Growth opportunities for financial institutions in capturing and managing information

Today, information is growing at unprecedented rates. It abounds around us in all forms – email, video, text messaging, audio, and, of course, paper. Without a doubt, paper is the mainstay communication medium found in the financial space. Checks, forms, and attending documentation all become valuable assets in the financial world. The challenge and opportunity is the proper integration of information into business processes and workflows, and then managing it digitally to improve operational efficiency, reduce cycle time, gain competitive advantage, and meet legal and regulatory requirements.

Adding to this challenge and opportunity in the financial space is the Check Clearing for the 21st Century Act (Check 21), which removed barriers to electronic check processing and remote deposit. Although the stage was set for checks to clear, and money to be moved in hours instead of multiple days in 2004 when Check 21 went on the books, financial institutions and business are just starting to take advantage of it.

One reason for this new energy behind check processing is that customer demand resulting from the growth of small to medium sized businesses. This firmographic makes up about 70 percent of the U.S. Gross Domestic Product today. SMBs by and large, employ knowledge workers and seldom have dedicated information technology resources. That said, they are becoming very aware of the uses of 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.

The bottom line is that financial institutions and their customers, whether they are small, medium or large sized businesses, are faced with capturing information from documents and using it to increase operational efficiency as well as further hone their competitive edge and meet regulations. They are looking for information capture, workflow, security and management solutions. From the viewpoint of end users, the key to these solutions is automation.

Kodak, as a leader in the document capture space, has the brand equity, broadest product and solutions portfolio, geographic reach, and experience to help end users realize their needs. Our channel partners can help end users in designing and implementing a document capture system that will complement existing systems and leverage current and future activities. 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. Last year, Kodak introduced an image capture system consisting of a high-speed scanner, specific processing software and inline document separation capability tailored for banks involved in wholesale payment processing arena. This is an example of a wholesale lockbox capture solution which maintains transaction integrity of checks and associated documents for an institution’s largest business customers. Kodak is continually investing in automated solutions to capture and manage information for specific needs today and in the future.

In each of these solutions, data security is vital. Automated solutions must provide the means to identify, capture and protect critical data elements from the view of unauthorized personnel. Did you know that our new version of Kodak Capture Pro Software and Kodak Digital Archive Services internet repository allows financial institutions to automate the capture and secure archiving of structured, semi-structured and even unstructured documents?  Kodak Capture Pro Software has support for digital signatures as well as hidden index fields. Digital signatures create a method for end users to verify if images being viewed have been altered in any way. Hidden index fields also allow the capture of sensitive index information (such as Social Security numbers) which can be automatically populated into index fields, without the actual information being displayed on a PC screen during the image capture process.

As mentioned earlier, financial institutions have growth opportunities in implementing check imaging and remote deposit capture solutions as more customers request these services and, as the banks themselves, search out new opportunities for expansion. Today’s challenging credit and mortgage environments are narrowing profit margins in both loan and deposit portfolios. Banks are looking to improve operational efficiency in dealing with the aforementioned and the need to grow deposit revenues that are fueling interest in check imaging and remote deposit capture.

At this point, I would like to share with you three significant trends occurring in the remote capture marketplace today.

Small to medium sized banks are increasingly signing 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. That necessitates answering a fundamental question: 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.

We're also beginning to see that small and medium size business are seeking to buy 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, bank adoption has been widespread but client adoption has been limited and is 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 backs with which we’ve partnered.

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 return on investment 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. Our 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 business document needs.

In the four years since Congress passed the Check Clearing Act for the 21st Century Act enabling check scanning and remote deposit capture, we’ve moved from early adopters of the technology marketing the service to a few major customers to growing acceptance by all sizes of banks and customers. Trends in hosted services, businesses purchasing remote deposit capture solutions directly from vendors and the ability to scan checks via document scanners will only accelerate the interest and pace of adoption in the market for Check 21 solutions.

Couple the opportunities in Check 21 solutions to the information explosion occurring in today’s digital environment and it is easy to see that the challenge to integrate documents and information into business processes and workflow is really an opportunity. Doing so will improve operational efficiency, reduce cycle time, gain competitive advantage, and meet legal and regulatory requirements

Kodak is a trademark of Eastman Kodak Company. 2008

Media Contacts:
Jack Kasperski, Kodak
T: +1 585-724-5130
E: Jack.Kasperski@kodak.com

Nancy Vargo, Eric Mower and Associates
T: +1 716-880-1483
E: KodakPR@mower.com