Close
  • Latest News
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Menu
Search
  • Latest News
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home Latest News

      Technologies Help Banks with Check 21

      By
      Theresa Carey
      -
      October 14, 2004
      Share
      Facebook
      Twitter
      Linkedin

        Check 21, also known by its full name, the Check Clearing for the 21st Century Act, was spurred in part by the 9/11 terrorist attacks, when millions of uncashed checks sat on airport runways for days. Those unmoving pieces of paper, which authorized the transfer of cash from one account to another, severely slowed the nations flow of commerce.

        The law, which takes effect Oct. 28, will allow banks to exchange check images electronically rather than shipping physical checks all over the country as they do now. It doesnt require the electronic exchange of check images, also called IRDs (Image Replacement Documents), but many banks are gearing up because the act will save them significant amounts of money.

        According to analysts at Accenture, a global management consulting, technology services and outsourcing company, banks process more than 40 billion checks annually, which represents a significant portion of their revenue and profits. Fees generated from check processing can comprise as much as 50 percent of a banks total fee income.

        By giving digitally imaged and substitute checks the same legal status as paper checks, Check 21 will dramatically cut the volume of paper checks in circulation, improve reliability and speed, and eventually reduce transportation, float and other check processing costs by more than $2 billion annually industrywide.

        /zimages/3/28571.gifRead more here about the challenges Check 21 presents to banks.

        Industry insiders believe that more efficient check processing also will lead to lower fraud costs, with the savings likely to be passed on to customers. In the short term, many banks will see their check processing costs rise as they invest in both digital and paper processing systems; in the long term, those costs will drop significantly.

        Accenture analysts said they think the industry should not fear a scary Halloween scenario, resulting from masses of bounced checks due to suddenly reduced float times. “Check 21 is not a flip of the switch event,” said Richard Winston, a Dallas-based partner in the Financial Services group of Accenture and leader of Accentures Check 21 practice.

        “Few banks will be immediately equipped” to handle digital checks on a broad scale, so the industry adoption of electronic exchange of checks will take years, thereby minimizing the float problem.” At present, about 85 percent of checks clear the day after theyre deposited because they are written locally.

        A key concern among consumer groups as well as banks is the potential for fraud. Several firms have stepped up to provide solutions to banks to prevent fraud. One is Mitek Systems Inc., which has created ImageScore, an image quality analysis solution designed specifically for financial institutions.

        ImageScore analyzes scanned images of checks to verify the quality of a check image. Additionally, it ensures that the image is an acceptable payment instrument for financial institutions and verifies that the image conforms to the quality and usability criteria defined by the X9.37 standards committee.

        /zimages/3/28571.gifHow will Check 21 affect you and your checks? Click here to read more.

        A major problem banks face in the Check 21 environment is the loss of transaction data if the paper check is destroyed before the information is accurately captured as an electronic image. ImageScore is designed to prevent this problem by verifying that the image accurately represents the original paper document.

        The solution identifies and flags potential flaws while conducting several levels of tests for each data item, including verifying whether the data items are present as well as performing OCR/ICR (optical character recognition/intelligent character recognition) tests.

        Harland Financial Solutions, a provider of technology for financial institutions, intends to incorporate the ImageScore technology into its image-based item processing solution, CheckQuest.

        “As Check 21 grows near, it has become even more important that we have a solid image-exchange strategy in place,” said Bill Zayas, senior vice president and general manager of bank core systems at Harland. “We are planning to integrate ImageScore into our CheckQuest item processing solution to ensure that the images being sent and received by us and our partners are usable and of the highest quality.”

        In addition to the quality tests, ImageScore can analyze the usability of an image. It can accurately identify whether a data field is missing, such as signature, date, payment information and CAR (the courtesy amount on the check). As a result, banks are able to avoid financial liability caused by passing along unusable images, as well as to avoid delays with presentment, clearing and settlement caused by illegible information on check images.

        Another Mitek product is its FraudProtect System (FPS), an automated system that helps community and midsized banks detect counterfeit checks and signature forgeries. These banks use the FPS to make timely “pay or no pay” decisions. A version based on paper checks is currently in use.

        In the electronic image exchange world, manual check-fraud detection will be more difficult. FraudProtect System focuses its attention on the image of the original check within the IRD as it searches for stock variations or signature irregularities. The reduced size of the check image in the IRD will not affect the operation of the system.

        /zimages/3/28571.gifClick here for more on how suppliers plan to help banks ease their transition to Check 21.

        FPS addresses two common types of fraud: signature forgery and counterfeit checks. The system identifies potential signature forgery with patent-pending technology that compares a persons signature against a reference check and assesses the likelihood that the person who signed the check is the same person who had signed the reference checks. Counterfeit checks are identified by FPS by matching certain check stock features.

        Inspecting checks visually is very labor-intensive. The FraudProtect System installed in one computer can analyze two to four checks per second. As a result, Mitek recommends that a bank analyze all checks presented, instead of focusing only on high-value checks.

        During tests, the FraudProtect System processed more than 8,000 checks per hour when run on a computer with dual Intel Pentium 4 (2.4 GHz) CPUs and 2 GB of RAM running Windows Server 2003 and SQL Server 2000 (SP3). The test configuration ran the application on the same machine as the SQL database.

        The systems speed during unattended operation will depend on factors such as the average number of reference items in accounts, the power of the computer and, possibly, the network speed. The overall time to complete a days run will depend upon the speed and number of reviewers.

        The FraudProtect System runs on Windows 2000, Windows 2003 and Windows XP Professional. It requires Microsoft SQL Server 2000 or above, with licensing for each concurrent user who will access FPS.

        /zimages/3/28571.gifCheck out eWEEK.coms Finance Center at http://finance.eweek.com for the latest news, views and analysis on financial applications and services for the enterprise and small businesses.

        Theresa Carey
        Theresa is the Editor of CIOInsight.com's Finance Industry Center. She's been writing about financial technology issues since 1990 for a wide variety of publications, including PC Magazine, Newsweek, Fortune, and Fortune Small Business. She is also a Contributing Editor to Barron's and writes their 'Electronic Investor' column.Theresa received a B.A. from the University of California, Berkeley, and a M.S. from the University of Santa Clara. She also has a private pilot's license. When she's not at her computer, she coaches a local high school volleyball team, plays softball and volleyball, and takes part in many Cal Alumni Band events. She lives in Northern California.

        MOST POPULAR ARTICLES

        Android

        Samsung Galaxy XCover Pro: Durability for Tough...

        Chris Preimesberger - December 5, 2020 0
        Have you ever dropped your phone, winced and felt the pain as it hit the sidewalk? Either the screen splintered like a windshield being...
        Read more
        Cloud

        Why Data Security Will Face Even Harsher...

        Chris Preimesberger - December 1, 2020 0
        Who would know more about details of the hacking process than an actual former career hacker? And who wants to understand all they can...
        Read more
        Cybersecurity

        How Veritas Is Shining a Light Into...

        eWEEK EDITORS - September 25, 2020 0
        Protecting data has always been one of the most important tasks in all of IT, yet as more companies become data companies at the...
        Read more
        Big Data and Analytics

        How NVIDIA A100 Station Brings Data Center...

        Zeus Kerravala - November 18, 2020 0
        There’s little debate that graphics processor unit manufacturer NVIDIA is the de facto standard when it comes to providing silicon to power machine learning...
        Read more
        Apple

        Why iPhone 12 Pro Makes Sense for...

        Wayne Rash - November 26, 2020 0
        If you’ve been watching the Apple commercials for the past three weeks, you already know what the company thinks will happen if you buy...
        Read more

        eWeek has the latest technology news and analysis, buying guides, and product reviews for IT professionals and technology buyers. The site’s focus is on innovative solutions and covering in-depth technical content. eWeek stays on the cutting edge of technology news and IT trends through interviews and expert analysis. Gain insight from top innovators and thought leaders in the fields of IT, business, enterprise software, startups, and more.

        Facebook
        Linkedin
        RSS
        Twitter
        Youtube

        Advertisers

        Advertise with TechnologyAdvice on eWeek and our other IT-focused platforms.

        Advertise with Us

        Menu

        • About eWeek
        • Subscribe to our Newsletter
        • Latest News

        Our Brands

        • Privacy Policy
        • Terms
        • About
        • Contact
        • Advertise
        • Sitemap
        • California – Do Not Sell My Information

        Property of TechnologyAdvice.
        © 2021 TechnologyAdvice. All Rights Reserved

        Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

        ×