A Question of Check Image Quality

Tuesday 24 May 2005 14:15 CET | News

Poor image quality has long been an operations manager’s bugbear. But in today’s electronic check clearing world, the costs and consequences of poor-quality, unusable images are rising exponentially. Skewed images that necessitate additional keying are one thing. But unusable images sent to a check image exchange partner are quite another. Throw in the complications lousy images cause to fraud detection, exceptions resolution, adjustments and research, and the importance of assuring image quality multiplies. It’s easy to see how a

Know Your Enemy Long the bane of customer service departments at image-enabled banks, poor image quality can cripple expensive Check 21 projects. Image quality and usability is the foundation of successful Check 21 initiatives, in general, and electronic check clearing, in particular. That much everyone can agree on. However, the imprecise nature of the term ‘quality’ – which can mean different things to different people, all legitimate – has caused considerable debate among financial services companies over how to define high-quality, usable images. Virtually from the moment check image exchange first entered the industry’s consciousness, a who’s who of financial services players have been working to develop an interoperable definition of image quality. The Financial Services Technology Consortium (FSTC), the ANSI X9 Committee, financial institutions, technology vendors, and others have tried to articulate a hierarchy of quality attributes. Closure on the issue was thwarted when a much-anticipated report by FSTC, published around the time that Check 21 went into effect, largely delivered the promise of further study. A key problem, some observers say, is that industry leaders are focusing on maximum quality standards, on which consensus may never come. The slow process of setting quality standards recently prompted a Federal Reserve employee to dust off the old quip, “The only standard in the banking industry is the lack of standards.” Ironically, this gentleman’s own organization, the Federal Reserve, has taken the first steps in defining the minimum quality standards (which it made available at the recent BAI TransPay conference). While some may scoff at the Fed’s standards, to the more than 400 banks now in queue to exchange images through the Federal Reserve, these standards are a baseline. And minimum standards may be enough to keep the industry’s transformation from paper processing to electronic check clearing right on track. Some believe that banks will redefine their standards for image quality as they gain experience with their Check 21 initiatives – adjusting the variables for determining image quality for both internal and external use. One observer likened this ongoing process of controlling image quality to “turning the knobs.” Even the Fed says it will adjust its standards in concert with banking industry dynamics. The message: with minimum standards available, there’s no point putting your bank and or Check 21 initiatives at risk waiting to implement maximum standards that may never come. Images Gone Bad The magnitude of the image quality problem is starting to get out. Industry groups warn that the financial exposure to banks may approach billions of dollars per year. And the potential public backlash over botched image clearing initiatives may cause irreparable harm to banks. Regardless of where the industry comes down on image quality standards – if it even agrees on such standards – banks that are investing in Check 21 initiatives would be well advised to consider image quality from the perspectives of legality, usability, archival and security. Many of the 100 or so business processes affected by Check 21 now are dependent on a physical check for successful completion. In the future, these processes will rely on images. Without the assurance of a quality image to fall back on, banks will surely have a lot at stake. Steve McNair is president of FTP Consulting Services, Inc., a Texas-based financial services consulting and advisory firm. He c

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: ,
Categories: Payments & Commerce | Payments General
Countries: World
This article is part of category

Payments & Commerce

Industry Events