The Emergence of Electronic Cheque Processing

February 2009

In today’s competitive banking landscape, it is vital to take advantage of emerging technologies to improve business efficiency. Electronic cheque processing is one such technology and is aimed at making cheques acceptance easier, safer and more cost-effective for banks.

Paynet Kenya and Finteq of South Africa have combined forces to offer a full spectrum solution which meets the requirements of the Central Bank of Kenya for this service, which will allow Kenyan banks to electronically process and clear cheques and other EFT (electronic funds transfer) data between their institutions and the Clearing House at Central Bank of Kenya.

In this new process, banks will capture the full front and back image of a cheque at the point of presentation and together with financial records and EFT data, electronically transmit those images to the Clearing House for exchange between banks.

Currently, banks have to build electronic files and submit them to the clearing house for clearing and settlement. Representatives from the banks then physically go to the Clearing House to exchange the physical cheque documents. This process is expensive, labor-intensive and increasingly subject to fraud and other risks.

There are a number of benefits that can be derived from the cheque truncation process:

• Reduction of clearing time, particularly in remote/country areas where clearing periods are longer, via distributed capture.
• Reduction in the costs of couriers due to not being forced to move paper on a daily basis.
• Reduction in cheque substitution, which can be extremely costly to banks, not only in lost funds, but the time and effort put in by staff to track and trace these actions.

“This electronic process will help streamline the cheque acceptance process, reduce paperwork, and expedite closing, balancing and settlement.  In addition, this new process presents the opportunity for substantial cost savings and superior customer service across the business’’, said Rob Muller Commercial Director of Finteq South Africa.

Rob Muller and Andy Theron are scheduled to give a detailed presentation at this month’s Banking & Payments Technology Conference and will provide an objective, analytical agenda that will help banking experts analyze the potential of electronic cheque processing. The Conference whose theme is Serving Customers through Payment Technologies will be held at the KICC from 17th – 19th February.

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