Case Study
PNC Distributed Capture
How VICOR Distributed Capture Expedites Check Clearing
with Intra-Day Complex Payment Capture at PNC Bank
In October 2004, the banking world changed. That’s
when Check 21 rules on check images were adopted, clearing
the way for a revolution in check processing. Since
that time, financial institutions have deployed distributed
capture solutions at breakneck speed. PNC Financial
Services Corp. one of the nation’s largest financial
services companies with assets of nearly $98.4 billion,
recently set on a course to deploy VICOR’s Distributed
Capture solution for complex payment processing.
Checks in transition, and transit
Use of the business check is declining. It’s no
secret that volumes have been dwindling in recent years
because of increases in alternative payment forms such
as p-cards, wire and ACH. But as shown recently within
the VICOR CPPI, payments processors will operate in
a world of convergent payment types for the next eight
to ten years until straight-thru processing is realized.
As a result, processors must find solutions that process
payments in the most efficient and cost effective manner
possible.
PNC operates nationwide network of lockbox sites that
process over 6.0 million B2B payments each month. However,
a number of their corporate clients receive a portion
of its check payments outside of the normal lockbox
flow. These checks can show up at the client’s
corporate headquarters or at a field location. In most
cases, an employee at the company typically packages
and reships these checks via an overnight carrier to
one of the PNC lockbox sites for processing. Not only
is this a time consuming process, the cost of handling
the package is significant. PNC Senior Vice President
Bert Sciulli estimates that courier costs alone range
from $10-$15. “On top of that, actual handling
costs can range from $3-$8 for each envelope,”
says Sciulli, who notes that labor effort on both sides
is intensive – the originator needs to package
and ship the payment and supplemental documents, and
the lockbox provider needs to open the envelope and
ascertain information such as lockbox ID and address
- items not normally included on the courier envelope.
Capturing locally, processing centrally
When PNC examined ways to combat the courier conundrum
and take advantage of new technologies for check electronification,
it turned to VICOR, a Metavante company and the leading
provider of solutions that optimize the processing of
complex payments. Since 2000, PNC has successfully partnered
with VICOR for receivables solutions. VICOR Distributed
Capture was a logical fit because of its thin client
architecture, ease of installation, and unique ability
to image complex payments - those payments with associated
documents such as invoices, coupons, remittance instructions
and envelopes.
VICOR Distributed Capture enables a corporate user
to process complex payments easily: a scanner, Internet
connection and minimal software are the only requirements.
The images are transmitted via a secure Internet connection
to a Distributed Capture server located at the financial
institution’s central processing site. At PNC,
the server feeds directly to the lockbox network. Imaged
checks and supplemental documents are fed into the overall
transaction stream on an intra-day basis. Customers
can view these locally captured checks and supplemental
documents through web or transmission outputs on a same
day basis. Distributed Capture is initiated and managed
by an intuitive user interface that is browser based.
A speedy rollout
After a successful pilot with three clients in the fall
of 2006, PNC introduced a new product called "Remittance
On-Site" based on VICOR Distributed Capture technology.
Since that time, over 30 clients have been implemented
on the service and are actively using the feature on
daily basis. According to Sciulli, all new client implementations
have been seamless and acceptance of the product has
been overwhelming. Once the necessary hardware is installed,
the client is typically up and running on the application
within a day. While the module is designed to work with
any TWAIN scanner, PNC currently certifies the Kodak
I40 scanner which can capture up to 25 pages or 50 images
per hour and has a document feeder that handles small
or thick documents. Once scanned, images are fed directly
to central processing sites.
An easy close
According to a report by Celent LLC in May 2006 called
Remote Deposit Capture Vendors: Crossing the Chasm,
"The elegance in VICOR's solution lies not in the distributed
capture functionality but in the seamless integration
of remotely captured information with the centralized
wholesale lockbox workflow." Thus exceptions are processed
more efficiently at PNC because of the rapid pace at
which checks and documents are scanned and fed into
the network lockbox.
"PNC corporate customers who have installed Remittance
On-Site are now depositing checks and posting receivables
at minimum one day earlier," says Sciulli. "Consequently,
monthly, quarterly and year-end balance sheet reporting
is timely and more accurately reflects a company's accounts
receivable position. Courier expenses and the associated
handling costs have evaporated while providing corporate
clients with a comprehensive image archive of all of
their accounts receivable documents."
Though volumes are declining, checks are still the
primary source of payment for B2B transactions. Having
solutions that process checks close to the source of
origination gives institutions like PNC competitive
advantage for today and the near term.
About PNC Financial Services Group, Inc.
PNC Financial Services Group, Inc., is one of the nation's
largest diversified financial services organizations
providing retail and business banking; specialized services
for corporations and government entities, including
corporate banking, real estate finance and asset-based
lending; wealth management; asset management and global
fund services.
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