New Software Supports Check 21 Act

As businesses gear up for the impact of The Check Truncation Act, vendors are quick to release products adapted to the pending legislation. Computer Service Professionals, Inc. (CSPI, www.cspi-dyna.com) has released a software module that allows banks and credit unions to download daily in-clearings (also known as 'on-us' transactions) electronically from the Federal Reserve using a high-speed connection. This capability supports the Check 21 Act (also known as the Check Truncation Bill) recently signed into law. The legislation encourages banks to exchange checks electronically over networks instead of transporting the physical checks.

CSPI, a provider of image processing systems for financial institutions, added the Check 21 module to its development schedule in January. As stated by Garth Hantke, CSPI's software development manager, "We were monitoring the legislation progress and working directly with our local Federal Reserve branch. We felt positive about the forward movement toward image processing and the electronic sharing of check images and account data. Our customers now have the ability to upgrade before the Act is officially enacted." The Check 21 module will also be a standard feature on all new CSPI Dynastore version 8.0 software systems.

The Check 21 module has already been installed at two CSPI customer sites. To date, eight more sites are scheduled for upgrades through October. City National Bank (CNB, www.cnbt.com), a $160M institution based in Taylor, Texas, has been using the software since early August. According to Todd Ringling, City National's assistant vice president, the bank's processing time has been reduced by 60 percent. "We currently process 10,000 items per day, half of which are Fed images. What used to take over one hour to process, now takes 20 minutes. Other benefits include the reduction of courier costs and the elimination of shredding costs since we aren't storing the paper checks. Also, considering the time savings, our personnel have more time to focus on other activities, such as image statement preparation."

To this point, CSPI has worked with three Federal Reserve branches, including Dallas, Texas; St. Louis, Missouri and Chicago, Illinois. Within 12-18 months, the Federal Reserve is expected to announce the electronic acceptance of out-clearings from participating financial institutions. The combination of electronic in-clearings and out-clearings would eliminate all courier costs, allowing financial institutions to invest their savings in other areas.

Other CSPI software modules are available specific to the USA Patriot Act, a separate bill that applies to anti-terrorism activity. Specific examples include fraud detection, signature verification and document imaging & tracking software.