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Banking Special Issue: Proof of Deposit - Case Study

Table of Contents


The Future of Bank Imaging

The green wall

Relationship Banking

Proof of Deposit

POD Case Study

Designing Forms for a Banking Environment

File Folders

Thrashing Folders

Staging Folders

Using COLD (a case study)

Check Processing: The need for Speed

Printing Your Own Checks

Check Processing 101

Images from the Fed

First National Bank & the Fed (case study)

Glossary of Bank Image Technology


by Joe Devlin

POD Case Study

Win-Win for Wachovia

by Joe Devlin



In order for a bank to make money, it must process huge volumes of checks every day. Consider the check processing operation at Wachovia Corporation, a super regional bank serving the southeastern United States with dual headquarters in Atlanta, GA and Winston-Salem, NC. With $39 billion in assets, Wachovia Corporation is one of the largest financial institutions in the United States. Wachovia is consistently named among the nation's top corporate cash management banks, handling more than 100 million checks a month. And at that volume, even small increases in efficiency generate huge rewards. Stuck with high costs and high employee turnover, banks have proven more than willing to try technology that reduces costs and levels the workload to manageable proportions. Hence the interest in image-enabled proof of deposit systems.

As with most other banks, Wachovia handles the checks it receives from outside its system differently than the checks deposited at one of its own branches.

High Speed MICR

More than 70 million checks each month are sent to Wachovia after being deposited and processed at other banks. All the checks have dollar amounts typed in magnetic ink onto the MICR line by other banks. This allows Wachovia to process these checks quickly and accurately using its high speed IBM 3890/XP reader/sorters, running IBM's Check Processing Control System (CPCS). Reading MICR encoding is relatively easy to do and almost 100 percent accurate. There is no need to add an imaging component to these sorters.

Approximately one-third of the checks that Wachovia processes are deposited at Wachovia branches. These checks must be handled differently since the the dollar amount has not yet been transferred into the customer's account or entered onto the MICR line.

Processing these 31 million checks takes far more time and money than is needed for the checks with the MlCR-line already encoded. Wachovia spreads the work over five check-processing centers and a staff of hundreds.

These checks are processed by NCR 7780 Image item Transport and NCR Scalable Image Item Processing System (SIIPS) POD software. This system deciphers the dollar amounts from the hand-printed numbers on the top right side of the check and then encodes in MICR format the dollar amount on the bottom of the check.

The NCR 7780s have been equipped with imaging cameras that feed the check images to ICR software that automates some of the process. Each check is first prepared as a digital image and stored to disk, where handwriting is read and validated. The data is then sent to Wachovia's existing check processing system for account updating. Wachovia has a long work history with NCR's SIIPPS software. In fact, Wachovia was one of the first large customers to adopt the SilPS software.

Many of the major features in today's SIIPS system originated while Wachovia was a test bed customer. That process continues today as Wachovia became one of the first customers to incorporate Lucent's ICR software as part of their SIIPS system.

At first glance, it may seem odd that NCR would be willing to install Lucent's ICR software to replace its own ICR engine. That is, until you consider the fact that it was little more than a year ago that Lucent and NCR were part of AT&T Deregulation and competitive forces may have split the corporation asunder, but the close working relationship remains. We have installed NCR 7780 item processing transport/capture devices and SIIPS image-enabled software solutions in four sites in Raleigh, Charlotte, Atlanta, and Columbia, South Carolina," says Paul Boone, executive vice president of Wachovia Corporation. "These stations handle input from 450 operators currently processing 31 million checks a month. We have been using NCR equipment since we entered into an imaging partnership agreement with NCR to develop SIIPS in 1991."

The relationship is a close one. NCR installs and services the equipment. Wachovia provides the workstation operators and the LAN expertise. The SIPP system replaces traditional MICR recognition with an optical recognition process that not only reads the bank information provided at the bottom of the check but also the courtesy amount (the dollar amount) hand written on the top right of the check.

Trying to produce an ICR engine that can read handwritten numbers is no mean feat. The task is made even more difficult by the simple fact that checks often place the courtesy amount in different locations on the check. Finding that amount and recognizing those numbers is a job that has long been assigned to a special purpose CAR engine. Until recently we were quite happy with the old NCR CAR engine," says Boone. "Using NCR's CAR engine, we were able to displace 25 percent of the check amounts. Twenty-five percent may not seem like much, until you consider that at our volume it meant it was saving us the cost of hand typing almost 8 million checks each month - a considerable savings. When NCR came to us with this new Lucent LCAR reader, it was worth a look. It proved be a quantum improvement - the biggest jump in efficiency I have seen in the world of check processing to date. What's more, it s proven to be remarkable easy to install."

In the past, it took months of tweaking to get the old CAR engine working at 25 percent efficiency. During our preliminary testing of LCAR this summer, the product seemed too good to be true," Boone says. "Thus, we planned a slow and careful transition from the old engine, one site at a time.

What happened is that our first installation took less than a day, and resulted in an immediate doubling of our recognition rates. Faced with the possibility of an immediate jump to a 40 percent recognition rate, we quickly threw caution to the wind and migrated all our SIIPS systems to LCAR that week. Today we use the Lucent LCAR engine to read the amounts handwritten on all checks and deposit slips handled by our SIIPS systems."

Boone says their goal when they started to move to the NCR SIIPS platform was to save 40 to 50 percent on labor costs. "For the first time we are sneaking up on that goal," he says. "What's more the staff could not be happier. With our old system, data entry shifts tended to be long and erratic. This in turn resulted in high employee turnover. The new efficiencies of the LCAR engine allows us to arrange for much more regular work schedules. I cannot tell you what a morale boost that has been.' In addition to reducing Wachovia's operating costs and improving employee productivity, the SIIPS solution creates an image capture platform, which means it can eventually apply the benefits of check imaging to other areas. Wachovia will be able to archive check images electronically, which will eliminate the need to store and manually retrieve check transaction information. This means that in the future, the bank will be able to handle customer inquiries in a fraction of the time it takes with the manual process. )

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