By 2012 only 25% of all checks written will be cleared as paper, as opposed to nearly 100% in 2000.
Boston, MA, October 8, 2007 – A new Impact Report from Aite Group, LLC looks at the state of check processing as check electronification fundamentally changes the way checks are cleared. It evaluates the market, examines regulatory drivers and new check electronification models, and profiles major players in the industry.
Though the introduction of the automated clearing house (ACH) network can be considered a success, the fact is paper checks will continue to dominate the market for some time. Banks, the Federal Reserve and the rest of the industry have responded by moving from trying to replace paper checks with electronic payments to electronifying checks as early in the presentment process as possible. As a result, the industry will experience significant cost savings, and payment systems in the United States will ultimately be less susceptible to transportation disruptions. New business models, such as remote deposit capture, are being created that build client relationships and generate new revenues. Vendors in the check processing industry will have to adapt as quickly as the industry itself, or risk becoming unnecessary in this rapidly transforming market.
"The nature of check processing is changing rapidly, and though a number of electronic instruments will dramatically reduce the number of paper checks processed for clearing and settlement, billions of paper checks will still be written each year," says Nancy Atkinson, senior analyst at Aite Group and author of the report. "Financial institutions need to seriously consider their time of entry, as early adopters tend to pay additional costs for technological and operational challenges. However, there is no doubt that all financial institutions will eventually need to migrate to ACH conversion or check truncation, though most likely both."
This 37-page Impact Report contains 12 Figures and 4 Tables. The report profiles solution providers Alogent, BANKLINK (A Fiserv Company), Carreker, Metavante, NetDeposit, Open Solutions, ProfitStars (A Jack Henry Company), RDM Corporation and Wausau Financial Systems. It also discusses image exchange networks including Endpoint Exchange (Metavante), the Federal Reserve, SVPCO and Viewpointe.
Clients of Aite Group's Wholesale Banking Service can download the report.