Financial Services Industry Unprepared for Check 21 Legislations Challenges and Opportunities

This legislation, which the Senate passed yesterday (following passage in the House of Representatives on October 8), gives substitute checks -- such as a digital image of the check -- the same legal standing as paper checks. To provide organizations with the agility to take advantage of digital check imagings opportunities, Unisys today announced a comprehensive solution set, which spans assessment workshops, outsourcing services that capture images of checks at bank branches, and recent upgrades in leading payment applications and technology. The new legislation is expected to help eliminate the paper trail now slowing down the payments process. And because electronic checks reduce the dependency on the current paper-intensive check payment system, and on the transportation networks, the system is less susceptible to unexpected disruptions to the air transportation system, whether caused by weather, natural disaster, terrorist attack or other types of crisis. Coordinated Efforts Needed Despite these opportunities, Unisys research found that most of the current industry initiatives focus on either selected customer touch points, such as the retail bank branch, or only on certain parts of check truncation (the complete processing of a check from presentment to settlement). Without effective coordination both among and within financial institutions, as well as among other important players in the payment process, these projects will likely cause confusion and slow complete digital truncation in the industry. An example of such positive coordination is the recently announced agreement between Unisys and SVPCo, a consortium of more than 20 major banks committed to electronifying the check. Unisys and SVPCo will cooperate formally on system connectivity and support for electronic exchange of check data and images for their financial institution clients. Check 21 also underscores the need for coordination and operational flexibility within a bank. Developing and implementing new digital processes and products requires a unified strategy between a banks retail and payments operations to maximize efficiencies. According to Unisys research, almost 50 percent of the top 20 U.S. banks are actively reviewing the overlap of transaction services, internal processes and future infrastructure requirements; some senior executives at banks speculate that a 50 to 60 percent overlap of such functions may exist. Unisys End-to-End Solution Unisys provides the complete end-to-end solution that banks need to cost effectively meet the challenges of Check 21 and beyond. Unisys Check 21 solutions include: -- Check 21 Business Readiness Assessment workshops to help banks model their best practices around day-one, day-two (and beyond) check clearing and settlement processes to identify common trends and maximize cost efficiencies, and better understand the impact Check 21 will have on their businesses. Unisys has conducted workshops at several top U.S. banks. -- Consulting services about the impact of Check 21 on accounts receivable conversion (ARC) and related industry issues to help banks effectively run their payments franchises. -- Business process outsourcing services that capture check images at the branch and other decentralized locations. These services offer the proven benefits of payments outsourcing that Unisys has long provided to banks around the world. -- Upgraded Check 21-enabling technologies that include a new high-resolution feature, which enables the capture of full document images. Unisys SourceNDP branch scanner is now faster, allowing it to read up to 45 documents per minute. The NDP300/600 check-processing system now features a new high-performance feeder that provides an 80 percent increase in document capacity. Unisys offers easily scalable systems, providing more flexibility to adapt better to changes brought by