Future Proofing for the Check-pocalypse

I recently read yet another article predicting the end of the check. As a twist on this recurring topic, the author was trying to accurately calculate when the last check will process. The recurring and entertaining press coverage of the “check-pocalypse” is encouraged by our casual observation of individual consumer transactions. During a recent dinner conversation with new acquaintances, I described my work on check-related payments. The table practically responded in harmonized chorus, “I didn’t realize anyone still wrote checks. I do all of my payments online.” Having heard this erroneous reaction many times before, I replied with my standard friendly inquiries, “Do you send your kindergartner to school with cash for payment to the PTO or for a field trip? What do you use when you need a record of your timely payment? How do you pay small businesses like landscapers?” With pause, the table admitted, check payments continue to serve a necessary purpose for individuals – let alone for businesses. The importance of check payments as a convenient payment method has not been replaced. I assure you, the last check is not being processed anytime soon.

How long exactly? Well, my crystal ball is no clearer than yours, but it will not be before your next technology refresh is needed and it certainly will not be before your next audit. In fact, the question should not be “when will the last check be processed?”, but should be “how many more maintenance and support contracts do you have to sign for aging software in support of a long declining, but fundamental financial instrument?”

Financial Institutions addressing the slope of check decline need to think Operating Expense vs Capital Expense (Op Ex vs Cap Ex). Face the facts, no one wants to ask for capital expense for managing checks in 2016, let alone 2017, 2018, 2019, … Financial institutions need the flexibility to reduce costs as the number of checks also declines, while being able to future proof for common business changes like acquisitions (which require consolidation of check archives) with an equally balanced cost structure. While the general trend is check decline, business changes cause near-term peaks and valleys of checks being managed with acquisitions and divestitures that are difficult for aging systems to manage. This ‘elasticity of processing technology’ is exactly what cloud economics address. Check solutions in the cloud provide financial institutions what they need, as they need it, with a pay-per-use pricing model.

Now what types of cloud offering works for something like checks? Everywhere you look, you see yet another iteration of a vendor’s software being shoe-horned into a cloud offering. Typically, these services are part of a wide swath of products, many of which you pay for when you only need a small piece of the whole, similar to how your cable provider bundles channels you frequently watch with channels you have no interest in. In the world of check, the pieces are fairly straightforward: you need to process and pay the check and you need to archive the check to meet customer and regulatory retrieval requirements. Processing, including handling returns and exceptions, and ultimately paying of the check is what you do best either in-house or possibly through some sort of item processor. When it comes to archiving of the check, the item processor will typically bolt on a basic archive that suits their last client’s needs. One that you can shoehorn your processing needs into, at least with this version of the software. But what about the next version and the one after that? Will you still be supported? Will they still even offer that service? Do they have the critical mass to still offer that service to you as the last check is processed or will you once again, be trapped in a cycle of software and maintenance contracts and procurement cycles? Or even worse, you don’t want to be the very last customer using aged software.

Selecting the correct cloud service for your payment archiving can be the last check archive decision you ever have to make. What you need is a private cloud purpose-built for storage of financial institution checks that is priced in an operating expense model. Secure. Flexible Service. Purpose Built. Op Ex. It really is that simple. If you’re prepared to handle whatever the future may bring, you don’t need to obsess or worry about the date of the last check. That’s what I do every day – future proofing so that our customers are prepared for all the peaks and valleys on the long, unpredictable check reduction.

By Richard Luchak | September 8, 2016| Check , Cloud , Data Archiving , Modernization , Payments , Security & Compliance


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Richard Luchak

Mr. Luchak, with more than 15 years of experience in the financial services industry, focuses on Viewpointe’s payment products. Since joining Viewpointe in 2001, Richard has provided thought leadership in image exchange and settlement, contributing to the building of the company’s business. He is a contributor to X9 and the Check Image Collaborative in the authoring of various financial industry standards including the X9.100-187 standard and the subsequent Universal Companion Document. Richard holds a M.B.A. from LeTourneau University. Full-time father of two active teenagers under the driving age, Richard moonlights as a chauffeur. He is a big fan of the Houston Texans, roots actively against the Dallas Cowboys, and volunteers tirelessly for various organizations when football season is over.

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