First Commerce Bancorp, Commerce, Ga., has become the first bank to purchase an image-based check processing system developed by Greenway Corp.

The system, called PrimeImage, is based on open systems software that runs in either the Windows NT or Windows 95 computer environment. First Commerce, with $120 million in assets, uses the system to process 20,000 items on a peak day.

With the introduction of PrimeImage, Carrollton, Ga.-based Greenway joins a market crowded with about a dozen imaging systems designed for community banks.

"There are a lot of choices," said Charles W. Blair Jr., president and chief executive officer of First Commerce.

The system, which creates digitized images of checks that can be processed more cheaply and more quickly than paper checks, allows First Commerce to produce image-based statements for its customers.

Such statements are cheaper to mail than traditional check statements, which contain actual checks.

Many community banks believe that offering image statements also lets them appear progressive in the eyes of their customers. But experts believe the days of using check image statements to a competitive advantage may be numbered.

According to research from the Tower Group, Wellesley, Mass., only about 290 financial institutions had installed check image statement applications at the end of 1994.

However, by the end of this year, Tower projects that number will more than double. Further, by 1997 about 2,500 banks and thrifts are expected to install image statement systems - and over 90% of those are expected to be institutions with under $1 billion in assets.

However, PrimeImage offers other benefits beyond those derived from image statements.

A proof of deposit application streamlines the process of entering check amount data to a processing system by letting proof operators work from on- screen check images rather than paper items. A character recognition module, which automatically "reads" data from a check, is being tested at First Commerce.

Large banks use check image proof of deposit systems to reduce the number of proof operators they employ. However, community institutions, which typically use only a handful of proof operators, usually look to the systems to free up the employees to take on more work.

In addition to the proof function, PrimeImage allows community banks to get on-line access to images of checks. Using a magnetic storage medium known as a Raid, or redundant array of independent disk, a bank handling 15,000 to 20,000 checks per day could easily get six months of check images on-line, said W. Thomas Green, president of Greenway.

Such a feature is typically not cost effective for large institutions that process millions of checks per day.

Community bankers feel on-line access to check images, which would improve response times to customer requests for back check information, gives them a leg up in competition with larger competitors.

Mr. Blair expects the First Commerce system to pay for itself within two years. The savings will come from postage expense reductions and from productivity improvements in the proof area.

Though bank officials declined to reveal the terms of the First Commerce deal, Mr. Green said Greenway systems range from $250,000 and $475,000, including hardware and software.

"Check imaging is a tremendous boon to community banks," Mr. Green said. "The community bank now can offer pretty much the same services as a larger bank."

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