"check Imaging" To Cut Bank Processing Costs

 

A decade ago, Edwin B. Greene had an idea whose time had not yet come. Greene, a senior national marketing representative for IBM, had devised a new system for processing checks; with it, a bank could save money by sending out checking-account statements without including the checks themselves.

Greene's system is based on "check imaging." When a check that a customer writes is received by the bank, a machine extracts the customer's handwriting from the check -- even those with picture backgrounds -- and sends it to the bank's computer, takes a picture of the information on both sides of the check, and stores it on microfilm. When it's time for the bank to send out statements, a machine simply reproduces an exact copy of the handwriting from each check in the customer's checkbook sequence.

Greene's system is fast emerging as the banking industry's best bet to reduce the mammoth costs of processing and returning canceled checks -- a tab that, at approximately 42? per check, came to nearly $15 billion in 1981, according to the Federal Reserve Bank. Check imaging, Greene says, will reduce this cost significantly, because the checks have to be handled only once, rather than the 10 to 15 times needed for filing, sorting, and mailing under the traditional method.

Initially, Greene's idea met with a lukewarm response. In the early 1970s, handling and postage costs simply weren't high enough to push bankers into a new technology. But now, thanks to higher postage rates for mailing bulky checks and increased processing costs, the pendulum is swinging toward Greene's check-imaging process. In the hope of finally cashing in on his idea, Greene incorporated Image Statement System Co. (ISSCO), of Greenbelt, Md., two years ago.

He plans to unveil his first check-imaging production model, based on the prototype he showed in the early 1970s, at the American Bankers Association convention next October in Atlanta. Greene concedes that others will be offering similar products. "We'll be going up against the industry's big leaguers," he says. But he believes his system will be more than competitive in both price and performance.