Washington Mutual (Wamu) has signed a seven-year business process outsourcing agreement with Unisys that will allow the bank to capture images of checks and transaction tickets at its financial center stores. Once the Unisys system is installed and activated, Wamu will be among the first top ten U.S.-based banks that actually captures check images at the branch instead of an off-site processing facility.
Under the terms of the agreement, Unisys will host and manage this new check processing operation for Washington Mutual. Once up and operating, branch image capture will mean fewer handoffs during check processing-and therefore lower costs-and same-day access to check images for employees, which will help prevent fraud.
"Once the system is fully implemented, Wamu will be able to provide image-based products and services such as access to check images for customers via the Web and CDs for corporate cash management customers," said Armando Angelbello, senior vice president of banking and financial services at Wamu.
Making this move now positions Washington Mutual to confront such industry issues as escalating unit costs of processing paper checks; the shift to electronic transactions such as electronic bill presentment and payment; and the impact of the Check Clearing for the 21st Century Act-pending legislation to enhance the efficiency of the check system by allowing digital images in truncation, which can eliminate the need for a paper trail in check processing.
As part of the agreement, branch image capture devices will be installed in each financial center store's back office. The check imaging devices will be piloted in the first half of this year and rolled into a production environment near year-end. Additionally, Unisys will create and staff regional processing centers across the United States to handle item processing for Washington Mutual.
Indeed, when completed, it appears the Unisys check imaging system will bear a resemblance to its Intelligent Processing Solutions (iPSL) partnership currently under operation in the United Kingdom. A joint venture between Unisys and eight member banks including Lloyds TSB, Barclays and HSBC, iPSL now clears more than two-thirds of all checks written in the U.K.
Unisys has successfully pushed the iPSL model into Australia and is looking to do the same in the U.S., according to John Smith, vice president, Financial Services BPO Group at Unisys.
"We've proven that iPSL can work in the U.K and Australia," Smith said. "The hard part is making bankers see that check processing is not a competitive issues but a strategic one. I'm sure a lot of large institutions are looking to image and process checks internally by themselves. But when they see the competitive advantage enjoyed by Wamu, they will join an iPSL-type service."
But the iPSL model will face plenty of competition in the U.S. A number of outsourcing ventures are vying to capture a piece of the check processing pie. Among the bank/vendor partnership contenders: Endpoint Exchange, Image Exchange, ViewPointe and Symcor.
"Unisys would love to get five birds with one stone, and with Wamu as a cornerstone, maybe they will," said Alenka Grealish, manager of the banking group for Celent Communications, a Cambridge, Mass.-based financial services analyst firm. "The check processing market is so large that it can support a large stable of players. But I don't see them capturing 60 percent of the check processing market like they did in the U.K. I think the dominant player in this space will be lucky to capture 40 percent."