Checking Into The Future
Corporate customers driving upgrades of banks' check processing systems.
Business Solutions, January 1998
This feedback could include data reports and copies of canceled checks and/or invoices. The bank may have special instructions, like if a check comes in for over $1 million dollars, to contact the vendor immediately.
This processing of payments is called remittance processing. The bank which is performing the remittance processing for the vendor is running a 'lockbox operation.' "Lockbox operations are part of a national trend toward outsourcing," says Terry Leger, vice president of marketing for IA Corporation. "It allows corporations to cut back on their accounts receivables staff."
Bidding On A Major Player
IA Corporation (Emeryville, CA), a software developer, has developed a software, RemitVision®, targeted toward businesses that offer lockbox services. IA combines RemitVision with other technologies such as OCR (optical character recognition); check scanners and imagers; and CD-R hardware and software to create lockbox systems.
IA recently completed a lockbox installation for Wachovia Corporation, a bank which does remittance processing for thousands of large corporations. With assets of almost $50 billion, Wachovia, based in Atlanta, GA, is one of the 20 largest banks in the United States.
Having heard that IA's lockbox customers included industry leaders such as Mellon Bank and First Union, Wachovia contacted IA. "Wachovia assembled an executive team which had a list of requirements for the lockbox system," says Craig Sparkes, IA's v.p. of application product management. "Those requirements included: the connection of multiple lockbox centers; maintenance of accuracy in remittance services; ability to provide new services to clients; and Year 2000 compliance.
Wachovia's executive team put IA through a three-month evaluation, which involved many hours of research, demonstrations and meetings. Wachovia was also evaluating two of IA's competitors at the time. "We considered the time we spent working with Wachovia prior to the contract part of our pre-sales effort," says Sparkes. "It was worth our investment for the opportunity to win such a major account."
Meeting The Customer's Requirements
Wachovia did not discuss the details of IA's competitors' plans with IA, but Sparkes says IA won the bid based on RemitVision's ability to meet Wachovia's requirement list. Here's how those requirements were addressed:
- Connection of multiple lockbox centers - Because most payments are still made through the mail, most lockbox operators have offices in more than one region of the country. "It still can take more than one day for mail sent from one region of the country to arrive in another. Having offices in more than one region enables a lockbox operation to receive payments from anywhere in the country in one day," says Leger. "Millions of dollars being processed right away at a lockbox center are more valuable to a corporation than millions of dollars sitting in the mail."
Wachovia has remittance processing offices in Atlanta, Dallas and Winston-Salem, NC. Wachovia wanted the ability to move information between these sites in real time. This would better service clients who receive payments at all three centers. "RemitVision was designed to be run as a wide area network," says Sparkes.
With RemitVision, Wachovia will be using its internal network to connect and download information and applications from one site to another. "RemitVision also gives Wachovia the capability to eventually connect its sites through an intranet," says Sparkes.
- Maintenance of accuracy in remittance services - "Wachovia prides itself on the quality and accuracy of its remittance services. RemitVision uses OCR software from Mitek Systems to help Wachovia efficiently verify that the amount entered into the lockbox system from each check is correct," says Sparkes.
IA's system uses Mitek's OCR software to automatically read the amount on an electronic image of each check. This is referred to as courtesy amount recognition (CAR).
A lockbox specialist then reads the amount on each check image, and keys it in to the lcckbox system. RemitVision then compares the two amounts for each check to ensure accuracy. "CAR allows Wachovia to perform dollar verification using only one lockbox specialist instead of two. CAR also performs its job faster than a human operator could," says Sparkes.
- The system's ability to provide new services to clients - Wachovia's clients were beginning to ask the bank for options like access to account data, and check and invoice images from their desktops. There were also asking for CDs with copies of checks and invoices.
"When dealing with large corporate customers, some of which pass billions of dollars through remittance processing, you don't want to take a chance on losing them to your competitors. "Our system gives Wachovia the capability to offer these services," says Sparkes.
- Year 2000 compliance - Wachovia's previous remittance processing system was not Year 2000-compliant. "The Unites States Comptroller of Currency has mandated that all banks have Year 2000-compliant computer systems by the end 1998," says Sparkes. "This was the deciding factor in Wachovia's going ahead with the installation when they did."
The system also includes Bell & Howell and Fujitsu desktop scanners with document feeders. "Different companies bill and pay in different ways. When doing remittance processing you have to be prepared to scan not only checks but also various items used as invoices. These include check stubs, envelopes, and regular- and odd-sized documents," says Sparkes.
The key to Wachovia's system is RemitVision's flexible workflow software. "Different clients want different feedback on their remittances," says Sparkes. "One client might want a data report, another might want copies of the canceled check and the invoice faxed back to them, another may want the hard copy invoices sent back to them through the mail. Any combination of these requests may apply to a client," says Sparkes. "RemitVision allows users to design different workflow paths for the data and images for each account."
A Biscom fax server is included in Wachovia's system so images of checks and invoices can be automatically faxed to clients who request them. Printouts of reports and copies of checks are done on Hewlett-Packard and QMS laser printers. Wachovia clients' check and invoices images are also stored on the bank's enterprise archive system.
Wachovia's system is scheduled to be operating at all three of its remittance processing centers during the first quarter of the year.
Ability To Attract Corporate Customers Is System's ROI
An effective lockbox system can pay for itself with its ability to attract large corporate customers.
"Only a few lockbox operators have systems with capabilities as advanced as Wachovia's," says Leger. "But advanced lockbox services are so much in demand that large corporations have gone as far as submitting request-for-proposals (RFPs) to banks. These RFPs explain what specific services the bank's remittance processing system should offer, if the bank wants that corporation as a client."