Digital Image Act Spells End of Check ‘Float’

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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

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.

Clint Boulton
Clint Boulton
Clint Boulton is an Enterprise Storage Forum contributor and a senior writer for covering IT leadership, the CIO role, and digital transformation.
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