ORLANDO - Viewpointe Archive Services LLC, which has spent four years developing a massive check-image archive and settlement system that serves a few large banks, is completely revamping its business plan.
One key shift is that the Charlotte company, which has long promoted the idea of banks sharing a single archive, will now allow banks that have their own archives to connect directly to Viewpointe to clear checks. Instead of viewing the images within the shared system, these banks will be able to download them.
The changes also include new management, price cuts, canceling plans for a public offering, and aggressively soliciting more participants.
The makeover comes as many banks are beginning to shift their check-processing systems to electronic clearing networks. That long-awaited transition is happening much more slowly than many executives once anticipated, and Viewpointe hopes its new model can accelerate the change.
"We're trying to drive adoption," said A. Jerry Chambers, who has been Viewpointe's acting chief executive since February. He spoke in an interview Wednesday at the 2005 Bank Administration Institute's TransPay conference.
He said Compass Bancshares Inc. of Birmingham, Ala., has already signed up to send its own images to Viewpointe's archive and to download images from Viewpointe into its own, in-house archive.
Mr. Chambers said he hopes to complete eight to 10 more similar agreements, and to have three or four of them running, by yearend.
The 11 banks using Viewpointe add 100 million items a night to the shared archive, which contains 60 billion images. Mr. Chambers estimates that those banks account for 65% to 70% of the nation's total check volume.
The current Viewpointe model has participating banks clearing payments within the archive. A receiving bank stores an image in the system and then tells the paying bank where to find the file. This contrasts with the traditional method, in which the receiving bank delivers the paper check to the paying bank. Check image exchange systems used by some banks replicate the paper system but deliver the check electronically.
By permitting other banks to connect their archives to Viewpointe's, Mr. Chambers hopes to eventually extend the Viewpointe model, with banks clearing checks within any of the archives by telling one another where to find the file rather than actually transmitting the image.
However, Compass, and any other banks that decide to connect with Viewpointe systems, will initially follow the exchange model by transmitting check images to Viewpointe, and downloading them from the archive.
Two Viewpointe members, First Horizon National Corp. and SunTrust Banks Inc., began clearing through the shared archive in December. Mr. Chambers said that four or five more companies would begin doing so in the third quarter, and that eight or nine of the 11 would be using the archive that way by the end of the year.
In an effort to build volume and attract customers, Mr. Chambers said the company has slashed it prices. Viewpointe now charges a "front-end" fee of about $100,000. He characterized the fee as high enough to demand a commitment from potential bank customers, but not so high as to discourage new participants.
The archive also charges a monthly fee that increases along with the volume of images the bank sends to Viewpointe. The fee covers unlimited image downloads, and banks can cancel the arrangement with 60 days' notice.
He said he hoped this approach would alleviate the "analysis paralysis" that he said has hamstrung decision-making at many banks. "If you leave the bankers to their natural devices, they'll analyze something forever," he said. "We're trying to get pricing out of the way."
Mr. Chambers said that the self-examination at Viewpointe was prompted by Wells Fargo & Co.'s December decision to buy an ownership stake in the archive. He said the process moved into high gear this week as Viewpointe's new managers had a series of private meetings with bankers to promote check imaging.
Wells Fargo, which is based in San Francisco, has a strong history of developing its technology in-house, and the deal gave it a voice in charting Viewpointe's direction. Though the archive was formed with the idea of eventually pursuing a public stock offering, Mr. Chambers said the restructured board decided earlier this year to maintain the company as a private, bank-owned service provider.
Mitch Christensen, the executive vice president of payment strategies at Wells Fargo Services Co., the banking company's Scottsdale, Ariz., technology division, said that remaining private would let the company move more quickly in pursuing payments strategies than it could if it were a public entity.
One result of the decision to remain private was that the owners decided not to renew the contract of John G. Lettko, who had been Viewpointe's chairman and chief executive since its founding in 2000 as a joint venture of JPMorgan Chase & Co., Bank of America Corp., and International Business Machines Corp.
"When this thing was created, the thinking was that it was an investment play," Mr. Chambers said. "The whole world changed in three or four years."
He praised Mr. Lettko and said the breakup was amicable, but said the needs of the company no longer matched Mr. Lettko's strengths.
"John was an entrepreneur, an innovator, a leader," said Mr. Chambers, who had served as Mr. Lettko's chief administrative officer since Viewpointe's debut. "What we need for the next four years is different from what we needed for the last four."
Mr. Lettko confirmed Wednesday that Feb. 28 was his last day with Viewpointe. Mr. Chambers said he would remain CEO until Viewpointe finds a permanent chief, a process that he said could take another three to six months.
Mr. Chambers said that Wells Fargo's addition to the archive also influenced JPMorgan Chase, which last year bought Bank One Corp. of Chicago. Bank One has long been a staunch advocate for owning technology rather than outsourcing it, and he said that JPMorgan Chase was considering withdrawing from the shared archive in favor of an in-house archive. But once Wells Fargo came on board, JPMorgan Chase decided to stay as well.
Mr. Christensen said that his company brought to Viewpointe several long-term ideas for payments beyond check imaging. "Working with the other owners, we all developed a vision of what Viewpointe could become," he said, which may have been more appealing to JPMorgan Chase.
Executives from JPMorgan Chase could not be reached for comment.
During a Wednesday panel discussion at the conference, Taylor Vaughan, the senior vice president for treasury management at First Horizon, said that he likes Viewpointe's new pricing structure. The Memphis banking company was the first nonowner bank to use the archive to store its check images.
"We really like the variable cost model," he said. "As check volume goes down, my bill goes down."
