BANKS SEEK EFFICIENCY THROUGH TECHNOLOGY Image processing holds out promise of expediting work, cutting costs


A recent survey of banking executives by the Bank Administration Institute revealed that retail banking technology is being used more and more to help make banks competitive and to increase efficiency.

The results showed that many banking officials predict the 1990s will bring even more advances to automated teller machines, artificial intelligence software andimage processing -- the latter being heralded as having great potential.

Indeed, a recent conference by the American Bankers Association in San Diego on banking operations and automatic systems was devoted solely to the issue of image processing, according to Mark Serepca, a spokesman for the ABA's Washington office.

It is a rapidly evolving field in the banking world and one that has only recently begun to attract attention: Indeed, one banking wag complained that imaging was such a foreign concept to some bankers "that they thought it involved buying themselves a new suit."

In essence, imaging technology allows a bank to optically scan documents and store them in a computer where they can be processed. The procedure can dramatically reduce a bank's paperwork while also speeding up cumbersome banking activities like check processing.

A bank can capture the image of a check and transfer it to the checkwriter's bank via computer "in a split hair of a second" where employees can verify the account balance, said Ed Alwood, an assistant manager in the ABA's public relations department.

The checkwriter's bank still needs to cancel and process the check but imaging can dramatically speed up the daily credit and debit tally.

In addition, image processing can shorten the time it takes bank employees to conduct portfolio searches and free up more physical space at corporate or branch offices. Some banks have reported that the technology is particularly helpful with paper-intensive transactions like studentloans, mortgages and consumer loans.

Another area where bankers expect to cut costs with imaging i in postage expenses. They foresee a day when a bank customer's monthly statement will feature imprinted images of their canceled check instead of the actual check, making the statement much lighter and therefore much cheaper to send.

There are many banks in the United States that use some forof image processing for limited banking operations but very few that use the technology for large-scale activities like check processing.

At the Bank of Baltimore, for instance, the signature of customer at a branch office can be verified within 90 seconds when the corporate office uses image processing to send a duplicate of a customer's on-file signature over a fax, said Lawrence Wiskeman,a senior vice president at the bank.

Mr. Wiskeman, echoing the comments of many other banks across the country, says the bank continues to study the evolving field of image processing but cannot yet justify the enormous expense it would entail to bring the necessary equipment on line for multiple activities.

"Obviously there are operational benefits to this," he said. "But the question is -- will there be a cost benefit?"

A survey by the ABA also found that banking executives were concerned about which computer systems can best handle image processing and whether this equipment would ever be able to interface with the computers of other banks as well as the Federal Reserve system.

"So everyone is proceeding very cautiously," said Mr. Alwood.

"I don't think its going to go belly-up," said Stanley E. Miltko, a senior vice president at the financial consulting firm of Littlewood, Shain of Exton, Pa. "I think [imaging] is going to happen and I think in 1991, particularly, the latter half of the year you're going to see banks announcing greater productivity levels."

Image processing has already gained a foothold in low-volume financial areas like lockbox service operations and signature verification. But financial experts say it may take several years before imaging will be commonly used for a high-volume task like check processing.

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