There are all sorts of ways to embrace innovation, and it doesn't always require the deployment of a newly developed piece of technology. Sometimes, in response to a new rule or regulation, an existing function or piece of software can be given a new use.
That's what going on at Wachovia Corp., which is using Check 21 as a springboard to ramp up remote deposit capture. The bank holding company plans to deploy AFS Direct Merchant-a Metavante company-for distributed image capture, making the service directly available to the institution's corporate and correspondent banking clients.
With a desktop scanner and secure Internet access, Wachovia's clients will deploy AFS Merchant to capture images of payments at their own locations in a back office environment. These images will be electronically delivered to Wachovia for posting, and subsequent clearing through either bank-to-bank image exchange, or substitute checks. The idea is to get rid of geographic boundaries, enabling corporate and correspondent banking clients to consolidate their payments with a single preferred institution and gain the advantage of local processing. It's one of many benefits financial institutions are expected to reap from the newly Dubya-signed Check 21.
A pilot is scheduled to start shortly, with a much deeper rollout scheduled for 2005. For Shahrokh Ghassemi, Wachovia's director of transaction technology, and Joe Cornelius, product manager for image services, treasury service, the rollout is a chance to use Check 21's regulations as a means to gain greater benefits from remote image capture-a piece of technology that's existed for some time.
What makes remote deposit capture a useful tool?
Cornelius: Customers can make a deposit at Wachovia from anyplace in the world. You can remove restrictions; the customers don't have to physically come into branches, and there are reduced fees and improved availability. The customer has a PC, a small desktop scanner and an Internet connection.
How does it work globally?
Cornelius: It falls under Check 21, so the check must be dollar-denominated. So saying 'no geographic restrictions might be better.' But we will be selling to global institutional customers, to the extent that they are sending dollars across the ocean.
What advancements in the industry are making this move possible?
Ghassemi: It's a combination of regulations and technology. Check 21 is allowing us to do this from a regulatory perspective. In terms of technology, we're using technology that's already in existence: desktop, Windows, scanner and an Internet connection. But it's a new way of using technology.
Who are your customers?
Cornelius: They are and will be commercial customers and financial institutions. It's not a consumer product. We will be piloting in December with two customers, and our plan is to have a controlled rollout in the first quarter and general market availability in the second.
How are your customers making deposits now?
Cornelius: For the most part, out target customers for this product are making deposits the traditional way: using adding machines, taking the total, and delivering the deposit to the bank branch. Some of our other customers are a little more automated. The process is manually intensive and it requires the physical delivery of the check to our branch or a service center.
What's changing to eliminate the manual process?
Cornelius: This product eliminates the need for micro encoding. The customer can scan the image of the check. It's now an automated process to make a deposit. We now have some customers that don't make deposits everyday because it doesn't make sense economically. They'll be able to do that now.
What was your path to adopting this technology?
Ghassemi: We had selected AFS as the solution provider for our auto image exchange platform, so we had a relationship with them. [For the new rollout] we looked at many vendors, about a dozen or so, and there were two differentiating factors for AFS. One was we did have an AFS solution and only AFS and a few others had the solution that was close to where we could pilot it.
If the product is actually a new use of existing technology, why weren't most of the solutions ready for pilot?
Ghassemi: This is really not new technology, but it has required some development on AFS' part. It's a different use of unique technology, and the fact that AFS was providing the basic check image processing system for us made the decision.
What role will Check 21 play in developing deposit solutions?
Cornelius: The solution that the bank deploys is basically one solution right now. We don't have different solutions for retail checks and different solutions for commercial checks and so on and so forth. I believe we will have a handful of base technologies that will enable a company to process these images, replacing the conventional check processing, or images of the check. Once you build the foundation of capturing images, it then becomes an economic decision; what kind of device you use to capture the image and what kind of scan you use.
How are you making your customers aware of the new solution?
Cornelius: When the Check 21 Act was signed by the President, there was a lot of publicity generated around that in and of itself. And if you study the regulations, a lot of the action associated with it was geared toward the initial point of deposit. These new products are developed to allow the customer to capture the check in their own office, and that has gotten attention by itself. And we've been out in the market to talk about Check 21, and that has struck a chord.
