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New technologies from Check 21 Making check transformation work for your organization June Tomes VP,

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Our crystal ball the next two to five years. Remote Capture. Clearing networks. Projected 'tipping points' for image ... Electronic payments outpace checks ... – PowerPoint PPT presentation

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Title: New technologies from Check 21 Making check transformation work for your organization June Tomes VP,


1
New technologies from Check 21Making check
transformation work for your organizationJune
TomesVP, Treasury Solutions Consultant
2
Agenda
  • What has happened in the past 18 months
  • What we expected
  • What occurred
  • Our crystal ball the next two to five years
  • Remote Capture
  • Clearing networks
  • Projected tipping points for image settlement
  • Check Transformation solutions
  • Solutions overview
  • Risks and benefits
  • Evaluating the business case
  • Questions and answers

3
The first 18 months
4
  • What we expected
  • New products for clients
  • Remote capture a winner on several dimensions
  • Adoption of image exchange by banks
  • Small banks jumping on board faster than large
    banks
  • Industry standards
  • Image Cash Letter a viable check transformation
    strategy
  • Disbursements minimally impacted

5
What has happened so far
  • Remote capture of the transaction
  • Client sites eliminate trips to the bank for
    deposits
  • ATM create new channel for accepting large
    deposits
  • The clearing network would take time to develop
  • Agreement of check image standards quickly
    established
  • Tipping point for Image Exchange is 18 months
    away

6
What has happened so far
  • Image Cash Letter would compete with ARC as
    viable transformation strategy
  • All checks could be transformed
  • But clearing network would take time to
    establish
  • Payments would be minimally impacted
  • Positive Pay not impacted, but became more
    important
  • Loss of physical fraud capabilities could cause
    some problems

7
We have also been surprised at times
  • New solutions have clients exploring remote
    capture and imaging of remittance and other
    documents
  • Clients raising priority of creating or enhancing
    overall image strategy
  • Industry rapidly responding to security needs for
    check images automated comparisons of check
    characteristics, etc

8
Our crystal ball the next two to five years

9
Payments landscape
  • Most payments today are paper-based, checks and
    cash
  • Checks as a form of payment is declining each
    year
  • Checks represent a higher percentage of B2B
    payments than C2B payments (number of
    transactions)
  • C2B payments are 81 of transactions but only 13
    of dollar flows. B2B payments are only 6 of
    transactions but 65 of dollar flows

10
Electronic payments outpace checks
  • Non-cash payments will grow to 110 billion
    transactions per year by 2010
  • Check volumes will be less than 25 of total
    transactions

Sources NACHA, Global Concepts, Nilson, Federal
Reserve, Tower, FDC, McKinsey
11
Checks declining
Industry projections show that as checks decline,
payments transaction growth will be fueled
primarily by debit card, ACH and credit card.
Non-cash transactions, billions (Industry
Overview)
Sources NACHA, Global Concepts, Nilson, Federal
Reserve, Tower, FDC, McKinsey
12
Payments Transformation and Image Exchange
  • Of the estimated 25.9 billion checks written in
    2009 over 25 will be converted into an image
    between deposit and clearing
  • Today most imaged checks are cleared as IRDs,
    however that will decrease rapidly as more banks
    increase their acceptance of image
  • Many of the top 50 banks are either actively
    exchanging images or looking to exchange images
    in the near future
  • The 4 major image clearing networks, Viewpointe,
    Endpointe, SVPco, and the Fed, will enable the
    growth of image exchange
  • New image deposit products will continue to
    emerge some will utilize a least-cost clearing
    methodology for checks
  • Some retailers will eliminate check acceptance as
    a form of payment
  • As consumer privacy and fraud grows, checks will
    continue decrease

13
  • New products developed
  • Back office conversion allowing point-of-sale
    checks to be converted to ACH after the sale may
    go into pilot this fall
  • Combined POS/Image/Card terminals will enable
    merchants to reduce their footprint at the
    point-of-sale
  • Remote Capture with credit card acceptance is on
    the horizon
  • Remote remittance capture/transmission is being
    developed by banks
  • Online payments will be used for more types of
    purchases
  • Circuit Citys pay online and ship to store can
    be used in other markets such as fast food or
    pizza delivery

14
Check Transformation solutions
15
Why should businesses care
  • Receivables Processing Time

1
2
3
Mail Check
Time Gap
Good Funds Received
Mail Float
Payment Processing Float
Clearing Float

Check 21 transformed this process
16
Check Transformation solutions
  • Check Transformation is
  • the transformation of an incoming paper check to
    a check image, ACH or electronic transaction, and
    accelerating the deposit to the bank.

17
Check Transformation solutions
  • Potential Risks
  • Image quality
  • IRDs
  • Administrative returns
  • Images
  • ACH
  • Equipment costs and maintenance
  • Check security after deposit
  • Maintaining employee training on new process
  • The changing opportunities for fraud

18
Check Transformation solutions
  • Potential Benefits
  • Reduce days sales outstanding (DSO)
  • Speed receivables processing
  • Accelerate access to key customer service data
  • Improve cash forecasting
  • Increase ACH usage
  • Reduce costs of processing, storing and
    retrieving
  • Increased data integrity
  • Minimize risk and fraud

19
Transformation solutions for Receivables
  • Remote Deposit Capture Using a desktop scanner
    and PC, the Company scans the paper checks
    received, captures check MICR and images, and
    creates an electronic deposit file, eliminating
    trips to bank to make check deposits
  • Image Cash Letter the Company (high volume
    check payment) scans incoming check payments,
    leveraging their existing high-speed capture or
    remittance processing equipment. The Company
    then captures check MICR and images, and creates
    an electronic deposit file in lieu of traditional
    paper cash letters
  • ARC Cash Letter the Company (high volume of
    consumer check payments) mail) scans incoming
    check payments, leveraging their existing
    high-speed capture or remittance processing
    equipment. Along with capturing check images,
    company captures check MICR, which is then used
    to convert eligible consumer checks to ARC ACH
    debit transactions
  • Customer initiated Web and Phone Payments the
    Company empowers end customers to initiate
    electronic credit card or ACH payments via the
    Internet, touch-tone phone or live customer
    service representatives
  • Merchant Services in addition to traditional
    merchant card and check handling, the Company
    converts consumer checks payments received at the
    point-of-sale (POS) to ACH or debit transactions

20
Remote Deposit Capture business case
  • Key questions to ask
  • How many locations are receiving checks
  • Cash and checks in each
  • How many depository relationships are needed to
    process
  • Average value of checks
  • Number of days holding checks for deposit
  • What is your primary motivation in considering
    Remote Deposit

21
Remote Deposit Capture
  • What to look for in a remote capture solution
  • Remote deposit capability Deposits made to bank
    electronically with image transmission from
    almost any location
  • Image quality analysis Ability to analyse
    images at point of capture, which helps protect
    from posting errors due to poor quality check
    images
  • Optimal clearing channels Having built-in
    intelligence determines the optional check
    clearing path, with either ACH conversion or
    check truncation
  • Courtesy amount recognition Technology to
    reduce data entry and increase efficiency
  • Information security Use of digital
    certification to authenticate users and encrypted
    data transmission
  • Benefits to the company
  • Ideal for companies processing 500 100,000
    items in multiple locations
  • Faster access to funds expedited check
    processing
  • Reduced transportation costs eliminates trips to
    the banking centre
  • Faster notification of returned items, based on
    faster deposit time
  • Minimizes risk
  • Consolidation of banking relationships and
    depository accounts

22
Thank You! June TomesBank of America(804)
788-3741june.tomes_at_bankofamerica.com
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