In the ongoing battle against fraud, banks are equipping branches with imaging technology that lets tellers compare the signature on a check a customer is trying to cash with those on the customer's recent checks.
The application, which replaces the signature card as an identity verification tool, is as an example of how imaging technology is remaking some of the industry's most tried-and-true practices.
Wachovia Corp. and Bank of America Corp. are among the banks now using such systems, and industry experts say other banks will start doing so soon as imaging becomes more fully integrated with retail banking.
Because using fake signatures is the most common type of check fraud, simply comparing a recent signature on a screen with one presented at a branch could help reduce losses.
There is a slight limitation: Tellers can call up only images of on-us checks to make the visual comparison. But bank technologists say that once a bank has an imaging system in place, adding this security feature is an easy next step.
James Hicks, a senior vice president at Wachovia, in Charlotte, said a corporate customer's signature card can carry up to 20 signatures, so its effectiveness as an authorization tool is limited. Because the list of people allowed to sign checks may have changed since the account was opened, it is safer to compare a signature on a check presented for cashing with one on a recently cashed or deposited check, he said.
Alenka Grealish, who manages the banking group at the Boston market research firm Celent Communications LLC, said, "Signatures can evolve over time, so if you have the most recent check image, you have the most recent signature."
It is "always great to push fraud detection close to the point of presentment," she said.
The industry lost $698 million to check fraud in 2001, versus $679 million in 1999, according to the American Bankers Association, which conducts a check fraud survey once every two years. (The 2003 results are not in yet.)
Though the dollar amount of check fraud loss remained fairly steady, the value of attempted check fraud almost doubled, to $4.3 billion in 2001, and fraud-detection systems helped keep the problem stable, the ABA said.
If Wachovia's example is representative, using images at the teller station to prevent fraud suggested itself only after banking companies delved into image technology.
Wachovia initially decided to start imaging at the branch so that employees could give images to customers upon request, Mr. Hicks said. "Once we got to that point, then it was an easy leap over to the teller line as well."
It has been using images as a check-fraud prevention tool at teller stations since August and now has them in place in almost all its branches. The only branches not using imaging are those in New Jersey and Pennsylvania.
Tellers are given access to all past transactions and must decide which ones to use for comparison, Mr. Hicks said. Wachovia favors looking at old checks written for less than $100, because doing so helps avoid comparisons to past fraud. (Forged checks are usually written for large amounts.)
Bank of America, also in Charlotte, confirmed that it uses a similar system but would not discuss the scope of its efforts.
At a conference in Boston last month sponsored by TowerGroup, Robert Hunt, a senior analyst at the Needham, Mass., unit of MasterCard International, said B of A has been using the imaging system for the past several months and considers it an advantage in its effort to prevent fraud.
B of A's system, which retrieves only low-value checks, has given tellers a more important role in the bank's security efforts, Mr. Hunt said. "Now I can stop the fraud at the teller."
Doug Halvorsen, the line-of-business manager for capture products at the imaging vendor Carreker Corp. of Dallas, said many banks have enough imaging technology to use check images for this purpose - if they are not already doing so.
For example, Mr. Halvorsen said, any of the 10 major banks storing check images with Viewpointe Archive Services LLC's repository could do what Bank of America and Wachovia are doing.
"It doesn't require any sophistication," he said. "Almost everybody has that capability today."
John Lettko, Viewpointe's chairman and chief executive, said that some of its bank customers are planning to use images at the teller window to prevent fraud, and some already have programs in place.
"This has been highly successful" in preventing fraud, Mr. Lettko said. "Signature cards might as well be in a museum."
Vijay Balakrishnan, the executive vice president of marketing at the Alpharetta, Ga., imaging technology vendor Alogent Corp., predicted that image security tools would become more automated.
Many banks will probably install scanners at teller windows to convert paper checks directly to image as soon as they are presented, he said. Such systems would automatically compare the signature on the new check to the ones on the old ones.
