Citicorp's cash management unit plans to invest around $6 million in a check imaging project using equipment from International Business Machines Corp.

Although Citicorp officials declined to be interviewed for this article, an internal document reveals that the nation's largest banking company is testing the system with at least one of its corporate customers. IBM officials also declined to comment.

"Citibank's disbursement products are undergoing a major change," the document said. "Our goal is to eventually provide a full menu of image options to our customers depending on their needs."

According to observers close to the bank, the image project will be limited to Citicorp's wholesale business, which handles 1.5 million checks on a peak processing day.

Citicorp is among several top cash management banks intent on developing image-base products. Experts say the cash management business represents one of the fastest-growing applications for the technology.

Banks that offer their clients image-based check disbursement, statements, research, and adjustment products can generate new revenue.

Sources who requested anonymity said the bank's Delaware operations center runs most of its wholesale check processing volume on IBM's equipment. The New York center, which handles retail checks, uses Unisys Corp.'s systems.

The first phase of Citicorp's test is already under way, according to the document, entitled "Image '95, The Future is Now." The test involves the delivery of imaged check statements to corporate customers via CD-ROM.

The next step will be the launch this month of a three-month pilot of actual check images, again on CD-ROM.

At a later date, perhaps by the end of the third quarter, Citicorp will also test a system that allows customers to receive check images on-line at their treasury workstations by dialing into Citicorp's mainframe computers.

"Our goal for 1995 is to have same day exception item image review, which will provide our customers with a full day to investigate and make pay/return decisions," the document said.

The internal document also said the imaging project will be integrated into Citicorp's efforts at electronic check presentment.

Citicorp and its hometown rival, Chemical Banking Corp., are testing the New York Clearing House Association's Electronic Check Clearing and Return System, which involves the exchange of exception item images.

Last week Chemical announced an ambitious plan in the check image processing field. The bank will commit $50 million over the next five years using image technology to automate its entire check operations on an IBM platform.

Within five years, Chemical hopes to be processing some nine million corporate and consumer checks daily on the IBM platform .

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