Two of the major players involved in the electronic exchange of check data and images, Endpoint Exchange and Viewpointe, have agreed to interconnect their respective networks. Endpoint Exchange LLC is a subsidiary of Metavante (Milwaukee); and Viewpointe (Charlotte, N.C) is a bank-owned initiative that started out as a shared check image archive service, but then branched into image exchange.
The tie-up came about at the prompting of a Bank of America (BofA) executive, relates Jeff Vetterick, general manager of the Endpoint Exchange Network (EEN). “He strongly encouraged me to reach out to the then-CEO of Viewpointe, Jerry Chambers,” he says. "Before I called Jerry, the phone rang and it was him."
Bank of America stands to be an early beneficiary of the interconnected networks, as it will be the first to implement the connection between the two exchanges. "Bank of America alone will be able to present to us somewhere between two to three million items per day," says Vetterick. "When BofA's ready to receive [images from Endpoint Exchange], that number may double."
Although the two firms both operate networks that allow one financial institution to send a check image to another financial institution using an industry-standard format, Vetterick claims that because the two companies serve different types of banks, Viewpointe and Endpoint Exchange are not direct competitors. "Viewpointe has amassed a customer base of the largest financial institutions," he says. "We have amassed a base of small-to-midsized, and a few large, financial institutions – not the top tier."
Part of the differentiation stems from whether a bank operates or outsources its image archive. "If a bank wants to outsource their archive, then it might make more sense for them to join Viewpointe," notes Vetterick.
The Viewpointe strategy has indeed made sense for many of the largest U.S. banks, including members JPMorgan, HSBC, Wells Fargo and U.S. Bancorp. For its part, Endpoint has found more success with banks "just looking for a low cost of entry," says Vetterick. "Many of our customers have their own in-house item processing system and their own in-house archive."
The interconnection promises to speed the adoption of image exchange by extending the investment in image exchange across greater check volume. "Two years ago, if you joined an image exchange, you’d only be able to exchange three to five percent of your volume in that channel," says Vetterick. " Now, our members are looking at sending [anywhere from] 25 to 60 percent of their volume [through image exchange]."
"It’s really starting to tip the scales," he adds. "We expect tremendous growth in image exchange through 2006."
But what will the shift to electronics do to the existing paper-check-handling infrastructure? "As more volume moves into the electronic channel, it starts starving the paper mechanism of work," explains Vetterick. "It’s a natural consequence when you have to move paper checks around — the cost per item through the old-fashion mechanism will go up."