The high cost of installing imaging has already been offset by gains in productivity and employee morale in Huntington BancShare' check processing shop. And now the company is developing two new uses for its year-old imaging system: providing correspondent banking services for smaller banks and adding the ability to read handwritten amounts on checks.
"Not only has our average for items processed per operator jumped from 1,500 per hour to just under 2,700 per hour, but our employees are much happier," according to George Mackinaw, senior vice president of Huntington Service Co., the servicing branch for Huntington BancShares.
Mr. Mackinaw ascribed the improvement in employee morale to the renovation of the check processing area from a "noisy, dirty proof shop smelling of ink and paper to a quiet, clean, office-type environment."
Imaging is controlled in the Columbus, Ohio, office of Huntington, a bank holding company with branches in six Midwestern states.
Huntington first contracted with Unisys at the end of 1989 and began processing over the counter with the Unisys InfoImage IIPS (Image Item Processing System) in September 1991.
Huntington employees found the system easy to use, according to Mr. Mackinaw, who noted that employees exceeded old productivity levels within the first week of using imaging.
Before imaging, new employees required 90 days of training to become productive encoders; now training averages 30 days.
Faster employees means fewer employees, but Huntington was able to handle the 20% reduction in jobs through attrition.
The addition of courtesy-amount reading will enable the imaging system to read the handwritten amount of a check and enter it, reducing the present need for operators. Huntington remains committed, however, to handling any contractions through attrition, not layoffs, Mr. Mackinaw said.
Processors to Be Added
"The business case for the courtesy-amount read looks good. We're looking at read rates of around 40 to 50%, meaning we could capture half our checks," noted Mr. Mackinaw.
He said Huntington hopes to add this capability by the end of this year.
"Courtesy read capability will be provided as a processor to be added to existing hardware," explained Brian Blair, director of payment systems marketing for the U.S. marketing division of Unisys Corp.
Mr. Blair said Unisys expects to begin shipping the processors in the third quarter of this year.
Because the initial cost of installing imaging is so high Unisys is planning to provide new applications of the technology "strictly as add-ons to the client's existing platforms, so their business cases will continue to improve," Mr. Blair said.
He added, "We're trying to facilitate further development without further major cost."
Other Vendors Involved
Additionally, Unisys is working on coordinating the efforts of the large number of specialized software companies that are developing additional check processing capabilities such as signature verification, account reconcilement, statement print, and draft processing, so that a bank could pass electronic files to third-party vendors offering such services.
"We're also working with the ABA and ANSI to establish higher standards for customers so documents can be read better," Mr. Blair said.
Both the American Bankers Association and the American National Standards Institute are working with vendors and banks to develop finer specifications for checks that would make them easier for imaging systems to read.
"The quality of what we're getting from the customers becomes so much more important with imaging," Mr. Mackinaw agreed.
He identified two current problems with Huntington's imaging system that could be solved by customers.
First, the image can be difficult to read if a customer is using a low-contrast, dot-matrix printers. Unisys has just provided a new algorithm to Huntington that may improve legibility of such images.
Second, now that documents are not hand qualified but move straight from the encoder to the sorter, items such as staples that used to be removed by hand can slow down processing.
"We're looking to go to the customers and get them to standardize their documents," Mr. Mackinaw said.
Tips on Preparation
For banks exploring imaging, Mr. Mackinaw had this advice: "First, look at your documents ahead of time. It won't hurt to start standardizing and streamlining your paper flow now, so you'll be ready when you do pick up imaging. Second, once you do get involved, audit as you go along. Make sure you don't start spending more than you can justify."
Indeed, Mr. Mackinaw said he had a tough time convincing Huntington's decision-makers to buy imaging, as the bank's average check processing cost was already well below average and the business case presented a payback of almost four years.
Nonetheless, Mr. Mackinaw said, "We did it strategically, and it was well worth it. Not only did productivity improve more dramatically than we had forecast in our business case, but we're looking at getting into the business of providing imaging for the smaller banks that really can't justify the initial. expenditure."
Finally, Mr. Mackinaw noted "I can't say enough about what changing over to imaging did for our employees' morale, and you can't put a dollar value on that."