The PCHC adoption of check truncation is called the Check Image Clearing System or CICS. CICS does not include the original paper check from the collection or return process. With no end in sight for the use of the paper check as a payment instrument, banking institutions that are constantly seeking better, speedier, and more cost-effective processes for the delivery of their services to their customers cannot disregard the benefits that check truncation provides.
In lieu of the actual paper checks, their digital images are transmitted electronically to either the drawee bank for collection of its amount or to the depository/presenting bank in case of dishonor of the check. This will eliminate the need to physically transport paper checks, making processing of check payments faster and more efficient.
Institutions that implement check truncation will be reaping the benefits of image processing and avoiding the increasing unit cost and difficulties of manual check handling. They will be using CICS in view of the following reasons:
- Paper check processing and clearing costs are increasing, while electronic and image processing costs are decreasing;
- The benefits of a reduction in float (items that are in processing) are optimized by an image exchange;
- Today’s check transportation alternatives carry increasing cost and risk;
- Value drivers in financial institutions are focusing not only on new product opportunities, but also on process improvements and enhanced customer satisfaction.
The Future: Image Exchange
In the digital age, the implementation of an “image exchange” in conjunction with check truncation is critical to evolving the banking industry, keeping it competitive and sustaining its success.
It is hoped that participation in an exchange of check images between banks will permeate the banking industry to the point where adopters will pave the way for new technology, rules, standards and processes.