Viewpointe LLC, which mainly serves large banks, is making its image exchange system accessible to very small financial companies.
The New York company is expected to announce today that it has developed a software suite that lets banks to send it check images through a secure Internet connection.
Banks currently send Viewpointe images in two ways. Its 11 large bank owners use dedicated lines to send images that are stored in its large archive. (These banks settle payments between themselves using an image sharing model.)
Other banks can settle payments with the 11 large banks, and each other, by using the Pointe2Pointe image exchange service, which also requires dedicated connections.
Diane Scott, Viewpointe's chief strategy officer and chief sales, marketing, and product officer, said the cost of installing and maintaining these connections makes Pointe2Pointe a poor fit for small financial companies.
The new software is aimed at "the very smallest second-tier companies and third-tier companies," she said, which will send fewer than 75 million check images a year.
"Now is the time for all institutions to drive the paper out of their systems," said Ms. Scott.
Many small banks have expressed interest in using Viewpointe's exchange service but do not have the resources to support a direct connection, she said. "There are only so many resources to go around," and this software would make it simple to reach Viewpointe.
It should take about a month for a banking company to install and test the software, Ms. Scott said.
No companies have agreed to use the software, she said, but about two dozen have expressed interest in the idea of a low-cost, Internet link. "We have quite a pipeline."
Users will pay a fee based on the volume of images they deliver to Viewpointe. Pointe2Pointe users pay higher fees, which are also based on volume. Viewpointe's Web site lists eight Pointe2Pointe customers, including BancorpSouth Inc., Synovus Financial Corp., and Sterling Financial Corp. of Spokane.
Ms. Scott said the software also will benefit Viewpointe's current customers, which will be able to settle electronically with small financial companies. Viewpointe's image-sharing customers are some of the nation's largest financial companies, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and First Horizon National Corp.
Nancy Atkinson, a senior analyst with the Boston market research company Aite Group LLC, said helping the big banking companies reach small ones may be one of the top goals of this effort.
Viewpointe claims that more than half the nation's checks end up in its archive. Ms. Atkinson said: "In terms of total volume, it has plenty. It certainly wasn't missing the volume" just because small banks lacked a cost-effective way to connect to it.
What Viewpointe did lack was a way for its customers to settle with everyone, she said. The big banking companies already settle a significant portion of their check payments electronically, and offering small banks a less expensive connection can help its big users "take care of the annoying last few percentage points" — the check payments that must still be settled as paper.
Viewpointe is likely doing this "to support its big banks," Ms. Atkinson said. "The basic model is 'Let's get everything electronified.' "
In the past, when it was focused on increasing volume from large customers, Viewpointe may have had less motivation to pursue this kind of project, she said.
"Now that image exchange has become widely accepted, they have to find a way to add value" for these users, Ms. Atkinson said. "This is the right time to do it."
Corrected July 3, 2008 at 6:06PM: An earlier version of this story had several errors. First, it misdescribed Viewpointe's new Internet connectivity service, which uses an existing file-sharing application, not a new software product. The story also misstated Viewpointe's ownership structure; it is owned by five banks and International Business Machines.<@SM>In addition, Diane Scott, Viewpointe's CEO, was misquoted as saying the cost of maintaining dedicated lines makes its Pointe2Pointe a poor fit for small banks; she said they may not have the resources or check volume to justify the expense of a dedicated line.