Check, Please!

FST. The stage was set for checks to clear, and money to be moved in hours instead of days in 2004 when Congress passed the Check Clearing Act for the 21 st Century to enable check scanning and remote deposit capture. Why are financial institutions and business es only just starting to take advantage of it?
RH. One reason for this new energy behind check processing is that customer demand is resulting from the growth of small to medium sized businesses (SMBs). This firmographic makes up about 70% of the U S Gross Domestic Product today. SMBs , by and large, employ knowledgeable workers and seldom have dedicated information technology resources.

These businesses are becoming very aware of using digital technology to manage documents and information for meeting legal and regulatory demands and, more importantly , improving their operational efficiency and competitive edge. Part and parcel to this is shortening time to money and that brings SMBs to look at Check 21 enacted solutions. Many SMBs work with banks in their home office communities. By instituting Check 21 solutions, these community banks are realizing that they, too, can use their new service as a competitive tool in growing business beyond their brick and mortar footprint.

FST. Some banks are opting for hosted services to meet their Check 21 needs. Is this a growing trend?
RH. Small to medium sized banks are increasingly sign ing up as clients to outsourced or hosted services for check imaging and remote deposit capture. There are many reasons for this; however, the prime reason is organizational philosophy. Does an organization have the scope within its resources to implement and maintain a remote deposit capture solution or does it want to concentrate resources on its core business, that of banking? Certainly, costs enter the picture in terms of affording dedicated IT resources and capital investments in hardware and software. So, too, business growth opportunities enter the decision process. We’re seeing small to medium sized banks use hosted services to expand their business without building and staffing new branches. Regardless if the system is in house or hosted, banks of all sizes have quickly realized that offering check imaging and remote deposit capture solutions to customers has enabled them to grow business in a cost effective manner. Specific to hosted check scanning and remote deposit services, our automated Check 21 hosted services provider counts more than 270 merchants and 25 financial institutions as clients to date, and those numbers are growing.

FST. Why are businesses instituting Check 21 solutions?
RH. Businesses are interested in increasing operational efficiencies and reducing costs. W e're seeing small and medium size business purchasing remote deposit capture solutions directly from vendors versus sourcing them exclusively through banks as was the case in the initial Check 21 push. While banks are anxious to reach beyond their own client base, the reality is that they are limited by the scale of their sales organization and ability to implement and service solutions. In fact, while bank adoption was growing client adoption was limited and almost at a standstill. We realized that this would happen. To prepare for it, Kodak has been expanding application knowledge and market presence for the last three years. Kodak is in a unique position – our reputation as a leader in imaging, large portfolio, and trusted brand – to address this emerging need via our extensive channels to market. In effect, Kodak is playing the role of matchmaker by driving awareness and leveraging our relationships with businesses to bring clients to banks with which we’ve partnered.

FST. Are there any other significant trends out there?
RH. The last trend I would like to discuss involves capture technology itself and the disruption being caused in the market by businesses requesting to use document scanner platforms for remote deposit capture. These businesses do not require MICR and want to optimize ROI in document scanners through using one scanning platform for financial transactions and business documents. Doing so can lead to equipment cost savings, reduced training requirements and streamlined process flow. For financial institutions, t he Patriot Act has placed an additional burden on them to capture more information about current and new customers. Scanning many forms of identification and signatures are critical to meeting the scrutiny of their compliance departments and Kodak document scanners are very well suited for capturing this information. O ur portfolio of distributed scanners, including Kodak’s recently introduced personal workgroup ScanMate i1120 scanner, are getting a lot of airplay in servicing both remote deposit and document needs.

Rod Hughes is Director of Marketing, US&C, Document Imaging, Graphic Communications Group, at Eastman Kodak Company.