Academic journal article ABA Banking Journal

Who's Doing What in Image Processing

Academic journal article ABA Banking Journal

Who's Doing What in Image Processing

Article excerpt

Image-based high-speed check processing is expensive. Fullblown IBM or Unisys check imaging cOsts $10 million or more-probably much more-which means it is still a high-end technology, mostly for banks with $2 billion or more in deposits.

For a time, some of the biggest banks were willing to make that kind of commitment to a technology that shows much promise for improving efficiency. But now, the current economy and capitalization requirements are making even big money center banks rethink $10 million expenditures. Some of the banks that were first to sign on for image check processing are clearly in financial difficulty. One, Bank of New England, has backed away from further development efforts. Others also cannot deploy an expensive technology because they are being pressured to grow capital.

"Clearly the entire industry is sold on the [image] solution, but deployment will lag because people don't believe they can make the expenditure," notes Bill Sentenac, senior vice-president and manager, systems development, First Interstate Bank of California. The Los Angeles-based bank itself has chosen a wait-and-see approach to image check processing.

"We see banks settling in on their strategy, but not implementing the systems yet," says Wick Keating, vice-president of AMS, a consulting firm in Arlington, Va. Keating gave the keynote address at the Imaging In Banking conference sponsored by Bell Atlantic in Baltimore, Md. last November.

A lot of banks have a task force, and are evaluating the leading vendors and figuring out when they'll put it in. We see [image] check processing systems under development and in some cases in the early prototype stage, but no one is doing it in a real world application," says Keating, who feels that will take another two years.

Banks are not the only ones lagging. Vendor software development for the high-volume check image systems has been slower than expected. IBM, for one, has said its high-speed image check processing project is about six months behind schedule. Settling for less. Fully integrated image-based check processing that can capture, process, and store check images, offering full proof-of-deposit functions, is not here yet.

In the meantime, banks are looking at a piece of the checkless society available now: checking statements that include near-photographic images of the canceled checks , rather than the checks themselves.

There's a lot of interest in image statements," says Christopher Huppert, manager of marketing communications for TRW Financial Systems, Inc., Berkeley, Calif. He calls it the poor man's way of getting into image processing: "You don't get any of the back-office benefits like image keying and balancing," he says.

William V. Toner, industry consultant in IBM Corp.'s services sector division, agrees. "In order to save a lot of people [in the proof area], you have to put in a lot of hardware," says Toner, who has worked on IBM's image product for five years.

A reader-sorter equipped with an image camera, software, and a printer costs $3-4 million. The software alone costs $1-2 million. If a bank has eight reader/ sorters, it would have to install image on all eight in order to get the full benefit of image, according to Toner. But producing image statements is possible with only one or two. "A bank can start marketing image statements with a lot less money, " says Toner. And they are.

First Interstate Bank in Washington began its pioneer effort on checkless statements in 1983 using Recognition Equipment Inc. systems. Cincinnati Bell Information Systems, Inc. (CBIS), of Cincinnati, Ohio, developed the next generation for First Interstate (using REI's transport and IBM mainframes).

CBIS says one Canadian and one U.S. bank are testing and implementing its ImageBanc checkless statement product. "Most large and medium-sized banks that had planned image proof-of-deposit have turned to image statement instead," says CBIS spokesman Jennings Edwards. …

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