Check/Check 21 Services

The mission of i3G: Breaking down barriers to straight-through processing

January 2009

According to an October 2008 report¹ (PDF) by the U.S. Government Accountability Office (GAO), many financial institutions and their customers agree the Check Clearing for the 21st Century Act (Check 21) has provided greater efficiency to the U.S. payments system. But talk to any bank operations expert and they’ll admit that while efficiencies have been gained overall, the industry is experiencing some behind-the-scenes growing pains from the new electronic world.

To address these issues, a small and diverse group of bankers, along with the Federal Reserve Banks and the Independent Community Bankers Association (ICBA), decided to band together and roll up their sleeves to develop reasonable solutions to remedy some of these lingering industry maladies. The Image Industry Interoperability Group, or i3G, was formed in mid-2008 and is comprised of representatives from Bank of America, the Federal Reserve Banks, Frost Bank, ICBA (represented by Midwest Independent Bank), JP Morgan Chase & Co, Southwest Corporate Credit Union, US Bank, Wachovia and Wells Fargo.

“To be fair, the paper-based U.S. check system has had over five decades to perfect its rules and operational procedures to achieve near-seamless efficiency,” stated Brian Egan, vice president of the Federal Reserve Banks’ Retail Payments Office and an active member of i3G. “While the industry has come a long way in the four short years since Check 21 was implemented, we all have experienced many costly operational ‘hiccups’ like cleaning up the aftermath of large-scale duplicate file events.”  These types of exception situations are barriers to realizing the full efficiencies of straight-through processing and in extreme cases, adversely impact bank customers.

“Our goal is to eliminate a large percentage of these exceptions with a few tweaks in how we operate,” added Larry Taft, first vice president of Midwest Independent Bank, representing the many members of ICBA.

The group agreed to collaborate with an open mind, trying not to solve 100 percent of the operational issues, but rather to find reasonable and achievable solutions to reduce a large portion of the issues. The group’s charter was drafted to complement and work with other established industry groups to make a positive impact for the payments industry.

At the onset, i3G members prioritized the areas of greatest annoyance for the industry then took the following actions to address those areas:

• Developed industry best practices for resolving large scale duplicate file presentment incidents
• Constructed guidelines for proper use of Bank of First Deposit (BOFD) endorsement records
• Worked with industry standards bodies to clarify the standard approach for Tiff Tag use
• Addressed MICR-line guidelines for imaged items

“With over 70 percent of banks participating in image exchange and most of the heavy lifting of adoption behind us, it was time to collaborate on resolving image operational issues ailing the industry,” stated Marie B. LaQuerre, senior vice president for Image and Electronic Payments at Bank of America. In the coming months, i3G will be communicating its recommended solutions and anticipated industry changes in many industry forums and through a series of Webinars. LaQuerre continued, “We look forward to swift industry adoption and welcome input on the next set of issues to address in order to move the industry towards the true spirit of Check 21 -- greater efficiency for the U.S. payments system.”

More detailed information about these i3G initiatives will be shared in future issues of FedFocus and at industry events including BAI TransPay^SM (Off-site Link).

¹United States Government Accountability Office, Report to Congressional Committee. Check 21 Act: Most Consumers Have Accepted and Banks are Progressing Toward Full Adoption of Check Truncation.

"BAI TransPay" is a service mark of the Bank Administration Institute.

Top of Page