The world of banking is so varied that nearly every solution is unique. Banks differ in size, mission and manner of doing business. Cookie-cutter solutions don’t work because no two banks have the same goals.
Despite their differences, most banks have one thing in common: the need to provide faster, better customer service. And even though technologies may be deployed in different ways at different banks, some show up again and again at the heart of service-enhancing solutions. Omni Bank of Louisiana and Boston Private Bank & Trust both saved time and money with check and document imaging and enterprise report management technology. Mellon Global, meanwhile, has sped up access to funds with state-of-the-art remittance processing services.
Omni Offers Self-Service
If there were an “Everybank” that illustrates the adoption of imaging and document technology throughout an organization, it could be Omni Bank, based in the New Orleans suburb of Metairie. With six branches, 120 employees and $215 million in assets, Omni operates primarily as a commercial bank with a strong suit in business loans (it maintains an 85 percent loan-to-deposit ratio).
Over the course of eight months, Omni Bank implemented a comprehensive rollout of document management, resulting in benefits from the back office to customer service operations.
Senior management, recognizing the value of the technology, authorized the investment in 1998, according to Omni vice president Jennifer Creger. “We’re a community bank, and because of [our size], we were able to roll things out quickly once we make up our minds to do so,” she says.
With the help of its vendor, SER Macrosoft (www.sermacrosoft.com), Omni first implemented an enterprise report management application to make the data from its external check-processing service available as images for search and data mining. General document imaging started with signature cards, followed within a matter of weeks by loan documents. Four months later, Omni added check imaging and the associated processes needed to produce customer statements, integrating clearing data and check images.
The current stage was completed in October 1999. Had it not been for simultaneous Y2K activities, Creger believes Omni could have rolled out the entire application within six months, with major sections introduced at two-month intervals.
Omni Bank headquarters houses the main applications, which run in an NT/Novell Netware environment. One server hosts Macrosoft’s MacroChek (check images and data), MacroImage (document image) and Synergy (integrated index) databases, while another hosts the MacroFiche enterprise report management (ERM) application and report database. Other stations handle loading of check images and downloading of report data from the bank’s check-processing vendor for report processing.
Two scanning stations take care of inhouse document capture. This includes a MICR-reading Buic 1000 check scanner from Digital Check (www.digitalcheck.com) and a 4040D Copiscan scanner from Bell & Howell (www.imagingexperts.com) for full-size documents. There are also facilities for burning onto CD-ROMs signature card images (as a backup against WAN failure) and for printing statements from captured data. Branch banks retrieve images and reports via a WAN link.
Omni’s document management system now extends to all information, except human resources files and some accounting data due to security issues, says Creger. “But we’re scanning in everything else, such as our loan documents, credit underwriting documents and support papers, branch documentation, signature cards, stop payment requests and corporate resolutions.”
Going paperless is not part of the plan. “Our purpose was not to replace our file cabinets, but to distribute the documents throughout the organization,” says Creger. Electronic access to documents means that branches no longer need to maintain the shadow duplicate files that slowed down the loan-approval process. “It took a day to make all those copies, and then we had to wait on a courier to deliver them.”
Creger says the most significant impact has been on customer service. “If you call up to tell us that the IRS wants your statement from a year ago, you don’t want to be told, ‘Let me take your information and it will take about three weeks to get it out of our research department,’” she explains. “Now our reply would be, ‘Do you want me to fax it or drop it in the mail?’ I didn’t have to expand my research staff to extend that level of service, because it’s all available at everybody’s fingertips.”
Even if the IRS isn’t after them, every customer can have statements with check images matched to cleared items. “Every-body tells us it’s convenient and easier to balance,” says Creger. “In fact, we’ve found that our customers are more aware of discrepancies in their accounts because of this, especially on the forgery end. All the checks are lined up neatly and they can easily see any discrepancies in the signatures.”
Some payoffs were unexpected. Signature card images, for example, were expected to be used primarily by tellers, but, says Creger, “we were surprised by the uses throughout the organization. For example, our loan officers now look at signatures when they process a loan request to make sure that it’s not fraudulent.”
Another unanticipated benefit has been the elimination of some specialized applications, such as safe-deposit-box management. “Instead of buying software to manage the safe-deposit-box database,” Creger says, “we simply put the contract in the imaging database. If somebody has a question about a safe-deposit-box relationship, you simply query the system, look at the contract, and see all the information that would have been in the software.”
The next step for Omni will be to make customer statements and check images Web accessible. “Our six- to nine-month plan is to release checks and make them available in a secure environment within a day of clearing, which is really quick,” Creger says. “Our customers are very excited about that, particularly our commercial customers, because they’ll be able to [answer questions] themselves at their convenience.”
Boston Private Outsources
The challenge for many banks is how to embrace technology without being overwhelmed by it. Boston Private Bank & Trust Company is pursuing two strategies that might seem contradictory: outsourcing of data processing and internal imaging of key documents. It turns out the combination has given the bank the best of both worlds.
With about 5,000 customers and $1.5 billion in assets under management, Boston Private provides carefully tailored banking and investment-management services to the new-wealth market. Like many banks, it has chosen to focus on its core competency, and it has handed off most tech-intensive jobs — check processing, mainframe data processing, and so on — to outside specialists.
“We chose to outsource to be able to take advantage of the new technologies in a more cost-effective manner,” says Barbara Houlihan, executive vice president. The bank’s advantage comes from “the scale that the vendor [achieves by] focusing on one business: item processing. That vendor can afford to invest in the best technology, and we get to use it.”
By relying on outsourcing, Boston Private maintains a lean, seven-person IT department that takes care of the network, connectivity, WANs, telephony, e-commerce and support of internal applications. Its check processing partner is service bureau giant M&I Data Services (www.midata.com).
When Boston Private first contracted with M&I, it stuck with the traditional, paper-based model: M&I would capture data from the checks’ MICR line, create transactions and post files to the bank’s data processing vendor. A few years ago though, the bank decided to deploy imaging technology in what Houlihan calls its “three-legged stool” project. One leg is enterprise report management (or COLD as it was then known). This technology enables all employees to see reports, statements and notices without having to go through the research department. The second leg is imaging of internal operating documents. The third leg of the solution is check imaging.
Even though the document imaging part of the project is handled internally, ITresources did not need to be increased. Signature cards were the first items made available for viewing.
Check imaging is more involved and requires more infrastructure, so the bank left this to the vendor. M&I was not only able to add imaging to its check processing, it also designed a delivery system of storing and managing checks so not to burden the bank. The system relies on DocAccess software from Advanced Document Technologies (www.adti.com); the software manages indexing and retrieval, and the images are available for search and retrieval the following day. All that is required on the bank’s end is an Internet connection, a DocAccess client and security access. To the bank’s researchers and customer service reps, the DocAccess software looks like a tool on their desktop, sitting right next to client signatures or reports that were produced.
“The beauty of it is that you have access to the data the next morning,” says Al Spadorcia, Boston Private’s senior vice president of operations. “You can look at any of the items that cleared. When there’s a question of whether something posted properly and correctly, you’re not just looking at the posted data report, you can look at the actual check. If somebody is challenging whether something was properly authorized and paid, you can pull it up and see the signature.”
Boston Private also offers some customers — usually commercial customers handling high volumes of checks — direct access to check images using the same DocAccess client software and secured access to the M&I servers. “They need to look at checks the next day, and they would rather look at them themselves.”
With all three legs of its solution firmly planted, Boston Private continues to build on the system. In the works is a generic browser client for imaging applications, which will allow Boston Private to expand its e-banking product, E-Private Banker. General document imaging and management will be fully operational across mortgage, commercial lending and investment management operations by the end of summer.
Mellon Global Sinks Remittance Float Delays
Sometimes banks take on a service provider role. Mellon Global Cash Management, part of Mellon Financial Corp., offers lockbox services that collect, process and deposit incoming payments for corporate customers.
Mellon has two main lockbox products. The wholesale version, aimed at businesses with relatively low volumes but high dollar amounts, features flexible and extensive scanning options. The high-volume retail version typically scans only the amount and invoice number from fixed positions on the payment coupons. A further refinement is the automated lockbox service, in which Mellon keys additional data and supplies files ready to be loaded directly into a client’s accounts receivable system.
All of these services allow companies to offload the task of processing remittances and depositing checks, but more importantly they minimize “float time” — the gap between when a payment is sent and when the money is available for use. Ron Victor, Mellon’s vice president for remittance processing, explains that Mellon’s services minimize the three major floats: mail, processing and remittance availability. With processing centers located in seven different cities, Mellon’s infrastructure minimizes mail float time. High-volume scale and 24/7 operation minimize processing time. Finally, prompt deposits speed up access to remittance revenues.
There is also what Victor calls “information float” — clients like to know about payments as soon as possible, in order to make time-critical decisions. “A high-risk car insurance provider wants to make a decision as soon as a policy has been paid, or it’s going to cancel that uninsured driver,” he says, offering one example. “We update multiple times a day, and they can come in as often as they like.”
Mellon’s integrator for the lockbox applications is BancTec (www.banctec.com), which supplies the data capture, workflow and archiving software as well as the specialized check-processing hardware. BancTec offers its own 9500 workstation, which is optimized for check imaging and encoding, as well as ImageTrac scanners from IBML (www.ibml.com), which excels at handling different sizes and thicknesses of pages and envelopes.
The Mellon operation starts at the post office, where incoming remittances are collected. The envelopes are opened and sorted at the processing centers, and the checks go to the 9500 workstations, which encode and endorse them, capture the images and print paper copies. The checks themselves are then sent to the clearing and deposit process, and the paper copies are reassociated with the rest of the paperwork. The reassociated papers are sent to nonautomated customers.
For automated customers, the reassociated papers are scanned by an ImageTrac unit. The invoice and envelope images are merged with the check images from the 9500s and put into the archive, where they are available for searches. CDs with the images for those transactions are then burned and sent to the client companies.
Access to images is what sets this service apart. Customers have three ways to receive check images: next-day delivery on CD-ROM, Web access or FTP transmission. Mellon maintains a RAID-based, online accessible archive for 60 days. This on-demand availability of check images and associated remittance details and document images allows users to act quickly on both routine processing and problem solving.
“Our end users can use [the data] for customer service,” Victor says. “They’re able to view the exception items instead of waiting for the paper. Imaging also allows them to make quicker decisions on customers [that are reaching] their credit limit. If the customer has a shipment of perishable goods sitting on a dock, it wants to make sure that we’ve received a payment and that the credit limit now has room so it can ship that order.”
Russell Letson is a freelance writer based in St. Cloud, Minnesota. He can be reached at rletson@cloudnet.com.
