Innovation: Paperwork at a standstill when cheques go digital

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GIROBANK has become the first in Britain to use imaging systems for processing cheques. Cheques arriving at the bank's processing centre in Bootle, Merseyside, are scanned and converted to digitised pictures. All subsequent operations are carried out using the image on a computer screen, doing away with the physical handling of cheques through five separate processes.

Each operator can now deal with about 2,400 documents each hour, compared with about 700 an hour under the old system. The pounds 6.3m system, which was installed by Unisys, will also cut the bank's costs by reducing the number of errors and the cost of correcting those that remain. Unisys says its customers in the United States have cut processing costs by 25 per cent.

Girobank, a subsidiary of the Alliance & Leicester Building Society, is unusual in not having any branches. Transactions are handled on its behalf at 20,000 post offices. And although much of the back-office work of other clearing banks is handled at the branches, at Girobank everything is passed back to five processing centres.

Under the old system, documents arriving each night from post offices were sorted into batches of 100 items. Each batch was passed to a microfilm work station and the documents fed through individually. The batch was then re-assembled and taken to a data capture terminal, where again each document was entered individually - to capture the machine- readable printed information and to key in handwritten amounts. Re-assembled once more, the batch went to another computer terminal for balancing. From there it was sent to a dispatch point and finally on to a machine that read and sorted the documents, putting them in order according to their destination. They might be destroyed or returned to the customer.

Using the image-processing system, documents arriving from the post offices are made up into blocks of 3,000 items and put through the Unisys DP1800 reader-sorter. This machine performs all five processes formerly carried out in separate handling areas, at the rate of 55,000 documents an hour. First it reads the printed information on the document electronically. Next it endorses it and prints a unique identification number on it. The document is then microfilmed for the archive. The machine records an image of the front and back of the document and sorts it into one of 24 pockets for disposal. This is the last time the document needs to be handled. From this point operators work with the image of the cheque on the screen, calling up each image in turn to key in the amount of each cheque. This is added to the other information from the cheque, which was previously captured by electronic means.

As the operator finishes keying the amount the image changes to the next document.

Not all documents are in mint condition, and if the reader-sorter is unable to capture the printed information, it will transmit the document to a data correction work station, where the operator keys in the amount and any other data which could not be captured electronically. The block of work is then transmitted to a balancing workstation and from there to the main ledger computer. The images are finally deleted to make room for more.

The microfilm provides an archive, allowing Girobank to get rid of the paper documents. In future Girobank will use the imaging system to read handwritten amounts. The Huntington Bank in Ohio, a Unisys customer, is already doing this. Experience shows that the vagaries of handwriting make it possible to read only 70 to 80 per cent of cheques correctly. Like a supermarket bar-code reader, if the system cannot read the writing it alerts the operator, who then keys in the amount.

'The speed with which transactions are handled will not itself be visible to the customer,' says Sean Clarke, Girobank's operations director. 'We already process the transactions on the day we get them, and update the customer's account on the same day.

'But the imaging solution will give better cost control and support the delivery of Day One service.

'The new systems will also be inherently more reliable. By reducing grounds for complaint, this will enhance customer service.'

(Photograph omitted)

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