The National Bank of Canada Tuesday said it has signed a 10-year, $368-million deal to outsource its cheque, remittance and currency processing, paving the way for digital imaging of its cheques.
Under the agreement, Intria Items will take over cheque and bill payment as well as envelope and deposit processing for the Montreal-based National Bank’s automatic teller machines. The bank said 600 employees who are already involved with these processes will be transferred to Intria Items.
Intria Items is a joint venture formed more than seven years ago by the Canadian Imperial Bank of Commerce and Fiserv, which owns a cheque-imaging equipment provider called ImageSoft. The ImageSoft technology allows banks to dispose of the original paper cheque early in the clearing process, a strategy that is being adopted by banks, credit unions and other financial institutions across Canada. The Royal Bank of Canada, for example, has already introduced digital imaging capabilities at its operations centre and within some of its branches and call centres, and by this spring its online customers will be able to track their cancelled cheques over the Internet.
In the United States, many financial institutions have moved to digital imaging in response to the Check Clearing For the 21st Century Act, which seeks to remove some of the legal requirements that paper cheques be presented in the clearing process. In Canada, the Canadian Payments Association is leading an industry-wide initiative that would see cheque imaging adopted nationally by 2006. This new method is sometimes referred to as truncation and electronic cheque presentment. Using the method, banks would destroy the original cheque once it has cleared and return only its image to the account holder that signed it.
National Bank of Canada spokesman Denis Dubé said business process outsourcing was the most logical way to move towards cheque imaging.
“”If you take into account the technology required by the CPA, we would have to invest a lot of money to respond,”” he said. “”For us, by outsourcing, we avoid this investment.””
Henri Dubuc, Quebec and eastern Ontario regional operations manager for Intria Items, said some of the equipment it uses will read or process in excess of 100,000 items an hour. “”When you think of imaging in real time items or cheques at this type of speed, you’re looking at pretty important technology,”” he said. “”We’re looking at millions of dollars, and it’s more like tens of millions.””
According to the CPA, about 1.5 million business and consumer credit union customers in the four western provinces now receive cheque image statements and can see the cheque image within hours of the debit being posted to their account, instead of waiting for monthly statements to come through the mail. “”Staff find the quality of the image copies better than microfilm copies that have traditionally been used for tracing purposes,”” the group said in a report called “”Cheque Imaging in Canada — A Change Whose Time Has Come,”” published in January.
“”We see the number of cheques and documents to process being reduced — a lot of people use an electronic way to do their banking,”” said Dubé. “”This agreement was a response to this situation. From our point of view, this is going to be cost-effective for us.””
ImageSoft’s Titan Enterprise Edition will be the base infrastructure for the National Bank, said Dubuc. The same product is used for Ceridian Canada, which turned to Intria for cheque imaging last year.
“”That’s the beauty of technology like this,”” he said. “”You can maximize its utilization . . . from the perspective of size and scope, as we migrate the entire clearing system in Canada to an image-based environment, size is not going to be an issue.””
Intria is in the process of building a processing centre in LaSalle, Que. which will handle all its Montreal-based operations, including the National Bank of Canada business.