Never in his life has Thomas A. Mennell been so glad he was wrong.

Two years ago, when the Texas Commerce Bank executive first learned about digital imaging of checks, he deemed the pursuit too expensive.

Corporate customers of the Chase Manhattan Corp. subsidiary would reject paying extra to get their checks on CD-ROM, he thought. Customers with low monthly check volumes would not be interested, he thought. And most customers probably did not even have a CD-ROM player, he thought.

Wrong, wrong, wrong.

Today Mr. Mennell, 51, oversees his bank's surprise hit product: a check research tool called CD-Search, which lets users search for and examine digital pictures of checks on CD-ROM.

Despite virtually no marketing, the four-month-old product has been sold to 1,100 of the bank's 16,000 commercial accounts.

"It's meteoric," said Mr. Mennell, a senior vice president and general manager of payment services operations. "You don't do something like this fast. Usually any product, to get from zero up to over 1,000 accounts, that's probably two years worth of effort selling it."

The bank's experience is notable because financial institutions in general are warming to check imaging only slowly, and many attribute their reluctance to doubts about customer demand for image-related services.

Tower Group, based in Wellesley, Mass., estimates that 1,350 banks will have installed check image systems by the end of this year. Only about 10% of these will be using imaging for cash management services like the one at Texas Commerce.

With the help of local outsourcing firms, the bank's image service currently handles about one million items per month.

When the imaging service is brought in-house this summer, Mr. Mennell said, the bank should be able to handle about 12 million checks a month. Such volumes would bring in annual fee revenue of $3.6 million.

The project was born by accident, after a customer asked if his company could get its checks on CD-ROM. Mr. Mennell and colleagues visited the check imaging operation at the local Federal Reserve and learned that the cost was less prohibitive than they had thought.

The bank then teamed up with a Dallas technology company, Scan Direct, and began testing checks on CD-ROM with a few customers.

As interest snowballed, Texas Commerce began making deeper and broader commitments to the technology. The effort was bolstered by support from its parent bank, which was then Chemical Banking Corp. and is now Chase.

"I keep getting congratulated," Mr. Mennell said. "But this is not the result of a carefully crafted marketing plan."

The bank introduced CD-Search at functions in Dallas and Houston, each with about 70 clients at present. A few sales representatives have offered it to clients by telephone, but the sales force has held back because the bank's capacity to capture images of checks is still limited.

One salesman who had never seen the product sold it to a customer who had never seen it by reading a one-sheet product description, Mr. Mennell said.

"Is it conceivable that practically every commercial-type account is going to have this?" Mr. Mennell asked rhetorically. "Six months ago, I would have said 'absolutely not,' but now I wouldn't be at all surprised."

He is still puzzled by the product's popularity.

At 2.5 cents per item, it costs more than what Texas Commerce charges for microfilm delivery (1.5 cents) but less than paper checks that are sorted by serial number (3.5 cents).

And even customers with fewer than 1,000 checks a month are rushing to sign up for the service.

"How many of those checks do you need to look at?" Mr. Mennell wondered aloud. "Clearly, there is value being delivered here that we don't truly understand."

So far, there has been no time to figure it out. Mr. Mennell said the bank is too busy filling orders and imaging checks to conduct market research.

Equipped with only an inexpensive CD-ROM reader, customers signed up for the service can receive a complete check record, including pictures of both sides of the checks.

They can instantly search the data base by check number or amount and can cut-and-paste check images onto letters to their own customers. They can enlarge portions of the checks to validate signatures, or examine other minutiae.

One CD-ROM can hold about 25,000 checks - about a file-cabinet drawerful - and compression technology promises to produce disks that can accommodate ten times that amount.

And though microfilm reels can handle about 40,000 items each, they are cumbersome to search and cannot retrieve individual checks instantly.

One possible explanation for the success of the project is the fact that Texas Commerce's service can image and process all of its customer's checks, no matter how many items are missing from a sequence or from what bank they have emanated.

One corporate customer's eyes lit up when she learned the bank could image all her checks.

"I thought she was going to hug me," he said. "Never has anything I've ever done or any product I've ever provided resulted in that kind of reaction."

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