Wide-scale check imaging has seemed an elusive goal, at least for the better part of a decade. Continued downward pressure on electronic storage and communications costs, and exponential increases in the capacity of storage media, have convinced some banks, notably Bank of America and J.P Morgan Chase & Co., to create massive archives to support imaging, and its logical end result, check truncation. But key stumbling blocks have remained, like federal statutes that require long-term storage of commercial documents like checks.
Earlier this year, the Federal Reserve began talking with bankers about drafting legislation that reverses federal requirements for long- term check retention. Most observers agree the Check Truncation Act, as the proposal has been dubbed, has a good shot at enactment, although the Fed has not found a Congressional sponsor for the bill.
Yet, wandering through the Bank Administration Institute's Transaction Processing Conference, last month in Orlando, FL, it was as if the lid containing check image archive on the sidelines of the payments marketplace had been blown sky high.
Viewpointe-the joint venture archive service announced last year by Bank of America, J.P. Morgan Chase and IBM, through its Check Solutions unit-was prominent, announcing the addition of First Tennessee bank to its planned national archive service. Even if the Viewpointe archive fails to lure scores of banks into its fold, the participation of BofA, which outside of the Fed is probably the largest processor of checks (with an estimated 1 billion checks a month), makes Viewpointe a potentially huge database of check images.
Meanwhile, Fed officials announced plans for a roll out of a national image archive, beginning this month. The Fed's archive, a new addition to the Reserve Bank System's check services line, should be fully operational by December 2002, according to Rich Oliver, senior vice president, Federal Reserve Bank of Atlanta, and retail payments product manager for the Fed System. The service will feature regional archives that are managed centrally, and when fully implemented, can be accessed via the Web.
Advanced Financial Solutions Inc. (AFS), Oklahoma City, used the BAI show to announce its selection to help create a national check image archive for the country of Singapore, and its plans to launch a multi-bank archive in the United States this fall.
The Singapore Clearing House Association is creating a national image archive as part of a modernization project that builds upon an existing semi-electronic processing environment for checks. AFS has been selected to build the archive, which will be based upon the company's existing archive product, known as ImageDepot. The company has also been selected as one of three "preferred providers" of front- end technology that captures and transmits check images and associated information for electronic clearing and settlement.
Singapore is an island nation of just over 3 million people, located off the coast of Southeast Asia. A city as well as a nation, Singapore takes up an area roughly three times that of Washington, DC. In 1999, the most recent year for which statistics are available, Singaporeans wrote about 92 million checks, worth a total value of about $250 million.
The number of checks written in Singapore may seem small, compared with the U.S. (where more than 66 billion checks were written in 1999), but as Alan Lipis, president of Global Concepts Inc., Atlanta, notes, the critical success factor has been the ability to get all of Singapore's banks (over 130 commercial banks) using the same archive to support a national check truncation program. "Countries like Singapore are leapfrogging the United States because of size and the capability to get all banks to work together," says Lipis.
While it may take time for U.S. banks to catch up, Lipis says the Singapore national archive could be replicated in the U.S.
"Banks in any city in the U.S. could get together and establish a similar archive," he says. Lipis describes it as a "strategy of peaceful coexistence" between the worlds of checks and electronic payments. "It's a recognition and acceptance that the check is not going away any time soon," he says.