"We'll be fully electronic in about 10 years," Ebbesen predicted, adding, "There's not a whole lot of image exchange going on right now, anyway. But we think there will be more next year when we're ready to go with the exchange solution."
CUJ Resources
For additional information on this story:
* Navy FCU at www.navyfcu.org
* Greylock FCU at www.greylock.org
* NCR Corp at www.ncr.com
* VECTORsgi Solutions at www.vectorsgi.com
