Two banks in the central plains region have achieved full electronic truncation in the 10th Federal Reserve District through the installation of image-based check exchange and electronic clearing technology.
Intrust Bank, Wichita, Kan., and BancFirst, Oklahoma City, Okla., have installed Endpoint Exchange, an electronic check clearing platform and network that capitalizes on existing imaging infrastructure and settlement relationships. Operated by CheckClear, an Oklahoma City-based software firm, Endpoint Exchange enables financial institutions to clear check-based transactions by exchanging images between member banks, thrifts, credit unions, service bureaus, clearinghouses, and the Federal Reserve.
Intrust Bank and BancFirst joined Endpoint Exchange as charter members earlier this year through the Central Oklahoma Clearing House Association (COCHA).
The embracing of image-based check clearing by the two banks is a step toward national "electronification" of paper checks, according to Mark Craig, general manager of CheckClear.
"Intrust Bank and BancFirst have proven that banks no longer have to be wedded to the old ways. It's time to pull the plug on paper check clearing and settlement and adapt to truncation and check image exchange," Craig said.
By integrating prime pass image capture with check imaging, both Intrust Bank and BancFirst are in a position to employ check image exchange. Capturing check images remotely allows the paper check to be truncated at the earliest point of the process, without losing the revenue from the paper check.
For Intrust Bank, known as an innovator in check imaging, fraud prevention, and branch item capture, truncation and check image exchange is the logical next step in streamlining item processing operations. In 1997, it became one of the first banks to install branch item capture technology, which permits image-capture check transactions at the point of origination.
"Being a member of the Endpoint Exchange means that Intrust Bank and the other Exchange members can truncate a customer's check at the point of deposit, permitting the exchange of images instead of paper checks," according to Jim Simon, vice president of operations at $2.5 billion Intrust Bank.
"It means faster clearing and settlement, reduced float, and reduced transportation costs," he added.
Endpoint Exchange, he added, "represents a win-win by allowing us to further streamline our operations and provide greater value to our clients."
BancFirst is also looking to employ truncation and check image exchange with bottom line results. Endpoint Exchange offered BancFirst an easy way to lower its check clearing and settlement costs.
Endpoint Exchange will help engineer the industry's move from a paper-check clearing and settlement environment to nationwide electronic check image exchange across all 12 Federal Reserve Districts, said Scott Copeland, chief information officer of $2.8 billion BancFirst.
It also positions the bank for the Check Clearing For the 21st Century Act, which will spur truncation and check image exchange.
The Central Oklahoma Clearing House Association joined Endpoint Exchange in April, enabling it to electronically clear every eligible item in the 10th Federal Reserve District.
Truncation of checks at the bank of first deposit and the subsequent exchange of check images through the Endpoint Exchange greatly increases efficiency, significantly reduces check-handling costs, and allows member institutions to identify fraudulent checks faster, according to Sharon Lewis, executive director of the Central Oklahoma Clearing House Association.
"We invite all image-enabled financial institutions in the 10th District to contact us about membership in the Endpoint Exchange," Lewis added.