New Banking Group Aims at Smoothing out Image-Exchange Process

A new, eight-member banking group that is working to smooth out the remaining kinks in image exchange, the process by which paper checks can be turned into images and settled electronically, has released four recommendations and is working on another eight. The Image Industry Interoperability Group, or i3G as it styles itself, last week released its guidelines for resolving duplicate file presentments, proper use of bank-of-first-deposit endorsement records, use of so-called TIFF tags for images, and MICR line requirements for imaged checks. More recommendations are on the way from the panel, which began meeting last summer and includes a mix of large and small institutions, including Bank of America Corp., The Federal Reserve Bank, Frost Bank, JPMorgan Chase & Co., the Independent Community Banking Association, Southwest Corporate Federal Credit Union, U.S. Bank, and Wells Fargo. Midwest Independent Bank is representing the ICBA on the panel. “It's not a cast of thousands because speed is critical to making this effort work,” says a spokesperson for BofA. “There's no investment [by members]. This is roll up your sleeves, with sweat equity.” The first four recommendations are just the start. “We have a dirty dozen of issues that were annoying us,” says the spokesperson for Bank of America. While the i3G guidelines don't carry the force of rules or regulations, they do come with policy recommendations that entities such as the Federal Reserve or the Electronic Check Clearing House Organization (ECCHO), the Dallas-based rule-making body for image exchange, can adopt, the spokesperson says. Perhaps the most pressing of the first four recommendations has to do with communication regarding duplicate items. Duplicates are not as numerous as in the recent past, but “when they happen they're large and onerous,” says the BofA spokesperson. And while most paying banks have worked out ways to prevent duplicates from affecting account holders, there remains a messy accounting process for reversing settlement entries between banks, the group says. The key, says Bill Brennan, director of item processing operations at Southwest Federal CU, was to recommend a communication channel separate from the returns and adjustment process for paying banks to request information from banks of first deposit, or intermediaries. “The normal adjustment channels weren't created for handling this,” notes Brennan. Another issue, that of tagged image-file formats (TIFF) tags, refers to coding accompanying images that gives instructions on how to decode them. A leftover from fax-machine technology, TIFF tags required a standard specific to checks, the group says. Otherwise, improperly tagged items might not render on image viewers. They could, for example, appear blacked out. Image exchange continues to take hold among banks. Some 1.22 billion items flowed through image-exchange networks in October, the latest month for which statistics are available, according to ECCHO, up from 428 million checks two years earlier. Annualized, that October volume represents 44% of total paid check volume in the U.S., ECCHO estimates.