By connecting larger banks to its Endpoint Exchange Network, Metavante Corp. is making the check-image network more useful to the small banks that are its core users, an analyst said Thursday.
"It will bear fruit for them in two ways," said Bob Meara, a senior analyst at the research and consulting firm Celent LLC in Boston.
The network will gain volume not only directly from the new users among the nation's 25 largest banks but also indirectly from using the big-bank connections to generate small-bank usage, Mr. Meara said.
Endpoint announced Wednesday that 12 of the nation's 25 largest banks began to transmit check images over its network in 2006. (It would not identify them, saying it did not have their permission.)
Endpoint was a pioneer in image exchange, clearing its first check-image files in November 2002. The company, which has more than 4,000 customers, most with less than $10 billion of assets, initially connected the banks that used imaging software from Advanced Financial Solutions Inc., with which Endpoint shared some owners. Metavante, the technology subsidiary of the Milwaukee banking company Marshall & Ilsley Corp., bought both companies in July 2004.
The problem was that the small banks using AFS software did not necessarily have much clearing volume in common, limiting the network's usefulness, Mr. Meara said, but the addition of big banks changes the equation.
Jeff Vetterick, the general manager of Endpoint Exchange, said in an interview Thursday that the network anticipates connecting early in 2007 with two big banks through the SVPCO Image Payments Network operated by the Clearing House Payments Co. LLC, of New York and in the first half with the Federal Reserve banks. He predicted the new connections would drive faster adoption of image throughout the industry.
"We're finally getting out of the flat line where everybody was working on the details. Now we're starting to leverage all that hard work," Mr. Vetterick said.
The Electronic Check Clearing House Organization, a Dallas group that is the rulemaker for image exchange, and the Fed reported this month that nearly 5,500 institutions - about one-third of the industry - were able in October to receive check-image files for clearing without printing them back out on paper.
