How Metavante Plans to Leverage Its VECTORsgi Deal And Check 21

With the Check Clearing for the 21st Century Act (Check 21) taking effect today, Metavante Corp. hopes to use its latest acquisition in the payments business to help it leverage sales to banks for distributed check capture and move the two national check image exchanges that have gone live so far closer to interchange with each other. The Milwaukee-based processor, which two weeks ago announced its acquisition of VECTORsgi (Digital Transactions News, Oct. 15), looks to use the Addison, Texas-based software company's product line in combination with that of Advanced Financial Solutions Inc. to sell distributed check capture products to banks of all sizes. Metavante acquired Oklahoma City-based AFS last summer. VECTORsgi, which numbers 41 of the 50 largest banks among its clients, currently offers no branch-capture product but is well-known for its image-exchange technology. AFS, which has installed its branch-capture product in 1,250 bank locations, has focused on smaller and mid-sized institutions. As a result, Paul T. Danola, executive vice president at Metavante, says he is only starting to investigate ways to combine the two companies' technologies into packages for banks in a wide range of asset sizes. “I'm at 50,000 feet right now,” he says. One possibility, he says, would be to combine AFS's branch-capture product with VECTORsgi's expertise in check-kiting solutions. He also hopes to use Metavante's ownership of the Endpoint Exchange, a national image-exchange network the company acquired as part of the AFS deal, and VECTORsgi's relationship with the Small Value Payments Co. (SVPCo.), which operates the other national image network, to help move the two systems toward interoperability. Currently, the two image exchanges operate on different technical standards and rules, and are not connected. SVPCo.'s network, which only went live in August and serves some of the largest banks in the country, is a point-to-point system moving large bundles of images between its members. It relies on so-called distributed transfer agent (DTA) technology from VECTORsgi. Endpoint Exchange, by contrast, is a centrally switched, multi-point network trading single image files among community banks, credit unions, and other small and mid-sized institutions. Now that Metavante has a foot in both camps, Danola hopes the company can facilitate discussions toward interchange, something most observers says is necessary for banks to maximize their investments in image exchange. “The logical businessperson in me says we'll need the ability to do image exchange between these organizations,” he says. “Perhaps we can move that ball a little faster.” Effective today, Check 21 confers legal status on so-called substitute checks, allowing banks to trade this paper in place of the original checks without having prior agreements in place. Because the substitute checks are printouts of check images, the law is widely seen as fostering image exchange.