Cheque Processing - Complete Experience
It was 7 years ago now but I still have vivid images of the bank's largest cheque processing centre in KL. Yes, I've been there many many times since then but the last I left the account was like 3 years ago. I was with one of the world's leading IT company that anchored its business in 5 core industries. Financial Industry had been the largest contributor and their cheque processing system processes more than 51% of world's cheque. Impressive huhh.
4:00am. I was told that's the best time to start observing if I really wanted to learn about cheque processing. I took up the challenge and never regret it. Seriously, have you ever thought about how a bank clears your cheque? Have you ever thought about how banks could verify ALL the cheques issued everyday (signatory, names, date, amount, etc), have it reconciled with corresponding banks and transfer the fund accordingly within 1 day? How do they handle the hundreds of thousand or millions pieces of cheque and stub everyday? And how do they cope with the skillful and imaginative forgers from abusing this legal tender?
Technology.
They can do it with machine that will automatically cut envelope, retrieve cheque, endorse date on it, take pictures on both side, crop out signature to compare with its database, read the MICR line and match with details written on the cheque or with information stored in database, sort out the cheques and stubs accordingly and complete it within fraction of a second per document. MAGICAL!!
The fastest system I knew then was a processor that could perform the basic pass at 2000 document per minute. That's about point-0-3 second (0.03 sec) per cheque!!!
Equally interesting is the process change in cheque processing involving the entire financial industry (including central bank, ie "the exchange centre") to further shorten time required to process cheques.
Cheques used to be physically collected from each branch, sent to bank's HQ, then sent to the central bank, and then back to issuing bank for processing. Imaging technology allowed cheques' images to be captured and processed digitally in bank's HQ so that the physical document can get sent to central bank for further processing. A very efficient network infrastructure and secirity measure now allows bank to capture images at source (ie branch) or regional/HQ centre, and transfer electonically to issuing bank via "central control". This basically "TRUNCATES" cheque processing (and therefore known as "cheque truncation").
As a back office processing system, cheque processing is very quickly identified as an outsourcing target. It presents the bank with an opportunity reduce "capital investment" quite drastically (yes, the complete system can easily cost millions!), move many headcounts from "cost centre" to "profit centre", and focus on others many would perceive as the main things - like "selling" to its customers.
Cheque processing outsourcing again presents another sets of challenge. It was exciting to be part of the team. Talking to bank's senior representative and understand their perspective. Consortium was being informally set up. Some would want to do it alone. Some would want to tag on major supplier. Some don't even bother!! It was also a time when central bank is pushing for consolidation of financial industries in the country. How very interesting to see all the action happening!
Well, it wasn't the only thing that I was involved in but with the time that I spent with some good buddies around this subject, I was passionate about it.
Lastly, I would insist on this - that cheque processing will still be very much required within the next 10 years eventhough more people are paying via other means (internet, credit card etc) because the amount of cheques being dumped in the system are still tremendous.
Labels: Banks, Payment Processing
posted by PlaThai @ 1:07 AM
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