Banks have realized that sending check images electronically can help them overcome some geographical limits, and they are incorporating the technology into their expansion strategies.
Some are already using imaging systems to extend their geographic reach into areas where they lack branches, and at least two have considered installing the technology instead of building branches or check processing facilities.
“It’s a different environment in the world, because geography becomes much less of an impediment” to expansion, said John Feldman, Bank of America Corp.’s image executive for transaction services.
Today many of B of A’s business customers have secondary relationships with other banks, Mr. Feldman said. The customers had to start these relationships when they opened offices in parts of the country where B of A had no branches, he said.
But this month the Charlotte banking company will begin using remote image capture technology to win back the business it lost to regional banks through secondary relationships. It will offer its customers scanners that let them convert paper checks into electronic files at their own sites and transmit them to the bank for deposit.
Mr. Feldman said that before remote-capture devices became available, bringing in additional business from customers in places like the Midwest and the Rocky Mountains “would be cumbersome,” because B of A would have needed to build or acquire branches in those area to help customers make deposits.
Penny Gillespie, a senior analyst at Forrester Research Inc. of Cambridge, Mass., said B of A should have little trouble persuading its business customers to use the remote imaging service, so they can conduct all of their business with one bank.
“The corporations are all looking to minimize their banking relationships and reduce their banking fees,” she said.
Other banking companies are considering imaging technology when making infrastructure decisions. For example, Wachovia Corp. announced in February that it would build several branches in Texas. And though the Charlotte company decided to build the accompanying check processing sites, James Hicks, a senior vice president, said he seriously considered not doing so.
“Very early on, putting a check processing facility there did not make sense,” he said. “We had contemplated using branch image capture technology in that area. We were very close to saying that branch image capture was the right solution,” but in the end, Wachovia decided against the idea, because the technology is still too new.
However, Mr. Hicks said Wachovia could eventually use scanners to help it expand in a limited manner into “boutique markets.” For example, if it wanted to set up a branch serving a specific company outside its geographic reach — like, say, Microsoft Corp. — “we could ramp that up very quickly” without having to build a check processing facility in that area.
Alenka Grealish, who manages the banking group at the Boston market research firm Celent Communications LLC, said Wachovia’s idea demonstrates how easy it is to transmit check images almost anywhere in the country for processing.
“No longer do you need to bring your supply chain with you when you move,” she said.
