Banking On Payment Processing

As an integrator and software developer specializing in payment processing and receivables management, ImageScan, Inc. (www.iscanit.com) (Lanham, MD) works with any number of businesses that accept payments. ImageScan has established a presence in the banking vertical market and is pursuing similar opportunities in utilities and insurance. While most of us tend to think of banking on a consumer level, ImageScan also addresses banks' B2B needs. "Although a bank might farm out consumer payments," contends Hanna Jabbour, ImageScan's product manager, "they rarely farm out B2B because of the relationships involved." Those relationships are much more than the typical customer expects from a bank, mainly because the relationships are so much more valuable. For instance, a Fortune 500 company might hire a bank like Fleet Bank (Providence, RI) to track all of its incoming payments. However, this service extends beyond providing account balances to maintaining a full record of all documents related to a transaction. In other words, a widget manufacturer might be expecting a $10 million check from a retailer, but only receives $9 million. The $1 million difference will prompt a call from the manufacturer to the bank. The bank must be able to find the document from the retailer explaining how some products were sent back or found defective. Unlike you or me, that manufacturer isn't going to speak to a teller. An account like that is the initial responsibility of one of the bank's vice presidents.

Begin The Sales Cycle Early And Win Trust
When Fleet Bank, which has $200 billion in assets and 20 million customers, began looking for a payment processing solution for B2B accounts, ImageScan was already on the scene. Fleet acquired Summit Bank last year, and ImageScan had an existing relationship with Summit. However, Jabbour estimates that he had been preparing for just such an opportunity for several years. "For banks like this, the need is always there; it's a matter of when they are ready to upgrade. When that time comes, you can't just walk in that day and make a pitch. Such systems require service and support for the life of the product, so the working relationship and the bank's level of comfort is very important." Jabbour says that a sales cycle of three years or more is the norm in the banking industry. During that time, the integrator has the chance to learn about the customer's existing assets and needs and explain how it can meet them.

According to Jabbour, Fleet chose ImageScan because the bank's priorities were reducing errors and labor costs with a solution that was scalable enough to accommodate growth and to be rolled out to six additional sites in the following year. "As one of their large clients, I might be able to tolerate a small error once or twice, but that's not going to last long," says Jabbour. "While you can't always assign a dollar to it, there is value to accuracy and customer service." However, Jabbour cites a study one bank conducted that found that fixing an encoding error costs between $200 and $300.

Flexible Products Leave Door Open For Future Upgrades
To meet Fleet's needs, ImageScan deployed its own RemitTrac software, which processes payments with functions like courtesy amount recognition, amount entry, and pre-balancing authorization. To maintain the high level of functionality necessary, ImageScan embeds FormWare from Captiva Software (San Diego) in its RemitTrac product. FormWare is used to provide functions such as gathering data from line items and OCR/ICR (optical character recognition/intelligent character recognition). In addition to offering the high recognition rates necessary for the application, ImageScan developers also believe that Captiva's development initiatives are aligned with their own. "We believe that customers should have one solution and be able to configure it in a way that best fits their specific need," says Jabbour. "This combined product provides a very wide range of possible solutions, but a customer doesn't have to use them all to get the benefit. On the other hand, when a new customer requirement arises, enhanced functions can be activated and utilized."

Previous to installing RemitTrac, Fleet was using an aging system that didn't have the full range of functions that current processing products can provide. All of the images were handled manually. In other words, they were scanned, but the data entry to the accounting system was manual and there was no workflow component for routing documents. From hardware delivery to full conversion of the first site took about three months, including setup and training. Generally, training on just the wholesale (B2B) application takes about a week. An additional two to three week's training is often needed for both the Captiva and workflow functions. If a bank opts to incorporate retail/remittance (business to consumer) processing, or upgrade to wholetail (an integrated solution for both B2B and B2C), another two to three weeks of training could be necessary.

"Training is always an issue with this kind of product," says Jabbour. "Fleet has more than 2,000 customers per site that are handled by our software. In environments where there are that many tasks, it is important to develop tools that are simple enough for the end user to modify as needed. Otherwise, there would be a request for a change coming in every other day." On the other hand, Jabbour says customers are advised to call whenever they are unsure about making a change. "We'd prefer to get that call to having to get them out of trouble."

In the first months after a similar solution went live at RemitTrac's first site, the bank was able to double the volume of payments processed with the same number of employees. As a result, documents entered the system faster, and customers could access them sooner. Simultaneously, the number of errors decreased, which was a critical requirement in an environment with high-value transactions. As Jabbour points out, the telephone company won't be too upset if your $78 check is read as $73, but a client whose $18 million check clears the bank at $13 million will be.