Software Vendors Lay the Groundwork for Image Exchanges

VECTORsgi said today that recent sales of its software have positioned its systems to control potentially 40% of the volume of check-image exchange. The announcement indicates that, although full-scale transmission among banks of digital check images may still be years away, banks are jockeying to be ready for image exchange, and as a result vendors are reporting some success in sales to major financial institutions of necessary software. “Regardless of what you may have read about the slow adoption of image exchange, our sales indicate a huge investment by large banks in the technology foundation,” said Sydney Smith Hicks, president and chief executive of VECTORsgi, in a statement. The company, an Addison, Texas-based unit of Metavante Corp., Milwaukee, said 13 large financial institutions have adopted its image-exchange systems, including ABN-AMRO, Bank of America, Fifth Third Bank, First Horizon National Corp., National City Corp., Navy Federal Credit Union, and U.S. Bank. TowerGroup, a Needham, Mass.-based consulting firm, estimates these customers account for 40% of the “future volume” of image exchange, according to the statement. An estimated 30 billion paper checks are currently transported annually among banks. “While actual exchange may take some time to work into the large bank market, image exchange purchases are ongoing due to heightened competition and advances in technology,” Robert Hunt, a TowerGroup senior analyst, said in the statement. One of VECTORsgi's customers, First Horizon, has moved into commercial production with image exchange through the Viewpointe Archive Services LLC network (Digital Transactions News, Dec. 16, 2004), swapping images with SunTrust Banks. Others, the company says, have begun to “test” their systems peer-to-peer or through emerging networks like those created by Small Value Payments Co. (SVPCo.), the Federal Reserve, and Viewpointe. Image exchange networks are emerging to allow financial institutions to move digital images of checks, rather than the paper originals, between banks of first deposit and paying banks. The market received a boost last fall when the Check Clearing for the 21st Century, or Check 21, Act went into effect. The new law doesn't deal with image exchange but encourages it by conferring on so-called substitute checks the same legal status held by checks. Substitute checks are print-outs of check images, and the movement of them among banks is widely seen as a forerunner to nationwide commercial image exchange.