Check Truncation: The Countdown Begins

Community Banker, January 2004
By James Swann

In its January, 2004 edition, Community Banker, looked at how smaller banks and technology vendors are preparing for the impending enactment of Check 21. Following are excerpts from the article...

...Some community banks are already engaged in truncation and imaging, but most are still coming to grips with the technology. In December, Celent Communications estimated that less than 20 percent of all federally insured institutions had the ability to accept check images. Now, with a deadline looming, the majority of banks will have to hurry to catch up. Industry experts warn that banks without full-fledged truncation systems may fall behind the curve".

...Also customer notifications may present an opportunity to enhance the bank-customer bond, according to Steve Hill, managing principal at Carreker Corp., a payment solutions firm. "Informing customers about what Check 21 will mean to them can be a great retention effort for any bank," Hill said...

...Beginning in 2004, the Federal Reserve Banks will use Small Value Payments Company's Image Exchange Network to reach member banks. Also, SVPCo will begin sending images through the Federal Reserve, creating a nationwide check image exchange. Presently, SVPCo member banks account for over 65 percent of the 42 billion checks written annually in the United States...

...With image exchange networks growing on a national scale, more vendors are cropping up in the field of check imaging, a crucial component of check truncation. Companies like Carreker...have already secured many large-scale deals with financial institutions, with more sure to follow...

...Check 21 is not yet a part of mainstream consciousness in America, so bankers are going to have to educate their customers as well as their employees. "Bankers are just starting to scratch the surface on staff training. Theyxre even further behind with customer education. What will happen on day 366, the day after Check 21 is officially implemented, when a customer walks into a bank (with an IRD and questions)?" Carreker's Hill asked...

...For banks with questions, Carreker Corp., a software solutions provider for financial institutions, offers the Check 21 Readiness Workshop, a two-day program designed to answer questions a bank may have about Check 21 and how it fits in with day-to-day operations...