Fiserv Inc. has signed up three more banks to settle check transactions processed through the fledgling Fiserv Clearing Network, whose reach will expand to 19 states, mostly in the Midwest, the Southwest, and the West Coast.
Stephen J. Ward, the executive vice president of Fiserv's item processing group, said Wednesday that the Brookfield, Wis., financial technology company is working on settlement deals with other banks in the Southeast and Northeast.
The network is meant to take advantage of the Check Clearing for the 21st Century Act, which will enable banks to settle check payments using digital images or image replacement documents rather than the original checks. That law will take effect Oct. 28.
When the plans for the image-clearing network were announced in May, Fiserv said it would offer check clearing and settlement to the 1,700 banks that outsource their item processing to Fiserv or use its software in-house.
The new settlement banks are Midwest Independent Bank, a Jefferson City, Mo., unit of Midwest Bankers' Bancorp. Inc. that provides correspondent services to 400 institutions in Missouri and Iowa; TIB-The Independent BankersBank, an Irving, Tex., unit of Independent Bankers Financial Corp. that provides correspondent services to nearly 1,100 community banks; and Bank of the West, a San Francisco subsidiary of the French financial giant BNP Paribas that has 100 correspondent banks in California.
In May, United Bankers' Bank of Bloomington, Minn., became the first bank to agree to settle transactions for the Fiserv Clearing Network.
Fiserv expects to further expand the network's reach in the near future. Until then "there are other ways of getting" settlement services in the area outside the network, Mr. Ward said.
For instance, Fiserv has an arrangement with the Small Value Payments Co. LLC division of the Clearing House Payments Co. of New York, and the four settlement banks have their own relationships with other trading partners, he said.
About 11 institutions - all clients of Fiserv's item-processing center in Eagan, Minn. - have begun settling transactions through United Bankers Bank, Mr. Ward said. "We're still technically calling it a pilot," because it is still working to ensure the system works reliably. "The next step is rolling it out to the rest of the clients in that geography."
So far the participants are using paper checks to settle the payments, but the system is designed to work as well with image replacement documents or digital images, he said.
Fiserv has deals to offer its clients imaging software from the NetDeposit Inc. unit of Zions Bancorp. in Salt Lake City and to use AirNet Systems Inc.'s courier services to deliver IRDs to the paying bank.
"A huge part of AirNet is the ground network," Mr. Ward said. "We're not in the transportation business, nor do we want to be in that business."
Don Robinson, a senior vice president of Bank of the West, said Wednesday that it plans to use the Fiserv relationship as a springboard for extending its correspondent services beyond California, where it provides settlement for a number of banks that use Fiserv's four item-processing centers.
Bank of the West plans first to expand into Portland, Ore., then to Seattle, and next year to Phoenix, Salt Lake City, Denver, and other places, Mr. Robinson said.
Mr. Ward said it will take 12 to 18 months for Fiserv to roll out the clearing network nationwide. "You can't just flip a switch and do it," he said. "The work keeps coming in the door every day. You can't call a halt and say, 'We need 30 days to do this work.' "
