By outsourcing its check processing to ERAS Inc. (Miami), a service bureau and software development shop with processing facilities in the United States and Mexico, TransAtlantic Bank (Miami; $400 million in assets) has been able to run circles around its competition.
TransAtlantic caters mostly to commercial accounts, such as mid-sized insurance companies that deposit piles of checks each business day. Through the use of check imaging technology, the work has become far easier to handle. "Before, we used to have to microfilm all those items and then send them to be encoded," says Dominic Suszek, senior vice president and chief operating officer at TransAtlantic. "Now, we're actually capturing the images of the checks at the teller line."
Tellers can scan as many as 1,000 checks in just a few minutes. But the encoding of the digital check images gets handed off to ERAS. Although that's not earthshaking volume, deals of this type highlight the way in which the industry-wide shift towards image will make back-office outsourcing increasingly prevalent.
ERAS currently has five processing locations in the United States, two in Mexico, and ambitious plans to expand. "We're offshoring work in both directions, depending on the nature of the work," says Carlos Rodriguez, Jr., senior vice president at ERAS. "Any employee can see any available batch of work at any available center at any point in time."
Rodriguez adds,"To the client, we look like one giant workforce on the Web."
Indeed, from Suszek's perspective, it doesn't matter where his customers' checks are processed as long as the arrangement provides the bank with a competitive advantage. "By getting ERAS the images earlier, the bank can open later to serve our customers," says Suszek. "Most banks close [the books] at one or two o'clock, or if they accept deposits after two o'clock, those are credited to the next business day."
In this way, TransAtlantic has been raising the bar for its big-bank competitors. "They're trying to catch up to us," he says. "We're offering something that they just can't because of the sheer size of those institutions."
Furthermore, the ability to eliminate daily courier runs from each location changes the economics of branch banking. Indeed, courier costs had made up about seven percent of the cost of operating a branch, Suszek says. With imaging, those costs disappear.
But that's not all. With processing handled offsite, TransAtlantic can open new branches using smaller storefronts. "Where previously I needed 1,000 square feet to open a branch, now I need 800," says Suszek.
Plus, those branches can be anywhere in Florida. "We don't have to worry about transportation anymore," says Suszek.
Except for data traffic, that is. The bank has selected Sprint to develop a voice-over-IP network that can handle not only its expanded data traffic for check images, but also for ordinary phone calls. "We're implementing a new phone system for all of our locations for voice-over-IP, and switching all of our phones to voice-over-IP so that we can use our WAN for our local phone calls."