Digital Image Act Spells End of Check 'Float'


Banks are facing a new federal regulation that greenlights digital checks in lieu of paper documents.

While a hassle for the financial services space, Check Clearing for the 21st Century Act, or Check-21, is creating new opportunities for archiving service providers and storage vendors.

Check 21 ends the float time for checks to clear, freeing up banks to use digital copies of checks in place of paper. Called image replacement documents (IRD), they have the same legal status as their paper predecessors.

The digital image checks clear immediately. Paper checks generally require a day or two to be processed.

Check 21 has paved the way for archive services, such as Viewpointe Archive Services, an independent entity IBM started in 2000, along with Bank of America and J.P. Morgan Chase & Company. Viewpointe stores and retrieves digital check images, saving banks from worrying about the hassle of check processing and other tasks.

The ball began to roll for the act after 9/11 when banks could not clear paper checks, because there was no transport via air after flights in the country were shut down, according to Theresa O'Neil, director of content management technology at IBM.

"Banks all over the country are reworking their long-term plans for their back-office operations," O'Neil told "They are now required to treat IRDs the same as a paper check. It does away with the clearing time for the check."

Besides co-funding Viewpointe, IBM has another level of interest in the venture: it's infrastructure runs the business. The company's digital archive is fortified using all IBM hardware, software and services. This includes IBM Enterprise Storage Server for disk storage and IBM LTO (Linear Tape-Open) backup drives, as well as IBM's DB2 Content Manager software.

All told, the infrastructure handles four petabytes of storage for Viewpointe, which O'Neil said digitally archives nearly one-half of the 50 billion checks written in the United States for such firms as Bank of America, J.P. Morgan Chase & Company, SunTrust Bank, HSBC Bank, First Tennessee Bank and others.

With its growth potential, the business of saving copies of digital checks could be even more lucrative, as it is believed American banks will spend as much as $2 billion this year and next on technology to improve check handling.

Viewpointe's success is an example of how businesses can prosper from new regulations handed down by the government in the wake of 9/11. Sarbanes-Oxley, HIPAA and SEC 17a-4 have all created new opportunities for storage vendors looking to help corporations archive content that needs to remain static for long periods of time.

According to O'Neil, Viewpointe's main competition may stem from banks that are building their own proprietary archive services with infrastructure from other vendors, rather than outsourcing help from a service provider.


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