KeyCorp Clears the Way for Check 21

Back in 2003, executives at Cleveland-based KeyCorp, one of the nation’s largest bank-based financial services companies, with assets of approximately $88 billion, were looking forward to the upcoming â€ÅCheck Clearing for the 21st Century Act.” Enacted on October 28, 2004, Check 21, as the law is known, allows banks to store and deliver electronic copies of customers’ checks in lieu of paper checks, if customers prefer. The creation of substitute checks or check images removes the need for physically transporting checks and eliminates

Key’s management recognized early the advantages of Check 21. With Check 21, Key could offer customers choices in how they receive their cancelled checks – print or electronic – and cut costs. More importantly, automating and streamlining some processes associated with retail accounts and monthly statements, Key could offer better service. In fact, as more financial institutions were to adopt image exchange, the check-clearing cycle could begin to shorten, providing customers with quicker deposit availability. Project kick-off As one of its first tasks, Key selected Prinova, Inc., a North American provider of innovative document design, development and delivery solutions for the large volume document delivery market, to help them with the project. Key then chose Exstream Software’s Dialogue software to handle the companies’ digital imaging needs both today and into the future. “We selected Dialogue for its ability to dynamically include check images or substitutes, truncated statements—those that receive no checks—and statements that still include physical checks,” said Al Pytel, senior vice president of KeyCorp’s Information Delivery and Applications Support Group. “We knew that Prinova’s expertise with the software would provide smooth integration across the entire project. Prinova helped Key transfer the coding for the traditional retail statement programming to Dialogue. Key lacked documentation detailing its legacy system’s underlying business rules, which could have meant that each business rule would have to be recreated. But Prinova had a strong banking background and understood the inner workings of Key’s existing technology. “Prinova’s expertise in bank document management allowed them to reverse engineer the old application, uncover the business rules and translate them to the new Dialogue system,” explained Nancy Cook, vice president of Key Technology Services group. “That saved us a tremendous amount of time and effort, because we didn’t have to redesign the statement from scratch.” Prinova brought in one of its programmers and a team leader for the project, who interfaced with Key’s team on a daily basis. The project was split into two phases. The first phase involved converting a large portion of retail bank customer statements. Phase two converted the remainder of the retail customer statements, including high net worth statements for Key’s best customers, which consolidate all of a customer’s accounts into a single statement. Recognized as an industry leader, Key and J.P. Morgan Chase were the first to exchange images electronically in late August 2004. And in November, Key became the first to use the Federal Reserve Banks FedForward(SM) Paper-to-Image product supporting the Check 21-enabled electronic clearing process. This FedForward service enables deposited paper items to be converted to electronic images and presented as either substitute checks or an electronic file to the paying bank. At launch, 70 percent of Key’s customers were receiving truncated statements, meaning no checks were being returned. The remaining 30 percent were targeted for the image statement project and all but 6 to 7 percent accepted, or opted in to receive check images. In addition, nearly 200,000 customers migrated to receiving statements electronically. A win-win for both company and customer Within 30 days of the first phase of implementation, Pytel says Key saw savings, while the entire project, including the Pri