Check processing centers in the United States are ripe for consolidation, according to Paul Currie, CEO of Symcor Services, Inc., a Toronto-based information services company.
Symcor, founded by minority shareholders Royal Bank of Canada, Bank of Montreal and TD Bank, currently processes about two-thirds of checks in the Canadian marketplace. Other customers include Citibank, American Express, Hong Kong Shanghai Bank and Capital One.
With check volumes on the decline in Canada, the switch to an outsourced check utility has allowed participating banks to switch their fixed overhead costs to per-item variable costs. As a result, the industry has been able to eliminate excess item processing capacity. "We have consolidated 23 sites in Canada essentially down to six sites," said Currie.
Now, the company plans to bring the "check utility" model below the 48th parallel. "The check decline that we've been experiencing in Canada is now being experienced in the U.S.," said Currie. "The large financial institutions in the U.S. will turn to focused companies - check utilities - that can process checks safely and securely on a scale basis, using image."
Symcor makes its check images available over the Internet using IBM's OnDemand archive, the same platform used by Viewpointe Archive Services, a joint venture of JP Morgan Chase, Bank of America, SunTrust Banks, U.S. Bancorp and IBM.
Symcor's processing centers rely upon the IBM Check Processing Control System (CPCS), and use software from Carreker to process exceptions, charge-backs and related activities.
Banks can also capture check images at the branch using solutions from AFS. "It allows us to move images of those transactions into different jurisdictions," said Currie. "For example, we can capture an image in Dallas and do all of the work on it in Halifax or Winnipeg."
If and when the Check Truncation Act permits images to replace physical checks, distance will no longer have the same impact on item processing economics. In the meantime, checks still require physical handling. "We're coast to coast, and all of our sites would be 50 to 100 miles from the U.S. border," said Currie. "We could move down into a region, take over check processing infrastructure from U.S. financial institutions, deliver them the same quality of service that they'd expect and then also give them image-based products."
Even check images captured at the ATM could wind their way north of the border. "It's like a branch transaction that's been converted into an image," said Currie. "You can do the processing on it anywhere."
However, the company's expansion plans into the U.S. would keep check images in their country of origin, helping to avoid jurisdictional issues. "The real win for Symcor will be to go in and take over a financial institution's existing operations," said Currie. "We'd take those sites and convert them into multi-bank sites, which is what we've done in Canada."