In an endorsement of image-sharing technology, Wells Fargo & Co. of San Francisco has joined Viewpointe Archive Services LLC of Charlotte as an owner and customer.
The move, which was to be announced today, will swell the number of checks stored in Viewpointe's massive check image archive and may spur other banking companies to decide how to make the transition to image-based check clearing.
At first Wells will use Viewpointe's system only for clearing checks with other member banks, said Mitch Christensen, the executive vice president of payment strategies at the banking company's technology division, Wells Fargo Services Co. of Scottsdale, Ariz. Eventually, however, Wells plans to store all new check images - including those of "on us" checks, written against Wells accounts - on Viewpointe's archive instead of its own.
He said Wells bought into Viewpointe instead of just becoming a customer so it could help set Viewpointe's course. "Ownership gives us some skin in the game," he said. "We were looking for some input in the company's direction."
Wells is also an owner of Clearing House Payments Co. LLC and has publicly committed itself to using the image-clearing system that the New York company's SVPCo unit is building to transfer large volumes of check images from one bank's archive to another.
That system has been moving images in production mode between KeyCorp and J.P. Morgan Chase & Co.'s Bank One Corp. since September. The system was beset by delays last year, and though Wachovia Corp. and Bank of America Corp., both of Charlotte, U.S. Bancorp of Minneapolis, and Comerica Corp. of Detroit are also expected to use it, none of them have said when.
Viewpointe got a later start in actual clearing but is moving faster. Its system, into which participants have been feeding check images for years, went live last month when First Horizon National Corp. of Memphis and SunTrust Banks Inc. of Atlanta started clearing checks in production mode, and Viewpointe says it expects eight of its other banks - all but Wells - to be doing so by midyear.
Mr. Christensen said the move to Viewpointe should be complete in 12 to 18 months.
The two companies have held informal discussions since Viewpointe was formed in November 2000, Mr. Christensen said.
At first, he said, Wells was not sure how fast Viewpointe's system could get its system up and running.
Wells was spurred to take another look by last year's two banking megamergers, Mr. Christensen said - B of A's purchase of FleetBoston Financial Corp. and JPMorgan Chase's of Bank One. Wells has been using an in-house image archive like Bank One's and Fleet's, whose buyers are both Viewpointe members.
"The more we looked, the more excited we got about the progress they've made in the last 18 to 24 months," he said. "They've moved the bar a lot quicker than we thought they would."
Though Mr. Christensen did not criticize the SVPCo system, Wells clearly expects Viewpointe to be an important part of its own image strategy and a key player in the payments industry.
Webb Edwards, the president of Wells Fargo Services, said in a press statement prepared for release today: "Our investment in Viewpointe reflects our belief that image sharing, rather than image movement among individual banks, is the most effective way to improve efficiency and service quality.
"We believe Viewpointe has tremendous potential to play an even bigger role in the future payments arena as it expands services and gains additional customers."
All of Viewpointe's owners - JPMorgan Chase, B of A, U.S. Bancorp, SunTrust Banks Inc., Wells, and International Business Machines Corp. - have equal stakes. Wells will be the 11th major banking company to use its shared archive; the nonowners who have signed up as customers are First Horizon; Bank of Montreal's Harris Bankcorp Inc. of Chicago; HSBC Holdings PLC's HSBC USA Inc.; Zions Bancorp. of Salt Lake City; BB&T Corp. of Winston-Salem, N.C.; and National City Corp. of Cleveland.
Wells bought its Viewpointe stake in late December; neither would reveal what it paid. Mr. Edwards is scheduled to attend his first Viewpointe board meeting as a member next week.
There is a fundamental difference between Viewpointe's system and image-exchange systems such as SVPCo's, which transmit image files between banks. Viewpointe stores images for member banks on a single shared archive; the banks grant each other permission to view the appropriate images.
John G. Lettko, Viewpointe's chairman and chief executive, said Wells' decision was an endorsement of Viewpointe's business model and will bring payment processing expertise. Well is "very much in the forefront of payments," Mr. Lettko said in an interview last week.
Mr. Lettko said that the 10 current Viewpointe users stored about 20 billion check images in the archive last year, and that Wells will bring "a boatload of volume." The archive should receive about 25 billion to 30 billion checks this year, including Wells'.
That total means that Viewpointe will store a significant portion of the nation's entire check volume. The Federal Reserve board reported last month that banks processed 36.7 billion checks in 2003.
Though many banks are aggressively pursuing image clearing technology, many more have yet to decide how to invest for the transition, especially since check volume is declining.
Mr. Lettko said Wells' decision could prompt other banks to sign up as Viewpointe customers. "We hope to get additional business, but at a minimum we think we'll get more shareable items and move away from paper faster, which is what everybody wants," he said.
Richard Winston, a partner in the financial services group of the New York consulting firm Accenture Ltd., predicted that Wells' move would prompt other banks to formulate check-image strategies. "I think they're going to see this as a call to action," he said.
Alenka Grealish, the manager of the banking group at the research and consulting firm Celent Communications LLC of Boston, said the move should boost the status of shared archives. Viewpointe has not "totally taken over the world with Wells, but it's a big endorsement of that model," Ms. Grealish said.
Wells' decision may also encourage smaller banks to consider shared archive "utilities" such as those operated by the Federal Reserve banks or the financial technology company Fiserv Inc. of Brookfield, Wis., Ms. Grealish said.
"It's unusual for banks to build a utility in the U.S.," she said. "It's quite an achievement just to get a major bank to sit down with its competitors and talk about sharing as a utility. U.S. banks have not often succeeded at that."
