Repeat Performance? Things Canadian Banks Can Learn from the US Check 21 Experience

by Bob Meara, February 1, 2013
Operations/ Benchmarking
North America

Abstract

Canadian financial institutions are preparing for a major payments system initiative: the electronification of checks. Canada can learn from a favorable US experience and do even better.

In the report Repeat Performance? Things Canadian Banks Can Learn from the US Check 21 Experience, Celent provides several guiding principles for Canadian banks to follow based on the US experience and examines the salient similarities and differences between the two systems. The genesis of this report was several meetings among large Canadian banks in December 2012 in which a common question was asked: “What can Canadian banks learn from the US check imaging experience?” Celent contends that Canadian banks can expect a faster transition to check imaging than the US experience would suggest.

“The US Check 21 experience is hugely relevant for Canadian banks,” says Bob Meara, Senior Analyst with Celent’s Banking Group and author of the report. “However, a number of factors suggest that a mere repeat performance of the US experience would be a worst case scenario for Canadian banks.”

This report begins with a US/Canada comparison to illustrate relevant differences between the markets and environments, with resulting implications for Canada. The report then addresses key considerations that will define the scope of Canadian bank check imaging project plans: image exchange, branch capture, remote deposit capture (RDC), image ATMs, and finally, RDC risk management.

This 42-page report contains 19 figures and six tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Erica Ferguson
eferguson@celent.com
Tel.: +1 617 262 8225

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary

1

Obvious Differences

4

Check 21 and Image Exchange

8

 

The Role of IRDs/CRDs

9

 

Early Image Exchange: A House Divided

11

 

Reasons to Expect a Faster Transition in Canada

14

 

Key Takeaways

15

Branch Capture

16

 

The Case for Teller Capture

18

 

Key Takeaways

21

Remote Deposit Capture

22

 

Corporate Capture

23

 

Consumer and Small Business Capture

26

 

Risk Management

28

 

Key Takeaways

31

The ATM Channel

32

 

Key Takeaways

34

Conclusion: Chicken or the Egg?

35

Leveraging Celent’s Expertise

37

 

Support for Financial Institutions

37

 

Support for Vendors

37

Related Celent Research

38

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