Fifth Third Bancorp, which aims to go completely electronic in its check clearing this year, has signed on to use Viewpointe LLC's Pointe2Pointe service for image exchange.
David Gottman, Fifth Third's director of check services, called the connection with Viewpointe, the shared check archive that serves several of the nation's largest banks, "complementary" to the image exchange his company has been doing since mid-2005 with the SVPCO Image Payments Network.
The connection provides access to a number of financial institutions, or endpoints, that Fifth Third could not have reached through other channels, Mr. Gottman said in an interview Wednesday. "It finally made sense for us to do that."
Until now Fifth Third has concentrated all of its image-exchange volume with SVPCO, which is operated by The Clearing House Payments Co. LLC of New York, and Mr. Gottman said "we still have the lion's share of our work concentrated through SVPCO."
Fifth Third and Viewpointe, which made the announcement Tuesday, are establishing a data connection, and after testing they should be ready to go live with it in the second quarter, he said.
Just as banks such as Fifth Third have focused on reaching trading partners through SVPCO, some of Viewpointe's 11 big-bank archive clients have focused on maximizing their clearing volumes among users of that shared archive. Viewpointe said last April that its five owner banks — JPMorgan Chase & Co., Bank of America Corp., U.S. Bancorp, SunTrust Banks Inc., and Wells Fargo & Co. — had achieved essentially 100% image clearing between themselves after an 18-month project, and that it would work with the other six archive clients — BB&T Corp., First Horizon National Corp., the Harris Bank unit of Bank of Montreal, HSBC Bank USA, National City Corp., and Zions Bancorp. — to do the same.
Viewpointe said no one was available Wednesday to discuss its progress toward that goal.
Mr. Gottman would not name the trading partners Fifth Third hopes to reach through Viewpointe, but he noted, "We're continuing to grow in the Southeast."
The Cincinnati company's ultimate goal is to clear all its checks as images, Mr. Gottman said. "We're driving hard to 100% image presentment. We're well on our way."
He would not disclose how much of its check volume Fifth Third is clearing now as images, but he said it expects all of its checks to clear as images "sometime this year."
The first goal is to increase its image-trading volumes with large-scale trading partners and then to work its way down to lower and lower volume thresholds, Mr. Gottman said. Fifth Third began last June to use its SVPCO connection to reach smaller banks over the Endpoint Exchange LLC unit of Metavante Corp.
"Transportation and paper costs continue to rise. We're asking, how can we take those costs out?" Mr. Gottman said.
Having a second network to clear items will enable Fifth Third to compare the cost and make the most economical choice for clearing, he said. "How do we stay the course to drive the clearing cost down and drive toward the goal of 100% image clearing?"
Bob Meara, a senior analyst at Celent LLC in Boston, the research and consulting unit of Marsh & McLennan Cos. Inc., said Fifth Third's move showed further evidence of "image exchange coming of age."
As image clearing was just getting under way, it made sense for banks to concentrate their efforts within existing networks, but "there's been a lot of water under the bridge since then," Mr. Meara said.
And though Viewpointe and The Clearing House have some shared ownership, it also makes sense for the banks to encourage a healthy rivalry between them as a way to drive down costs, he said.
"They both have limitations," he said. "Viewpointe has an advantage, arguably, over SVPCO," because while SVPCO connects to Endpoint Exchange and its 3,500 users, Viewpointe since early 2006 has connected to the Fiserv Clearing Network operated by Fiserv Inc. of Brookfield, Wis., which Mr. Meara said has nearly 5,000 endpoints. None of the four big exchange systems, including the one operated by the Federal Reserve banks, yet connects to all the others.
That is an incentive for big banks to diversify their connections, Mr. Meara said. "Large banks have become increasingly impatient about being unable to go downmarket."
