Checking Goes High-Tech
Check 21 doesn't mandate that banks have the ability to capture or clear check images, but rather that they can accept the IRDs as they accept original paper checks. Cisco has jumped on the Check 21 bandwagon by providing networking help for financial institutions, and also partnering with solution providers to offer its Cisco Branch of the Future.
"Cisco plays a big role in how banks communicate with data, voice and video these days through converged networking technology out to the branches and throughout the system," says Jim Bright, U.S. financial services industry manager at Cisco. "We are building strategically important partner relationships along the way to smooth out the bumps."
For its Cisco Branch of the Future initiative, Cisco has partnered with companies like Alogent and Carreker around teller applications and the interface between the captured check image and the teller applications themselves. In addition, Cisco has turned to companies such as Unisys and Panini for the image-capture equipment. Check images also create a need for image storage, so Cisco has partnered with Fiserv and Metavante, providers that are addressing such storage needs.
Although the deadline won't mean drastic changes for financial institutions, Bright expects that banks will have to prepare. "They will have to notify their customers about what is going to take place and what the legislation is requiring," he says. "And they also will have to be capable of accepting check images."
The move to capturing and processing images, a next step beyond the initial Check 21 requirements, will be where banks will ultimately see cost and efficiency improvements, says Kere Lewis, managing director of the Payments Group at BearingPoint, a Cisco partner. To actually process the checks as images, Lewis says, four main components must be achieved, including the ability to capture and send images, receive and post images, deal with the exceptions that occur in the process, handle incoming returns or the process of receiving checks, and then be able to get the image back to a customer.
"Today, banks have far-flung branch networks," Lewis says, adding that checks are processed in a centralized environment, which is a costly process. With check-image capture distributed and happening at each of the branches, the transportation of checks is eliminated, and the images can be passed through networks, saving time and money.
Virginia Garcia, senior analyst for financial services strategies at TowerGroup, agrees that Check 21 and image capture at the branch level will be key. "Financial institutions will have to make investments to accommodate this very significant change," she says.