SAN DIMAS, Calif. -- Think your credit union processes a lot of paper?
WesCorp processes so many paper checks, their annualized weight equals 88 Cadillac Escalades; and, if laid end to end, they would circle the Earth.
Or at least, they used to.
The corporate has seen its volume of imaged checks increase dramatically in the past 12 months, from less than 10% to nearly half.
Credit Union Times sat down with Sileshi Dereje, vice president of payment systems products, and Teresa Ward, vice president of payment systems operations, to discuss how the increasing popularity of imaging has affected the way the corporate does business.
CU Times: What are some of the biggest changes that you've observed as a result of your increased check imaging volume?
Ward: Well, obviously, now instead of pallets of paper being couriered to our door each day, we're receiving files. It's changed our processes a bit. We're not using our high-speed sorting equipment as much, and now we have more activity in our image room with the moving and processing of files.
CU Times: Has this resulted in any personnel changes?
Ward: We've had some staff reduction, but luckily, some of that happened naturally through attrition. It's not as manually intensive to handle a file as it is to handle paper, so we've also redeployed people, and we did have a couple instances of downsizing.
Dereje: We've actually been in this mode of business for about four years. We were the first corporate to deploy image exchange in December 2003, and we've been able to adjust to it over the past few years. We've been preparing in terms of training employees to move over to more electronic roles, and taking advantage of attrition.
CU Times: What is the volume of imaged checks you're handling these days?
Ward: Our incoming checks are running around 50% images and 50% paper. We expect to be around 75% by end of year. We've got a big group of members switching over in July, and we're scheduled to have more later this year. About 30% of our outgoing work is going via image as well. We should be 40% outgoing
by end of year.
Dereje: We've got 140 credit unions using remote capture products, which represent about 520 branches that are processing checks via imaging. We're adding around 25 to 30 new branches each month. It slowed down around end of last year and 1st quarter this year, but during the second quarter we're seeing a lot of movement in that direction.
CU Times: Do you think the accelerated flow will eliminate check holds for members?
Dereje: I can't say when or if that might happen, but it sounds like something the industry may experiment with in the future. The thing to guard against is still returns. Because images are expedited and you can get return notification sooner, but at this stage there's still a lag time because not all financial institutions have adopted the technology yet.
Ward: We send them through EndPoint Exchange, we use Fed Forward for others, and we have a direct relationship we use too, but that still doesn't hit every downstream end point. Images are more efficient to clear, but only to the extent that your downstream correspondents are image enabled.
Dereje: Yes, we've gained a day or two, but there are still some lags in return notification, so I don't see check holds going anywhere until the technology is more widespread.
CU Times: When do you think you'll see the end of paper check processing?
Ward: In terms of our business, our paper infrastructure is slowly being reduced; however, the thing to remember is that we still have to maintain that paper infrastructure in case the machine goes down. We still need that dual infrastructure, because we can't yet reduce it to the point where we don't have a contingency plan. And then, there are still those non-imageable items, such as bonds and foreign items, and checks that don't image well.
Dereje: We do see that it will happen, but we have yet to agree upon a date. When we talk about getting to a paperless society, what image exchange has really done is automate the back office process. I'm not sure if it's done much to change the consumer yet.
CU Times: How does the credit union industry compare to banks in deploying this technology?
Ward: We've been working with several large financial institutions to try to create these direct send relationships, and surprisingly, some of them are still not ready. Some of them still don't see the value in it.