BofA sets off on digital check trail

Bank of America's customers are getting a crack at moving checks off the paper trail and into the digital realm, part of a trend that could end up saving banks millions of dollars.

The bank announced on Wednesday that online customers in Georgia and Tennessee can view and print images of their canceled checks and deposit slips.

This is a first step in a national rollout around the United States, planned for completion by March 2003, which would make the Bank of America the largest bank to provide online digital check imaging nationally.

Customers will have access to copies of the front and back of their checks or deposit slips that have cleared within the previous 45 business days.

A growing number of banks are implementing digital imaging of checks for their customers. The move is considered the first step in a strategy whose ultimate goal is to let banks process checks electronically--that is, without physically moving the paper through their systems.

Pending federal legislation is providing momentum for the general move to digitize checks. The legislation, the Check Clearing for the 21st Century Act, would pull paper checks out of the equation the moment they are handed over to a bank.

This emerging technique, known as check truncation, could help banks save millions of dollars in operating costs, according to the financial industry. Consumer groups, however, argue that the legislation and the technology behind it would impinge on consumer privacy rights and habits, as well as hamper consumers' ability to recover losses resulting from check fraud.

Bank of America maintains that the new technology could help prevent fraud by allowing tellers to more quickly verify the authenticity of a check. The bank handles about 10 billion checks annually, making it one of the largest commercial check processors.

The images will be stored at Viewpointe Archive Services, which was formed by Bank of America, IBM and other financial institutions in 2000. Viewpointe also helps banks process check payments by transferring check images among banks.

In September, 20 of the nation's largest banks funded Small Value Payment Co. (SVPCo), a consortium of their payment systems, to build a network that will specifically handle the transfer of checks' digital images between member banks. The network is expected to be up and running in the first quarter of 2004, according to the company's president, Hank Farrar. Backers include Citibank, Bank of America and the Bank of New York.