They only come up rarely ”” maybe once out of every 3,000 documents scanned ”” but when they do, checks that fail the clearing process due to image quality problems can cost banks a huge amount of money. How much? Try millions. Hundreds of millions. But for many financial institutions, they’re simply accepted as a fact of life. With over 18 billion checks cleared annually in the U.S., that represents a large number of exception items.
In a great irony of technology, while the Check 21 Act and image-based clearing made dramatic improvements to the efficiency of the check-settlement process, they also introduced 21st-century problems. One of those problems ”” since the original paper document was no longer part of the process ”” was how to capture an image that was readable to the person (or machine) on the receiving end. We’ve gotten better at this over the years, but there are still some checks and money orders ”” especially money orders ”” that are going to cause problems no matter what.
How often do these problems arise? The small ones happen all the time. About one in five scanned checks needs manual intervention because of bad handwriting, background interference, problems with document design, and other minor nuisances that take a few seconds’ worth of an operator’s time to fix. A much smaller proportion ”” somewhere between 1 in 1,000 and 1 in 10,000, depending on the bank, cause more serious issues like incorrect balances, transposed account numbers, or missing deposit items. The cost of dealing with these items skyrockets ”” over $20 in many cases ”” and is a struggle for banks both large and small to deal with.
Our new white paper, Image Quality: The Quiet Problem That Costs Millions, takes an in-depth look at why these issues occur and how to fix them while keeping the customer experience a positive one. We interviewed a variety of financial institutions and service providers to obtain a comprehensive picture of the problem’s scope, as well as what banks are doing about it.
It’s no coincidence that at the end of last month, we also released a new software product, Clear by Digital Check, designed specifically for cleaning up these very worst of the problem images that banks face every day. To learn more, see our related article in this issue of Digital Communications, or check out the Clear product page.