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The Cutting Edge: Focus on E-Commerce

BofA, Chase, IBM to Form Electronic System to Cut Handling Costs

Viewpointe Archive Services will create digital images of checks that can be shared electronically by banks.


NEW YORK — Two of the biggest banks in America and IBM Corp. are setting up a new, electronic processing system that could greatly reduce bank costs in handling paper checks.

The system, known as Viewpointe Archive Services, also will make it possible for consumers to get copies of their checks from Web sites and automated teller machines maintained by banks.

The system--launched by Bank of America Corp., headquartered in Charlotte, N.C., and Chase Manhattan Bank of New York--is aimed at speeding up the processing of the estimated 68 billion checks that Americans write every year.

William H. Hoefling, executive vice president at Chase, said Wednesday that the system will create digital images of checks that can be shared electronically by banks, potentially cutting processing costs by 30%.

He said that the venture hopes to sign up "a significant number" of other banks over the next several years.

James D. Dixon, who heads Bank of America's online operations, said the process "will have a huge impact" on bank users.

He said that Bank of America customers will be able to go to banking centers, ATM machines or use their personal computers to view and print copies of their checks. Dixon also acknowledged in a teleconference that the system would make it possible for more banks to stop returning canceled checks or copies of canceled checks to customers.

Although some banks already have internal electronic processing systems, the new system would link banks nationally and allow them to exchange check images and clear the checks electronically.

Hoefling said that the typical paper check has to be handled a dozen times in bank processing--six times by the issuing bank and six times by the receiving bank.

Bank of America, the nation's second-largest banking company by assets, processes 40 million checks a day, or about 10 billion a year. Chase, the nation's No. 3 bank, handles about 2.5 billion checks a year.

Viewpointe Archive Services will be based in Houston and initially will have 30 employees drawn from the two banks and IBM Global Services, a division of IBM of Armonk, N.Y. The IBM Global data centers that will maintain the archive are in Dallas and Boulder, Colo.

The bank officials said that Bank of America, Chase and IBM had put up the initial capital for the venture, but declined to give the amount. They said they expected more equity partners in the venture.

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