Midland To Apply Electronic Scanners For Cheques
The move is expected to allow it to cut costs in cheque processing by up to 45 per cent.
Most of the hundreds of employees who now type the value on each cheque in computer readable magnetic ink, will be replaced by electronic scanners which will take a snapshot of each cheque.
The system is being developed by Unisys, the computer manufacturer and services group. The scanners will be able to read the figures on about half of all cheques.
More advanced software that will also read the amounts written in longhand could eventually lift recognition levels to 70 or 80 per cent.
This will cut the need for staff to key in values, which currently accounts for 60 per cent of the cost of cheque clearing, by up to three-quarters.
Midland does not disclose how many staff are engaged in this activity. At the same time, Midland expects electronic imaging to cut error rates on the 4.5m cheques and payment orders it handles every day, and to improve customer service by allowing bank staff instantly to call up the image of any cheque from their computer, instead of hunt-ing through dusty archives.
It's going to enable us to give a higher level of service to customers and manage down our cost base.
It wasn't a difficult decision to make,''said Rod Duke, Midland's general manager of operations. Midland is already one of the world's largest processors of document images, scanning in 73,000 customer letters and payment orders a day.
Electronic cheque imaging has been widely adopted in the US but is generally used for a more limited purpose:
US bank customers are used to receiving their cancelled cheques back with each bank statement, and imaging allows the banks to print copies rather than inserting the actual cheques in each envelope.
In the UK, Barclays has adopted image processing for ''outbound'' cheques - those written to its customers on other banks' accounts - but has not yet moved for cheques written by its own customers. National Westminster and Lloyds have not yet adopted the technology.
UK bank customers wrote 3.2bn cheques last year, a number which has fallen steadily since 1990 as direct debits and debit cards have gained in popularity.
Apacs, the UK payments and clearing association, forecasts that cheque usage will drop to 2.4bn in 2000, leaving most banks with substantial processing overcapacity.