Image Quality: The Quiet Problem That Still Costs Millions

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Image quality is a critical but oft-overlooked element of the modern check clearing process. While there is no question that electronic settlement represents a vast improvement over the paper processes of a decade ago, precision in the image capture process is necessary to avoid time-consuming rejections and costly fees.

Digital Check conducted a study of several major national and regional banks to identify the following:

How frequently scanned checks and money orders fail image quality screening;

The major causes of image-quality problems;

Which issues are easily correctable, and which trigger expensive “Day 2” errors;

The cost of image-quality issues to banks, both in easily quantifiable dollar terms and in hidden operational churn.

The results showed that minor errors occur almost constantly – tens of millions every day nationwide – but most are easily correctable. Day 2 exceptions are much less frequent, but account for a tremendous share of overall clearing expenses, thanks to the research and repair process, transportation costs, expensive fees, write-offs, and sometimes a paper settlement process. Ultimately, the sum of all these costs totals hundreds of millions of dollars annually.

Using the latest technology, it is possible to reduce – or in some cases, eliminate entirely – the high costs associated with these exception items; the second section of this report is therefore dedicated to best practices for banks to reduce settlement costs through greater efficiency.

As a maker of image capture devices for the banking world, we feel it is our job to deliver not only the highest-quality equipment and the latest technology, but also the guidance that helps financial institutions get the most out of that technology. We hope that you will find this study beneficial in helping to make your check settlement process the best it can be.