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Cell Phone Software Formats Checks For Online Banking

ImageNet Mobile Deposit uses the camera phone as a handheld scanning device to let customers check balances, request transfers, and pay bills.

Mitek Systems, a developer of image analytics and pattern recognition technologies, this week rolled out what it claims to be the first mobile banking software that turns paper checks into a format acceptable by banks through the use of mobile phone cameras.

The software, called ImageNet Mobile Deposit, uses the payments industry's standards for remote check deposit, according to Mitek. The idea is allow consumers to make mobile payments and deposit checks remotely without having to visit their local bank. Instead, consumers can perform these tasks using their mobile phones.

A similar idea already has been adopted by wireless carriers in the United States, who have collaborated with various financial firms to offer mobile banking to their subscribers. Earlier this month, Verizon Wireless rolled out a mobile banking application that lets its subscribers access their bank accounts and pay bills on their cell phones and smartphones. Participating banks include Wachovia, SunTrust Bank, Regions Financial, BancorpSouth, Synovus, FirstBank, Arvest Bank, and America First Credit Union. AT&T introduced a similar mobile banking service to its subscribers in November.

But Mitek said its ImageNet software gives consumers additional capabilities that they didn't have before.

"In addition to being able to check balances, request transfers, and pay bills on mobile phones, banks can take advantage of ImageNet Mobile Deposit to offer more advanced services to customers, like check deposits. We see the camera phone as a handheld scanning device that makes all this possible," said James DeBello, CEO of Mitek, in an interview.

Worldwide shipments of multimedia-enabled mobile phones will exceed 300 million units this year, surpassing shipments of television sets, according to a recent report by MultiMedia Intelligence. Sales of such phones will generate over $76 billion in revenue. MultiMedia Intelligence defines basic multimedia phones as those that have at least a 1.0-megapixel camera, MP3 audio and video playback capabilities, Java, USB, Bluetooth, 16-bit screen color, QVGA resolution, as well as Wireless Application Protocol and Multimedia Message Service support.

Here's how the mobile check deposit application works: Users first download ImageNet Mobile Deposit on their phone. Then they initiate a mobile banking session, key in the deposit amount, and take a photo of both sides of the check. The software uses the images to extract the check's Courtesy Amount and Legal Amount and transmit the information to the appropriate bank. Finally, the bank sends a confirmation to the user in a text message.

Paying paper bills works in a similar manner where the user captures the image of their payment coupon, key in the payment amount, and indicate the payment date. ImageNet Mobile Deposit then sends the information to the bank. Again, users get confirmation of the receipt in a text message.

Any financial transactions taking place over wireless networks raise security concerns. That's why Mitek, which has been supplying financial institutions with pattern recognition technologies for about 15 years, said it took several security measures to ensure that bank customers don't become victims of fraud.

Mitek has implemented three layers of security, said DeBello. The first complies with the Federal Financial Institutions Examination Council's requirements where users must authenticate themselves by using a Personal Identification Number to log in. The second involves encryption of locally stored data, such as a stored image of a check. The third uses a Secure Sockets Layer, a security protocol developed by Netscape to validate the identity of a Web site and to create an encrypted connection for sending personal data over the Internet.

In addition to those methods, images transferred using ImageNet Mobile Deposit meet Check 21 standards, DeBello said. Check 21, or Check Clearing for the 21st Century Act as it's officially known, is a U.S. federal law that became effective in October 2004, and allows the creation of a digital version of a paper check. The law states that banks can process checks electronically, as long as all the information is captured accurately from the original check.

"We have techniques to authenticate the checks and verify that they're being deposited to the right account. We call it secure code authentication where we create a code that represents the unique characteristics of your signature. We compare that code to already stored code of your signature that a bank would maintain," said DeBello.

Mitek expects the application to go commercial in the second quarter of this year. Banks, wireless carriers, or mobile banking platform providers can offer it to mobile users as a standalone product or as a bundled service. DeBello said his company has received a high level of interest from financial firms and Mitek is in discussions with several banks, the names of which haven't been disclosed yet.

ImageNet Mobile Deposit is compatible with most camera-equipped mobile phones and mobile platforms, including Microsoft .NET and J2ME. Mitek recommends phones with two megapixel cameras and higher for the best quality. But it won't work on BlackBerry smartphones or Apple's iPhone yet.

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