When bankers talk about "leveraging existing investments," it's often hardware like the IBM 3890 that they're talking about. The mainframe-based product, which dates from the 1970s, has endured the movement toward PC-based systems.
"It's a very old, reliable check-reader, and now image-scanner, that runs at very high speeds to help manage the paper payments cycles for large banks," said Brian Geisel, CEO of Alogent, an Atlanta-based vendor of check processing software.
"It's like a piano-they don't break. Banks love them," he added.
In order to ensure the survival of the 3890/XP, IBM has opened it up to the outside world, making it easier for software vendors to incorporate it into their latest offerings.
The 3890/XP can now act as a device on a Windows network using Intel-based PCs and servers. "We're able to keep the most expensive of those valuable pieces of 'kit' in an institution, which is the 3890 machine," said Geisel. "In other words, they don't have to buy new ones."
"IBM's 3890 has been a mission-critical element of the banking industry for many years and will continue to play an important role into the 21st century," said David Medeiros, director of global payments at TowerGroup. "Coupling this hardware workhorse with new open systems technology opens up a whole new dimension for item processing."
Alogent, for example, can control the 3890/XP from its own Sierra Clearing platform instead of through the mainframe-based Check Processing Control System (CPCS), making it appear as an external device rather than a standalone workstation. "We had to get inside the machine and redirect the API application program interface, and basically 'wrapper' it to take control of the machine," said Geisel. "From our perspective, it's a device driver, no different than picking up a new printer for a PC application."
"It's just one that's bigger and badder than most, that didn't have as open an API," he added.
Sierra Clearing is a high-volume item processing solution in use at utilities, telecom, and cable companies across the United States. It's also the core software platform for Intelligent Processing Solutions Ltd. (iPSL), an outsource item processing conglomerate which processes nearly 70 percent of all checks in the United Kingdom. Sierra Clearing is on track to process more than 1.1 billion bill payments in 2002, an increase of 20 percent from last year.
The switch from mainframes-and their associated batch-processing algorithms-to PCs also opens up the potential for workflow efficiency gains.
"Banks spend a very small amount of money to connect PCs to the 3890, and then get the benefit of automating a lot of the processes," said Geisel.
Yet automation is about more than just improving efficiency. It's also about preparing for upcoming shifts in consumer usage.
"We've got to do paper today, hence the importance of the 3890, because it's the best paper-moving machine out there," said Geisel. "But ultimately, we're about transitioning to electronic in a Check 21 environment."
Bank One intends to use image technologies at the check sorter to contain costs during the transition from paper to electronics. "It's these new technologies that give us the ability to do that," said Chris Nehrbauer, executive vice president at Chicago-based Bank One.
Separating the check processing hardware from the application logic makes it possible to employ a wider range of check processing equipment. Instead of using an expensive device in a central location, for example, Bank One can use distributed image capture devices at its low-volume sites. "We're looking for that modularity and the current technology to make it easier for us to give the customers more of their information," said Nehrbauer. "Not necessarily to use a one-million dollar, image-enabled sorter in a site that doesn't warrant the volume."
The bank can gain no further advantage from moving paper through the system, however efficient it may be. "Some of these functions we cannot get much better at," said Nehrbauer. "We've hit peak efficiency."
"We've really got to change to get to the next level, to improve the quality to the customers," he continued. "Image technology is what's going to drive that."
Bank One's plans aren't tied to the fortunes of the Check 21 Act, now making its way through the legislative process.
"It's not something we're pinning a lot of our strategy on," said Nehrbauer. "If it doesn't happen, its certainly not going to impact Bank One."
Indeed, given the continuing evolution of the domestic payments network, the last thing anyone needs is a congressional directive to improve customer service. "With the time frames that they're talking about, I doubt our customers, or the market, would really be willing to wait that long to get some of the benefits that are being proposed," said Nehrbauer. "We want to service our customers today."