Saving $2 Billion Annually Through Electronic Check Processing
Check 21 Legislation and Electronic Processing
By the end of the 20th century, it had become clear that the traditional paper-based check processing system was too slow and expensive for the demands of modern banking. Consumer behavior, too, had changed and growing numbers of people were using the Internet to conduct their banking and pay their bills. Keeping up with the changing times, the U.S. Congress passed Check 21 legislation, which, among its other provisions, created a new negotiable instrument called a substitute check that permitted banks to process check information electronically.
Syntel's client is a diversified financial services firm with assets of $482 billion, serving more than 23 million customers through 6,200 locations, the Internet and other distribution channels. To comply with Check 21, the client set up a service that enabled its commercial customers to scan and deposit checks and perform related bookkeeping tasks electronically from their places of business, through the firm's proprietary Web portal. The back end of the system gathers the scanned images and transfers them to a server where they are tested for authenticity and approved for processing.
The client brought Syntel in to design and implement a back-end system for the Web service that would comply with Check 21 requirements.
The client's commercial customers, scattered across the United States, used various scanner models from a range of vendors. Accordingly, Syntel needed to develop a framework that could support all the scanners in use. The scanner interface application, however, was a third-party product that had little documentation and support, and would require the development of ActiveX Web controls.
Once the check images were received from the scanners, the images - along with the attendant check data - were to be transferred via the X9.37 file format to a mainframe for processing. Syntel had to develop a mechanism for the transfer.
A key requirement was to enhance the user experience by focusing on utility, convenience and ease of use. Syntel was given a tight schedule to complete the project as the client wanted to bring the Web service to market quickly.
Syntel designed and built a suite of products that enabled customers to perform a multitude of tasks. Client side components were developed as ActiveX controls and could be downloaded by customers over the Web to interact with their scanners. Customers could scan checks and coupons, transmit the images for settlement, download scanner drivers, order scanners and accessories online, resolve any exceptions due to issues in scanning, reprocess the checks, generate reconciliation reports and make GL adjustments.
As the shortened deadline loomed and tasks multiplied, the Syntel team grew to a peak of 52 members, with 25 percent of the staff onsite and 75 percent offshore. The onsite team analyzed requirements, designed system and user tests, and coordinated the system's implementation with the client's technology team. Syntel's offshore team built and delivered the system.
To ensure timely completion of the project, Syntel employed a steering committee, project managers and leaders, supported by a status tracking, monitoring and reporting system.
The client's Web service has attracted considerable interest from customers. More than 500 of the client's commercial customers are now using the service, which in a short period processed one million checks worth $9 billion in deposits. Approximately $12 million in deposits are processed every day with the Syntel-built system.
The client estimates they are saving $2 billion annually through electronic processing. In addition, by carrying out 75 percent of the work offshore, Syntel delivered even more cost savings to the client.
The client also realized operational benefits. Based on Syntel's work, the client evolved a J2EE framework that was adopted in all its Check 21 suites of applications.
"This process is central to Syntel's delivery of leading-edge depository services to our customers," said Syntel's client manager. "The client now has a fully integrated, home grown, 'thin-client' remote capture application that is industry leading."
JSP, Servlets, Struts, ActiveX, Web Services, WebLogic 8.1, Oracle 9i, COBOL, DB2.