A Major Investment
"The investment from the banks is fairly sizable," Chambers said. The total cost of installing new cameras, software and controls procedures can easily run to tens of millions of dollars. "This was a major, major expenditure," he said. Viewpointe itself, meanwhile, leans on IBM for its architecture. The database (approximately 10 petabytes, executives said) runs on pSeries servers and the DB2 database system, using IBMs On Demand Business application. Storage is managed on IBMs Shark direct-access storage devices.Introducing customers to electronic check images was a good start for First Horizon, but until one year ago, the bank still had to print and ship paper copies of processed checks to other banks; images had no standing under the law. Check 21 legislation, which went into effect in July 2004, granted that standing. Vaughn calls such bank-to-bank operations "the Holy Grail of a common archive." As soon as Check 21 enabled electronic-only transactions, First Horizon launched such a program with Atlanta-based SunTrust Banks Inc., a $165 billion bank that also uses Viewpointe for image archiving. How does image archiving work? Say a First Horizon customer deposits a check drawn from a SunTrust account. First Horizon captures an image of the check and stores it in the Viewpointe archives. Then, rather than ship a paper copy of the check to SunTrust, First Horizon sends a data file that alerts SunTrust to the transaction and includes an index number to find the image, plus instructions for payment. SunTrust then presents that information to Viewpointe, giving an index number that lets SunTrust call up the image and process it as a normal paper check. Simple in theory, yesbut still very complicated in practice, Chambers warns, because of the inertia that comes with decades of processing checks by paper. "For banks to take advantage of Check 21, they have to wean their customers off getting the paper back, and they have to retool their back room," he said. In particular, overhauling those back-office operations "is all over the map." At First Horizon, the hardest task was adapting other bank IT systems to accept images rather than paper, Vaughn said. New software had to tell other systems that electronic files had been substituted for paper, and the bank had to ensure that no duplication would happen if the paper somehow did get processed. "That was nowhere near as simple as we thought it would be," Vaughn said. First Horizon purchased a virtual sorter from Sterling Software Inc. (since acquired by Computer Associates International Inc.) to receive and route electronic images, and the sorter affected other bank controls. For example, an electronic file could be returned as a fraudulent check, so First Horizon had to amend its anti-fraud procedures to cope with images rather than paper. "Thats a high level of manual labor," Vaughn said. Ultimately, Chambers said that banks will push the capture of check images further toward "the point of first presentment," such as when a consumer writes a check at the store. "What First Horizon wants to do, and what a lot of players want to do, is to use the Check 21 law so that commercial customers can digitize checks and make electronic deposits," Chamber said. That will let banks expand their geographic reach to practically anywhere in the United States, since their transaction channels will be shuttling data rather than paper. Not bad for building a 21st-century sales channel. Matt Kelly is a freelance writer in Somerville, Mass. He can be reached at email@example.com. Check out eWEEK.coms for the latest news, views and analysis on financial applications and services for the enterprise and small businesses.