It's a fact that check usage has been decreasing in recent years, mainly due to consumers' increased use of debit and credit cards and online bill pay.
Since the highs of the mid-1990s when more than 66 billion checks were processed annually, volume has dropped to an estimated 22 to 25 billion. As check volumes have decreased, the per-item processing cost has risen dramatically as infrastructure and other related costs remain fixed.
Branch capture, in its various installations, can bring down some of the costs simply by reducing the multiple touch-points and transportation of physical paper. However, even with some form of branch image deployment, check processing can be a laborious procedure requiring a number of steps and delays in balancing, posting and clearing of deposited items.
Checks and cash are processed differently and credit unions have separate infrastructure and procedures in place for each - equipment, staff, timing, and in many cases, separate buildings. Most of the cash processing associated with member deposits occurs at the teller window. Checks, on the other hand, are traditionally processed later in the stream at a different location. Recognizing potential efficiencies, some credit unions are implementing branch image capture for the check portion of the deposit in an attempt to reduce back-office processing costs and to reduce errors.
Still, there are challenges of streamlined deposit-processing associated with the complexity of handling checks accurately and timely without slowing basic teller functions. Current check scanning equipment helps, but most equipment operates at a slow speed, which makes it especially impractical to capture medium to large check deposits at the teller location. So even as check and currency deposit processing is brought closer together, separate equipment has still been required along with separate reconciliation procedures.
Resolving the Challenges
Today, there are new solutions that consolidate check and currency processing. Suitable for use at the teller counter, back-office or cash vault, these new innovations make it possible to process and balance cash and check deposits on a single device, as a single transaction. This is truly revolutionary.
The recent introduction of all-in-one check and currency processing innovations now make it possible for tellers to capture, process and balance a complete deposit on a single desktop device. Checks are imaged with CAR/LAR and full IQUA at over 400 items per minute and currency is counted at 1,600 notes per minute. Deposit slips are imaged or created electronically as are cash-in or cash-out tickets and the entire transaction is balanced -- all in seconds.
Enabling the process to be completed at the teller line dramatically saves time and reduces further manual processing, thus reducing labor costs. For example, midsize and larger credit unions that use in-house or outsourced check processing centers can leverage the new solutions to achieve huge operational and labor savings by reducing the workflow at these centers. Deposit errors, one of the most common and costly contributors to Day-2 processing, are eliminated at the teller line.
At the same time, member satisfaction is enhanced, as integrated cash and check deposits can be balanced right at the teller window, allowing the customer to leave knowing their exact, verified deposit. Even larger mixed deposits can be immediately processed at the teller window, due to the increased speed of the devices.
A More Cost-Effective Workflow
Like any new innovation, consolidating cash and check processing at the teller line requires workflow redesign and training. But, properly implemented, the investment and effort pays off significantly in terms of operational improvements, overall cost reduction and increased customer satisfaction. These new technology-based solutions take a practical and affordable approach, with a single tabletop machine combining high-speed check imaging and currency processing. They also offer software integration that verifies check amounts to the deposit slip and confirms the MICR data. The entire cash and check deposit can be totaled and balanced to the deposit so the transaction record can be sent to the credit union's host system, using an X9 standard or proprietary file format. If desired, the entire imaged deposit can be archived at the local level, as well.
Benefits of Consolidation
Gaining the ability to merge check and currency processing can provide measurable operational improvements for credit unions of every kind, both at the branch and vault level. The new technology-based solutions can be deployed quickly and easily to expedite current capture and forward processing and improve CAR/LAR rates. By limiting the number of touch-points, correction item processing is also reduced, resulting in faster posting and reduced costs.
Finally, the new merged systems can be implemented with a relatively low cost of ownership, since a single machine actually performs processing work which previously required separate equipment, operators and vendor contracts.
For credit unions, the end result is greater efficiency and accuracy, coupled with lower costs, economic gains and rapid ROI.
Curtis Hallowell is VP Product Management for Cummins-Allison Corp. For info: www.cumminsallison.com.