Advanced Execution Concepts in Branch and Teller Capture
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The document identifies 11 areas of improvement for financial institutions implementing branch and teller check image capture that can reduce costs, increase efficiency and productivity, improve customer and employee experience, and potentially generate new revenue streams, such as through data mining, without requiring major system overhauls. It provides examples of low-cost solutions in areas like reporting, scanner management, fraud prevention, and paper reduction. Financial institutions are encouraged to pursue these opportunities to maximize their existing investments in branch and teller image capture systems.
Advanced Execution Concepts in Branch and Teller Capture
- 1. Advanced Execution Concepts in Branch and Teller Check Image Capture We’re almost there… Let’s finish the job Written By: Joe J. Gregory, Vice President Marketing April 2012
- 2. Introduction “Advanced Execution Concepts in Branch and Teller Check Image Capture/We’re almost there, Let’s finish the job” is all about honestly assessing the success levels of branch and teller image capture and injecting one last burst of energy into these processes to move from a state of average performance to exceptional. Why wouldn’t a financial institution want a significant boost in productivity and improve the customer/employee experience? This paper will focus Unfortunately, it’s a taller order than what one might think when on how financial factoring in the varying levels of continued investment, project institutions with justification, competing resources and version control. branch or teller image capture can All hope is not lost. This paper will present a number of innovative implement cost- effective innovations execution ideas for those running branch and/or teller image with a strong value capture. These ideas are relatively inexpensive to implement proposition which compared to the initial cost of your system deployment, yet do not require major provide a final value proposition which helps drive out lingering system overhaul. costs and frustrations while increasing the satisfaction levels of operations, retail and customers. The paper will also address issues related to whether Salem, MA 2002 (Do we have a future?) there is justification in making these final It was blustery night on October 21, 2002 at the 5th Orbograph improvements. User Conference. An Orbograph business partner declared, “Teller capture is going to take over branch capture in the next two years, and then checks will be gone in about ten years.” Well, here we are in April 2012 and as we write another chapter in the life of the check processing industry, let’s take a moment to evaluate the aforementioned declaration. #1 - Teller capture will take over… (“Partially” True): No doubt teller capture (referred to as deposit automation by many) has continued to gain market penetration, and there have been a number of financial institutions that have migrated from branch to teller capture, but the adoption rate has been much slower than many of the optimistic predictions.
- 3. Although few have attained the utopia of “straight-through- processing”, there can be strong benefits to the process and many banks have taken this path. This workflow has yet to achieve the status of “predominant” when considering the majority of banks in the US, but it continues to make market share gains and within two to three years, may become the number one desired workflow. Until then, branch capture and blended environments should probably be declined “the leader” with outsourcing growing as well. #2 - Checks will go away… (Incorrect): Checks aren’t quite gone yet. (I think we’ve heard that before.) Our industry is probably Which payment processing less than 25B per year now, but we haven’t heard of vehicle has the too many banks or credit unions that have eliminated their check greatest chance of archive, nor are they completely disregarding their check reducing cost in the next few years? processing. What is true is that the market exhibits all the typical characteristics of a market in decline; some level of reduced investment, vendor replacement and migration to new technologies with the objective of trimming expenses. At the 13th Orbograph User Conference in October 2011, David Walker, President and CEO of ECCHO, challenged the attendees to rethink their payment strategies with questions like: • Which payment has the greatest chance of reducing cost in the next few years? • Which payments have the greatest risk of regulatory changes? • Which payments have potential for incremental value or revenue? These intriguing questions bring to light that the window is still open to drive incremental savings and sustain revenues worth millions at an industry level. Let’s finish the job! A Simple Process Assessment Let’s assume that your financial institution has successfully implemented a branch or teller check image capture solution. Whether it was six months or two years ago, as a decision maker,
- 4. you review the staffing, productivity, performance and satisfaction benchmarks against objectives and found them acceptable. You’re finding that your capture vendor has you in production and the project team has declared success. However, striving for excellence means you need to drive the project to another level. Examples of potential improvement include: 1. Expand reporting for each sub-function in the workflow 2. Implement greater scanner hardware controls as equipment ages and evaluate new scanner consolidation options Feedback from 3. Minimize rejects and exceptions enterprise-wide financial institutions running 4. Reduce teller keystrokes and maximize efficiency branch and teller 5. Reduce errors in larger transactions (customer vs. employee) image capture 6. Optimize staffing models indicates that there 7. Eliminate overhead of system managers are many 8. Reduce on-us check fraud in cash checks and split deposits improvements 9. Reduce deposit fraud on transit checks which can be attained. 10. Leverage the images for revenue opportunities and data mining 11. Eliminate all paper possible The result of all of these improvements will translate into an optimal customer and employee experience while driving cost savings of 30-50%. Solutions Which Won’t Break the Bank These all sound like great ideas, but how do we get there? The following points are a summary of technologies and refinements available today (with examples) which can be used to achieve levels of excellence in branch/teller image capture. 1. Reporting: Technology advances in reporting are a good route to evaluate. a. Schedule an in-depth review with your capture/teller vendor to identify underlying statistics not utilized (You can always find them!). b. Evaluate data export alternatives.
- 5. i. Implement a process to update a Business Intelligence (BI) component which allows your organization to slice and dice data. ii. Many vendors have this as an optional module iii. There are specialty vendors in the financial industry who can provide stand alone options iv. Evaluate even a simple dashboard approach Improvements which won’t break the bank are critical to the continual process Figure 1. Business Intelligence example analyzing field volumes over time. improvement of branch and teller image capture. (Figure 2. Business Intelligence example analyzing read rate over time. 2. Scanner controls and consolidation: Many software capture providers do not focus on scanners, but there are many benefits to be gained.
- 6. a. Talk to your scanner manufacturer or capture provider and ask if they can provide access to scanner level: i. Diagnostic tools ii. Remote scanner maintenance iii. Consolidated scanner performance and utilization tracking iv. Mean Time Between Failure (MTBF) statistics Scanner level controls are seldom implemented, but can provide great value to controlling distributed capture. Figure 3. Example of scanner level diagnostics. b. Evaluate a single control ticket which could be used universally to manage the consistency of image quality across all transports Figure 4. Control ticket example with built-in quality tests
- 7. Figure 5. Example of scanner image output variations c. Investigate new scanner technologies that can run both check and currency on the same device for foot space and efficiency savings. d. Various scanner providers now have new features which provide add-on capabilities including: i. Built-in receipt printers ii. ID Scanning iii. Mag Stripe Readers Consider these devices for migration at high volume tellers and/or upgrades to older machines. 3. Minimize rejects: Distributed scanners produce wide ranging results in reject rates. a. Track and scrutinize all exceptions and reject types for continue process improvement methodologies b. Ensure your check processing workflow utilizes automated MICR Repair for skewed and upside down items with rates of at least 80%
- 8. Figure 6. Example of MICR Repair reading an upside down image. 4. Reduce keystrokes: Many times, recognition software is under achieving or is not implemented as a critical success factor. a. Talk to your vendor to understand their philosophy behind recognition optimization b. Review all document and field level performance levels c. Gather scanner level reporting results d. Target levels of 90% read rate with error rates at or under 1% e. Evaluate higher performing recognition engines which can reduce costs by 40% Fine tune large transaction parameters for accuracy. Figure 7. Branch/scanner level reporting analysis. 5. Large transaction optimization: Errors in large transactions are caused by customer and employee errors.
- 9. a. Review reporting on large transaction processing b. Implement deferred workstation/back-counter procedures which are more stringent on accuracy i. Compare branch vs. centralized data entry accuracy ii. Optimize recognition software for accuracy over read rate. Targeted accuracy 99.6% or 0.4% misread Sub-functional Figure 8. Optimize accuracy levels for large transactions via threshold automation settings. technologies can smooth out staffing issues and deliver 6. Staffing models: Focus on employee utilization rates for on straight- operational considerations through-processing a. Analyze volumes per hour (peaks and valleys) for both retail promises for and operational staffing branch/teller b. Reconcile productivity rates with actual volumes capture c. Evaluate low cost, time sensitive sub-functional automation for load leveling and straight-through-processing Figure 9. Report to analyze daily volumes for staffing and capacity planning/hour.
- 10. 7. System overhead: Your support group may be using outdated techniques along with intensive manual processes to assess system performance and uptime a. Review procedures on how repairs are managed b. Improve speed of reporting to limit overhead and ensure optimization with enterprise view c. Ensure quick response with minimal customer impact via automated system alerting d. Negotiate service level agreements (SLA’s) with critical success vendors i. Introduce a managed partnership on key performance indicators ii. Coordinate bi-annual performance assessments Consider the benefits of new fraud prevention Figure 10. Deliver reporting highlights to functional managers automatically. methods in conjunction with 8. Reduce on-us fraud: Few bankers know that technologies now branch and teller image capture. exist to validate cashed checks and split deposits real-time at the teller or back-counter branch a. Identify fraud pain-points both operationally and loss related b. Review current teller procedures and update for new image- based processes c. Implement real-time analytics and signature verification, check stock validation for cash checks and split deposits d. Investigate real-time payee name verification as an added cash management process and extend to the teller/branch e. Evaluate options to incorporate a recognition-based Payee Name Verification (PNV) process at the teller line. This approach may require integration by making issue files available at the teller line.
- 11. Figure 11. Image analysis for fraud detection can be tightly integrated with branch/teller. 9. Reduce deposit fraud: Probably the most difficult check fraud to catch. a. Select vendors now make hotlists available as a means to identify deposit fraud b. Create profiles of suspect transit accounts c. Evaluate and improve analytic engines which can plug into the process at various levels d. Work with exchange partners to create reciprocal agreements to identify fraud during Day 1 processing for The opportunities quicker notification (inter-bank) and timing couldn’t e. Identify remotely created checks be better to f. Automatically identify missing endorsements on deposited maximize your checks, streamlining teller procedures with Automated investment in Endorsement Analysis (AEA) capabilities now available branch and teller image capture. Figure 12.Example of unreadable endorsement. (Up to 20% of the volume) 10. Data mining: Misunderstood as being unethical, illegal and without precedence, FI’s are driving customer acquisition and cross selling by mining check image data
- 12. a. Read the payer from transit checks and create a database of prospective customers b. Compare the payee of existing customers to spending habits and cross sell new services Figure 13.Reading payer or payee can create targeted marketing lists. 11. Eliminate paper: Internal bank tickets are challenging to manage and can be very expensive. Although teller image capture does reduce some percentage of internal documents, the ideal scenario would be to consolidate to a single document for branch or teller image capture. The Universal Teller Document concept can achieve this by assigning specific tran codes to “check boxes” on the ticket. Figure 14. Consolidate remaining over-the-counter tickets with the Universal Teller Document. (Uses image-friendly design with dropout boxes.)
- 13. Conclusion and Migration Options We’ve identified eleven major areas where financial institutions can see significant benefits which translate into: 1. Cost reduction (maintain or drive down unit costs) 2. Efficiency improvements 3. Improved employee experience 4. Stabilized environment 5. Increased staff utilization 6. Collapsed processing windows 7. Superior decision making based on more informed decisions 8. Fraud reduction 9. Revenue opportunities 10. Improved customer experience 11. Reduced paper, inventory control and cost savings As the market continues to evolve in distributed capture, will your organization settle with satisfied performance or strive for excellence? The opportunities and the timing couldn’t be better to maximize your investment in branch and teller image capture. Feel free to contact Orbograph at info@orbograph.com or joe.gregory@orbograph.com for support on any of these concepts. Orbograph has extensive experience and provide cost analysis models to help you quantify these potential benefits. www.orbograph.com Phone: 800-995-2502, Extension 5046