Small Banks Adopt a Wide Spectrum of Electronic Payments

Small banks are adopting electronic-payments technologies at a rate that rivals, and in some cases exceeds, that of their larger competitors, according to a survey released this week. Two-thirds of the nation's community banks are processing checks under the rules of the Check Clearing Act for the 21st Century (Check 21), which allows banks to settle payments on paper printouts of check images, while 14% are clearing on the images themselves and 58% plan to within two years, according to the survey, which was sponsored by the Independent Community Bankers of America, a Washington, D.C.-based trade group. Moreover, 41% of small banks plan to introduce remote check capture for business clients by 2008, the survey says. Some three-quarters of the small banks surveyed originate direct deposit and bill payments on the automated clearing house, while the national average for banks offering these services is about 60%, says the ICBA. Two-thirds offer online bill payment, while one-fifth say they plan to launch electronic bill presentment within two years. Nearly one-third offer WEB origination, or ACH transactions initiated on the Internet, and another 19% plan to offer it in the next two years. On the card front, 2% issue payroll cards, while almost 20% say they plan to by 2008. “We wanted to examine the extent to which community banks are adapting to new electronic payment options,” said Viveca Ware, director of payments policy at the ICBA, in a statement. “What we found is that community bankers are embracing and offering multiple options to their customers to pay bills and have even easier access to their money.” The first such survey the ICBA has conducted, the canvass took place in November and December and drew responses from 400 banks ranging from under $100 million in assets to $500 million-plus.