Where is the money in Checks?

It is often said where there is a need there is profit.

Most people see paper checks as obsolete and on the way out. In the mind of most businesses paper checks are a necessary evil that will soon be replaced by electronic transactions – mainly in the form of credit cards. However, to us that is what makes paper checks so interesting and … profitable. As time moves on, paper checks will convert to electronic transactions – this is an opportunity. In many cases paper checks will linger as paper and not convert – this is another opportunity. Metaphorically speaking, someone will have to “take the trash out”!

The Federal Reserve has announced that by 2010 they will no longer accept paper checks from financial institutions. If the Fed sticks to this pronouncement it will be a pivotal event. The strategic implications are staggering. Banks have already begun to buy technology and services to convert paper checks to images and to accept images from the Fed or other banks. As banks convert to the new image based technology it will be a small thing to simply exchange checks bank to bank – why bother with the Fed?? This presents an opportunity for companies that can offer banks flexible seamless software that will support the conversion of paper to electronic transactions at all points of contact with their customers – teller lines, ATMs, drive through, internet or external third party processors such as lockboxes.

As banks become more electronic, we expect that handling paper will become more costly. These costs will be passed on to customers. Customers will seek out technology to convert paper checks to electronic transactions to keep their banking costs low and to improve the efficiency of their internal business processes by incorportating business automation solutions. Business automation tools will likely include bookkeeping, archival, research and other solutions.

As paper checks become obsolete, there will be many great opportunities to fulfill the needs of businesses and banks – opportunities to serve and by providing a service to profit.