[I am in Las Vegas for the TAWPI Payments in Transition conference – these are my notes from one of the sessions. An index of all of the sessions and links to the rest of my notes is here. – EMc]
Check 21 Road Map: One Bank's Journey Into the 21st Century
JR Thornton, AVP Indirect Client Services, Wilmington Trust
[program blurb] Learn how Wilmington Trust moved their paper-based check and payments process to full image, including online exception handling of payments and returns, as well as all day-2 functions. Hear about the timeline, critical steps, outsourcing decisioning, and how they achieved an overall cost savings of $3.4 million annually.
Thornton started with a trivia and distributed casino chips for right answers – apropos in Las Vegas.
Initially a lot of Check 21 confusion. Education plan for both clients and employees (to ensure employees could address customer questions). Created 5 yr timeline that ends in late 2010. Leverage vendors, encourage collaborate. Include EVERYONE that touches paper. But there are other internal documents (not just check and payment stub) that contain key information. No one solution – different vendor solutions for each segment.
Milestones/Roadmap at Wilmington Trust: 1) check archive access to customer service – faster recognition of image quality issues BEFORE starting to exchange check images, 2) imaged signature card file; provide access to branch tellers – start promoting reliance on electronic rather than paper, promote self-service rather than calling operations 3) Remote merchant capture 4) check image statements, including PDF of original statement, on archive – easy to share with customers; 5) Outbound image exchange. no real issues with images, despite early concerns. If you can tell it’s a negotiable document, okay 6) Duplicate Detection 7) 100% conversion to check image statements (3 customers want checks, print them IRDs) 8) teller capture – 9) image exception handling – real time – for installment loans
Road ahead: 1) Same day clearing of teller work 2) online lockbox exception processing 3) image exception processing for all day 2 4) inbound image exchange – fed is forcing us 5) image return items 6) customer remote capture
This is a tough year to get capital projects approved due to tightened credit environment. Really need to demonstrate savings to recover investment quickly (within 6-9 months, with minimal investment) but Check 21 investments will sell themselves. Income statement impacts: reduce non-interest expense, interest expense and cost of funds expense; Balance Sheet impact: reduce non earning assets and cash due from others
Using all three models of remote capture 1) third party ASP, 2) vendor hosted ASP, 3) internal datacenter with minimal outside support. Decision regarding biz model based on 4 criteria: startup cost, IT learning curve, ongoing support costs, maturing of industry (on demand rather than invest in sw installation)
Consumers much more familiar and accepting of images today than they were.
Opportunity for improvement: standardize how items are listed in statements (paper vs Check 21 vs. ARC)
Q – How do you handle situation when another bank, who you sent IRD to, returns it to you. They don’t know what to do with it. Often because the item has MICR requirements outside industry standard. A: Involved federal reserve to help other bank understand process and make checks fit standard. Typically customer of the other bank is using non-standard check stock or using home banking solution. Very time consuming. But right thing to do. Implore customers to work with us to ensure checks meet industry MICR standards.
Q – will you always have outsourced or when does it make sense to bring in house? A: Not for another 7-8 years. As long as there is still paper. Will review in 5 yrs or so.