As the Oct. 28 enactment of the Check 21 federal banking regulation looms, many southeastern Wisconsin banks are contemplating how the system may help them provide new and more efficient services to their business clients.
For the past year, banks throughout the nation have been preparing for the Check Clearing for the 21st Century Act, a mandate from the Federal Reserve Board more commonly known as Check 21.
Check 21 will create a new system that will enable banks to exchange digital images of checks instead of the actual pieces of paper. The new law is intended to speed up transactions and reduce fraud.
"The important reason Congress was interested was the transportation aspect - getting things around the nation," said Steve Steiner, senior vice president of Brookfield-based North Shore Bank. "(Checks) are an important part of our commercial system, and during events like 9-11, checks were not moving."
Because the new system focuses on transmitting digital images of checks instead of the actual checks themselves, a natural disaster, large snowstorm or other event that could disrupt transportation networks would not necessarily shut down check processing, Steiner said.
Steve SaLoutos, senior vice president of commercial and consumer banking support services for U.S. Bank, said the company's banks have been ready for Check 21 for months and already have enacted changes required by the new law.
"We're fully compliant at this point," he said.
One of the largest changes from Check 21 for U.S. Bank has been the addition of digital cameras on check processing equipment in its processing centers. Those cameras take digital images of the checks, which can then be transmitted to different processing centers or other banks.
SaLoutos said the new technology purchased to deal with Check 21, a multi-million dollar investment, will allow customers, particularly business customers, to view digital images of their checks online. That feature will enable business operators to better keep track of checks written out and track instances of fraud earlier.
Terry Littel, deposit operations manager for Milwaukee-based M& I Bank's corporate marketing, said the bank started ramping up for Check 21 in 2003, when it added the ability to view check images in its secure Web site.
"We're looking at what types of products this might spawn," Littel said. "This will allow us to do more creative things for our customers, particularly our business customers."
Other than just viewing their cleared checks online, business customers also will be able to obtain software for account reconciliation, which can be used along with their online account statements.
"There are different programs they can use to help do that whole process more efficiently," she said.
Check imaging will create new opportunities for banks in the future, such as greater automation of deposits through corporate lock boxes, Littel said.
"With lock box services, there is a lot of area for improvement," Littel said. "The use of images and revamping of payments could be very beneficial to those services."
M&I Bank and U.S. Bank say they've already completed the needed changes to deal with Check 21 and check imaging.
Others, such as like Wells Fargo Bank and State Financial Bank, say changes will be started or completed by the end of the year.
"Our plan is to offer different systems that will be able to offer digital state-of-the-art technology," said Donna Bembenek, senior vice president of sales and marketing for State Financial Bank. "We're in the process of looking at vendors to provide us with that. That will probably take us into next year."
Some banks are not going to have to make many changes at all to deal with Check 21.
Kim Seidel, vice president of deposit operations for Milwaukee-based Park Bank, said that because the company contracts with M& I services for its check processing, there were essentially no changes it had to make in terms of technology or training employees.
"Their support service center became image-enabled in 2003, and we went image-based on Jan. 1," she said. "For us, it was a gradual transition."
Park Bank, like most others through southeastern Wisconsin, has been focusing in recent months on consumer and employee education on Check 21.
"We are in the process," said David Baumgarten, president of Associated Bank in southeastern Wisconsin. "We've started by educating all employees in the bank and sending out information (to customers). As people in the public start reading about this, they start talking to our employees, who are now able to address the issues and how they will affect customers."
The new federal law ultimately will provide efficiencies for banks and their customers, according to Rose Oswald Poels, vice president of the Wisconsin Bankers Association.
"I do think the reality of both operational efficiencies and eliminating fraud will outweigh not participating," she said. "It will take some time for more and more banks to fully participate in Check 21."
For information about Check 21, visit the following online resources:
The Federal Reserve Board: www.federeralreserve.com
Wisconsin Bankers Association: www.wisbank.com
Businesses will benefit from Check 21
By Eric Decker, of SBT
Changes mandated in the banking industry that will take effect Oct. 28 will mean a host of small changes for businesses, but they will also offer new opportunities for companies to better keep track of money.
One of the most important changes for business customers will be speed, according to David Baumgarten, president of Associated Bank in southeastern Wisconsin.
"When you make a deposit today, under Check 21, those funds will be good in your account tomorrow," he said. "That's the positive. In the same line of thought, one caution we're making to our customers is that as they write checks, they will clear a lot faster."
With current checks, several days often can pass before a check is processed and all funds are placed in a customer's account.
Perhaps even more significant for businesses will be the potential elimination of the need to physically get to a bank to deposit checks into accounts.
John Jansky, business banking manager for Wells Fargo Bank Wisconsin, said bank customers may be able to digitally transmit images of checks to their banks at times they are not able to get there, such as during heavy snow storm.
"There will be a way to scan checks and transmit them directly to the bank," "Jansky said. "On a snowy day in Wisconsin, when you can't get out and make a deposit, this way you can. This is some exciting technology to help business."
Other technology put into place to deal with Check 21 will give businesses and other bank customers better access to information about what has happened to checks they have written.
Steve SaLoutos, senior vice president of commercial and consumer banking support services with U.S. Bank, said the company has created a new, secure section within its Web site where customers can view images of their checks.
"If it is cleared, they can go to the site and within two or three seconds can view an image of their check," he said.
Many other banks that are fully converting to a check imaging system are offering their customers the ability to view checks online.
Terry Littel, deposit operations manager for M&I Corporate Banking, said M&I is also offering that opportunity, which business owners could use as another tool to help detect fraud.
"If they see suspicious activity, they can get in touch with whoever they need to as early as possible," she said. "Time is the most critical factor in terms of working through a fraud."
October 1, 2004, Small Business Times, Milwaukee, WI