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 is a subsidiary of Metavante (Milwaukee); Viewpointe (Charlotte, N.C) is a bank-owned initiative that started as a shared check image archive service, but has branched out to include image exchange.
The teaming came about at the prompting of a Bank of America 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," Vetterick 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 2 to 3 million items per day," says Vetterick. "When BofA's ready to receive [images from Endpoint Exchange], that number may double."
Different Exchanges for Different Types of Banks
Although both firms 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 its image archive in-house or outsources it, Vetterick explains. "If a bank wants to outsource its archive, then it might make more sense for it to join Viewpointe," he notes.
The Viewpointe strategy allows the largest U.S. banks -- including members JPMorgan, HSBC, Wells Fargo and U.S. Bancorp -- to place their check images in a central repository that simplifies the management and distribution of check images for high-volume players. For its part, Endpoint has found more success with banks "just looking for a low-cost [point] of entry," relates 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 across greater check volume. "Two years ago, if you joined an image exchange, you'd only be able to exchange 3 to 5 percent of your volume in that channel," says Vetterick. "Now, our members are looking at sending 25 to 60 percent of their volume [through image exchange]," he continues, adding, "We expect tremendous growth in image exchange through 2006."
But what will the shift to electronic exchange do to the existing infrastructure for handling paper checks? "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-fashioned mechanism will go up." * --Ivan Schneider