Customers and Their Checks

Financial institutions will be supporting multiple check clearing methods for the foreseeable future. While many in the industry study and plan the possibilities with image, corporate customers have already cast their vote for ARC.

CONTENTS

Customers and Their Checks
Check Images: To Share or To Exchange
ARC: Billers Like It; Bankers Have Their Doubts

The following articles continue this issue’s focus on what the customer wants — but here the topic is the industry’s efforts to address what the check-using customer wants. In “Check Images: To Share or To Exchange,” BAI Director of Payments and Operations Clint Swift provides a progress report on the billion-dollar investments that financial institutions are making to accommodate check images, whether those images are exchanged or stored in an archive.

At least two questions raised will go unanswered for some time: How much of what’s being spent on the capability to exchange images out of proprietary systems will ultimately be “thrown away” if the industry shifts toward a central image archive? And, more galactically, how much of any of this will be necessary as check-writing continues to decline?

Indeed, questions about check image usage abound. “What is it with you guys and images?” is a question that Vanderbilt University Professor David Owens asked a BAI payments and operations audience last May. Owens, whose business is to encourage students and others to “think out of the box,” was only half-kidding as he co-presented a general session that sought to equip BAI TransPay Conference & Expo attendees to find opportunity in the “disruption” occurring in the payments business.

In essence, “What is it with you guys and images?” is the same question posed by Global Concepts, Inc.’s Jarrett Helms in our second article, “ ARC: Billers Like It; Bankers Have Their Doubts.”

Billers are acting rationally when they gravitate toward ARC , a product that provides a lower cost and other benefits, Helms writes. Yet when Global Concepts posed a series of scenarios to financial institutions about their preference for image exchange over ARC, one out of 10 banks said they’d use image exchange over ARC “even if it was 25% more expensive.”

While acknowledging some of what’s driving this preference for image exchange, Helms’ thesis is that institutions may have no choice but to include ARC in a clearing mix that also includes image and Image Replacement Documents.

CONTENTS

Customers and Their Checks
Check Images: To Share or To Exchange
ARC: Billers Like It; Bankers Have Their Doubts

Questions or comments about this article? Post them at the Banking Strategies blog.