Academic journal article ABA Banking Journal

The History of Recognition in Banking

Academic journal article ABA Banking Journal

The History of Recognition in Banking

Article excerpt

How today's banks are turning paper information into computer-useable data using a new generation of recognition technology


Paperdocument information becomes of practical value to a bank only after it has been transformed into computeraccessible data. Therefore, the increasing proliferation of checks and other critical paper documents within American banks poses a serious challenge to banking operations. Various systems now exist for recognizing and converting printed and handwritten information into computer-useable data. Considerations for system implementation include: cost efficiency, versatility, marketing value, and security.

Some computerized recognition systems may adapt well to one task (recognizing machine print, for example), but fail at others (such as the recognition of cursive handwriting or hand print). Today, banks can select among these systems; their alternative, manual data entry; and a new generation of automated, cost-effective and allinclusive recognition technology that helps to reduce the costs associated with recognizing and capturing information on financial documents.

Beyond Paper: Recognizing the Opportunity

Despite the availability of electronic alternatives, American banking and its customers still rely on paper checks, paper receipts, paper forms, and paper records in general, and many banks still use manual data entry to process these paper documents. There is a wealth of information in these documents, and capturing that information and converting it into computer-useable data (ASCII) can help advance a bank's competitive capabilities. Today's challenge is to find the most cost-effective, comprehensive, automated means of transforming printed and handwritten paper information into computeruseable data.

Many banks still use manual data entry to process this paper information; yet automating the conversion of paper information to computer-useable data can help control costs by reducing labor expense and expediting processing. Further, automating this process can provide fast and inexpensive access to the gathered data, and fuels a variety of powerful marketing and customer retention activities, such as cross-selling.

For example, the payee line on a personal check can provide an abundance of potential marketing opportunities. With the right recognition software technology, payee-line and other important information can be obtained, and utilized, quickly, accurately, and inexpensively.

The right technology can also cut costs associated with manual data entry, including: * Handling, transporting, and filing of paper records; * Data entry management, administration, and non-payroll overhead; * High turnover rates of data entry operators; * Training of new operators

Staggering Facts

Let's take a quick look at some of the remarkable, sometimes staggering facts behind the paper tradition, which explain why automating the recognition process can yield tremendous results in cost savings. The aggregate value of payments made each day in the U.S. is about $1.7 trillion. Less than one percent of these payments is attributed to cash; the rest falls to "noncash paper instruments" (Bank of International Settlement "Survey of G10 Countries," 1994). Recent estimates place the number of checks written each year in the U.S. at 66 billion. Altogether, the checks would form a stack about 5,200 miles high. And, a 1999 report states that the cost of processing checks for one year in the U.S. alone totaled $181 billion (ShihYu Wang, Massachusetts Institute of Technology "Automating the United States Payment System," 1999).

These facts and figures do not take into account the other critical pieces of paper involved with finance, such as various forms, applications, cash tickets, deposit slips, and so on. However, estimates place the number of paper forms created by U.S. business in general at nearly four trillion per year. …

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