Jan 14, 2013
The fiscal strength of financial institutions (FIs) has weakened under the stress of multiple economic and industry factors. A mandate to trim costs to reinvigorate their base and maintain profitability into the coming years grows increasingly difficult to fulfill. And, while the electronification of checks has been a step forward on the path of operational efficiency, initially yielding some economic benefit, it does not go far enough to solve the challenging issue of rising preventable exception item processing costs.
Exception item deposit processing is often a part of internal auditing that singles out abnormal items for further analysis or is directly related to system or process limitations. Any item or transaction that falls outside the boundaries set by the financial institution is removed from the normal workflow and flagged for exception processing. This practice, unique to these items, slows the workflow and invites errors not commonly seen in the majority percentage of the work - lost deposits, missing items, out of balance deposits, missed deadlines, etc.
Efforts to reduce these costs have sought to accelerate a less than optimal procedure. FIs hope to manage the expense by capturing check images in the banking center as early on as possible. Branch and teller capture is a step in the right direction, but results to date have been disappointing. Basic processing errors still frequently become Day 2 adjustment items, and the related operational costs are increasingly more expensive, eating into the upfront savings.