Check 21 technology is paying off for one credit union here, even as the industry struggles against a "painful" trend towards duplicate item posting.
"We can now turn our attention to serving members at their convenience," explained Lynn Reazin, vice president, client services, at $1.5-billion Community America CU.
"We used to walk away from the member and hurry to the back room to hit the courier's strict deadline for sending cash letters," she said.
With the on-demand, electronic cash letters afforded by the VSoft Corp. eDesk Genesis solution for Check 21, we "no longer have to worry about the clock," said Reazin. Atlanta-based VSoft provides process improvement tools for financial institutions.
"We can submit electronic cash letters at our convenience," Reazin added.
In the month since the VSoft technology was installed, certain business units at the CU have cut check processing time by 80%, said Reazin. In addition, the CU sees "significant savings" on check processing equipment and maintenance, she said.
"The maintenance on our old coders, endorsers and imaging systems was phenomenal," said Reazin. "We spent 20 hours of IT time per week trying to care for those machines." But not everything is coming up roses since The Check Clearing for the 21st Century Act was passed two years ago.
"A big flaw with Check 21 is that the physical check and the electronic item can both be in circulation at the same time," said Terry Faurote, vice president, item processing at Members United Corporate FCU. The Warrenville, Ill.-based corporate serves 2,100 CUs nationwide.
"And sometimes the Federal Reserve sends out the same electronic item twice," Faurote added.
"We're feeling the pain," Reazin continued. "We have to help our members navigate other financial institutions to try to correct the errors, and we're running into a lot of problems."
Duplicate postings are "indicative of Check 21 across the industry," agreed Lisa Coffey, vice president, item processing at Southeast Corporate in Tallahassee, Fla. Southeast Corporate serves about 440 CUs, mainly in Florida and Mississippi.
"Our adjustment requests have tripled in the past nine months," said Coffey. The corporate handles nearly 3,000 adjustment cases per month, up from about 1,000 per month, she said.
Faurote estimated that Members United receives .05 % duplicate items. "However, we anticipate the percentage to increase as more substitute checks get into circulation."
At Community America, about 2% of items are posted twice by other financial institutions, Reazin estimated.
"We're finding that other institutions are presenting the physical check as well as the image," Reazin explained. Community America doesn't make the same mistakes, she said. "We've removed the ability to create physical cash letters that might result in duplicate postings."
In addition, VSoft includes measures that prevent branches from submitting duplicate electronic items or batches, said Puneet Malhotra, vice president, business development at VSoft.
Not all players have implemented such measures, however, according to Southeast Corporate. And automatic detection against a duplicate electronic item does nothing to guarantee that the physical original won't also be submitted.
Instead, accurate processing under Check 21 is often left to tellers, said Coffey. We've shifted the check processing expertise from the specialists' shoulders onto the tellers', but tellers aren't familiar with the entire workflow or the 'Principles of Banking 101,' she said. "We find that tellers are running an image or an electronic batch twice."
Southeast Corporate and Members United automatically detect duplicate items on the in-clearing side in efforts to cut down on mistakes made by its member CUs.
CUJ Resources
For info on this story:
* Community America CU www.cacu.com
* Members United Corporate FCU www.membersunited.org
* Southwest Corporate CU www.secorp.org
* VSoft www.vsoftcorp.com
