True believers in check imaging -- a technology that most banks have adopted but which has lagged expectations -- say the Internet may be a good place to give customers pictures of their checks.

Though consumers are not exactly clamoring for such a service, banks that have spent years investing in check imaging technology are hopeful there will be some demand. Banks say they can easily adjust their equipment to give online banking customers ready access to scanned checks. A handful of banks, including Wilmington Trust Corp. of Delaware and Two River Community Bank of Middletown, N.J., say they are willing to give this a try.

Because Internet banking is meant to wean people from writing checks, it may seem contradictory -- or at least curious -- that banks want to offer Internet-based check viewing. Most banks that offer online banking promote the fact that customers can pay bills electronically and can track credit card purchases through Web sites.

But despite the rapid rise in Internet banking services in recent months, only 10% of active Internet banking customers generally use online bill payment, according to officials at Digital Insight Corp., an Internet software vendor in Calabasas, Calif., with 700 bank clients. Last week the company introduced a service that would enable banks to display images of paid checks and statements to customers on the Internet.

Digital Insight is readying a service that would let banks offer check statements exclusively on the Internet as an alternative to mailing out monthly customer statements, which cost $1.25 to $2 per account.

Such a service "kind of refutes the whole idea that people who are into electronic banking don't write checks," said Steve Ledford, a senior vice president at Global Concepts Inc., an Atlanta-based bank consulting firm.

Robert Hunt, a former executive at Irving Trust (now Bank of New York) and BayBank (now FleetBoston Financial Corp.) who is now a research analyst at Tower Group of Needham, Mass., said offering check images online could serve as a "product differentiator" for the small number of banks that begin doing it.

"Does it move the market? I do not know," he said, "but certainly it is one of those things that addresses what you are trying to do over the Internet, which is to create customer value and product differentiation."

David Potterton, an analyst at Meridien Research in Cambridge, Mass., said that though there might be situations where such services add value, he doubted that offering checks on the Web would differentiate a bank's service.

"If [banks] have an image of a check and they are imaging anyway, then it might be a nice thing to build a link," he said. "I don't think it will be a high priority" among bankers.

Last week Wilmington Trust signed a seven-year outsourcing deal with Aurum Technology of Plano, Tex., which would install and run a new check imaging technology system. The $7.2 billion-asset bank and trust services specialist said it eventually would offer corporate and consumer checks to all customers online.

Wilmington Trust processes an average of 325,000 items a day in-house. It had decided that it needed to upgrade to an imaging system but balked at the high up-front capital expenditures. Officials said the bank would have had to build a system capable of handling peak volumes during holiday seasons, and this would have been less efficient than outsourcing.

Bill Farrell, senior vice president and head of information technology at Wilmington Trust, said banks who want to win in online banking will have to invest in imaging technology up . "We see this as table stakes," he said.

Two River Community Bank, a start-up, has installed a check imaging system developed by Mitek Systems Inc., a San Diego developer of character recognition technology.

Check imaging is far from a new concept. Mr. Hunt said the banking industry became highly interested in imaging systems around 1990, applying the technology to their proof-of-deposit function.

Proof operations are tedious and highly manual, involving rows of bank employees who verify the dollar amounts on checks, compare them with the accompanying deposit slips, and key the information into the bank processing system.

Mr. Hunt said banks thought that by adding imaging cameras and advanced character recognition software to check processing equipment, they would be able to automate much of the proof function, reducing labor costs. The reality was that only a few banks with low check volumes could install the technology successfully, he said.

Around 1990, Mr. Hunt said, banks believed that image-based proof systems "would be installed at every bank within 10 years."

However, he said, when banks measured the capital expenditures of imaging equipment against the benefits of work-flow automation and savings in employee work hours, "The cost hurdles of justifying proof of deposit were just frankly too difficult."

Still, most of the largest 25 banks in the nation have made significant investments to image-enable their check processing equipment. In 1996, Chemical Bank -- now Chase Manhattan Corp. -- took a particularly dramatic plunge, investing $50 million in technology from International Business Machines Corp.

Instead of reaping the rewards from proof of deposit, most banks with imaging systems turned to ancillary services, such image-based archival and retrieval, simplifying the administrative operations within banks. Others also turned to image-based fraud detection systems such as "positive pay," which enable corporate customers to view images of questionable checks before the bank pays the funds.

Another popular service involved the storage of thousands of company checks on CD-ROMs. Banks would take images of checks from the databases and place them on CD-ROMs, giving corporate customers a quick and easy way to maintain records of check payments.

Check processing vendors such as Unisys Corp. and NCR Corp., among others, are developing image-capturing systems that would reside at the branch. Banks, which typically receive 2,000 to 10,000 deposited items a day at each branch, would use these image-capturing devices at local branches, transmitting check images to a centrally located back-office site for the proofing function.

If successful, the process could help banks save money on check transportation costs.

"The sizzle has not gone out of the check-imaging initiative," Mr. Hunt said. "This could significantly change the cost equation, so I think there will be renewed interest."

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