New system speeds up banking

Technology allows checks to be scanned electronically for deposit

Friday, Dec. 29, 2006

Click here to enlarge this photo Laurie Dewitt⁄The Gazette Brian Pfeiffer, COO of Payce in Towson, says the company’s new remote check-depositing system has ‘‘certainly paid off for us.”

The system, which uses a scanner to deposit checks electronically, has not only cut down on time at the bank but put the company’s money in its accounts sooner, said Brian Pfeifer, COO of Payce, a 40-employee payroll and human resources administration company in Towson.

‘‘We can keep everyone where they are in the office,” said Pfeifer, whose company deposits more than 30 checks weekly. ‘‘It’s certainly paid off for us.”

Payce uses a system implemented recently by Provident Bankshares Corp., the Baltimore parent of Provident Bank that has $6.4 billion in assets. Provident has been reviewing the technology for about two years, said John Goedeke, senior vice president for commercial services.

‘‘We wanted to make sure it was tested thoroughly,” Goedeke said. ‘‘Better scanners have emerged since we first started looking at it, which we have used. We are one of the few banks of our size to provide this service.”

The system came about after the federal Checking for the 21st Century Act took effect in 2004. Among its provisions, the Check 21 law makes electronic checks the equalivalent of original checks.

Banks that offer the system include PNC Financial Services Group of Pittsburgh, which has assets of about $89 billion and hopes to complete its $6 billion purchase of Mercantile Bankshares Corp. of Baltimore by April. If that deal goes through, Provident would become the largest bank headquartered in Maryland.

More than 200 banks and about 12 percent of businesses across the nation now employ remote deposit, said Christine Barry, director of research with the Aite Group, a Boston financial research and consulting company. Large banks started using it initially, with more small and mid-sized ones coming on board in recent months, she said.

In a recent survey of some 270 smaller community banks with assets of less than $5 billion, about 70 percent of officials said they planned to employ remote deposit in the next three years, she said.

‘‘It helps get rid of the disadvantage due to location,” Barry said. ‘‘Many large banks have branches across the country, and this is a way smaller banks are leveling the playing field.”

HarVest Bank of Maryland, a Rockville institution that has $90.6 million in assets, plans to roll out remote deposit in the near future, said John P. Hollerbach, president and CEO. ‘‘That is one of the new services we have looked at, and we plan to have that early next year,” he said.

With new banks such as Commerce Bancorp of Cherry Hill, N.J., entering Maryland, the competition for customers has intensified. Two new institutions entered Maryland in the past year, while the number of branches in the state increased by 2.5 percent to 1,749, according to the Federal Deposit Insurance Corp. Maryland bank deposits rose by 4 percent to $92.8 billion.

‘‘When you have the kind of competition we have, you need every advantage you can get,” Goedeke said.

Besides purchasing the scanner, which can cost anywhere from several hundred dollars to more than $1,000, customers buy Windows-based software. They also pay the normal per-item fee, which is standard through the old system.

Each check scanned generates an electronic image of its front and back that is transmitted directly to the bank. Electronic deposits received before 6 p.m. are processed on that same business day, which can extend the banking day for customers, Goedeke said.

After checks are electronically processed, many scanners will mark the checks to make sure they can’t be deposited a second time somewhere else, Barry said. Most banks still print out the checks on the other side, she said.