BankservAfrica has signed an agreement with big four bank Nedbank, to process a component of its cheque operations. The solution is aimed at reducing fraud, as cheques will automatically have signatures verified.
BankservAfrica was formed in 1972 and is Africa's largest automated clearing house. The company processes about 2.5 billion transactions between banks each year, that it says are worth R8 trillion.
Nedbank is the first South African bank to enter into an agreement with BankservAfrica to process a component of its cheque operations. The bank expects the deal to benefit consumers because better verification processes will be put into place, it says.
Declining use
Martin Grunewald, CEO of BankservAfrica's Business Process Outsourcing unit, explains that bundling processes, which are seeing less use as payment solutions, in conjunction with the company's other solutions, will drive up economies of scale benefits.
“We have seen cheque volumes across all banks decrease annually from 264 million, 10 years ago, to 48 million today, as increasing numbers of consumers make use of credit and debit cards,” says Grunewald. Nedbank clears about 20% of these cheques.
He explains that BankservAfrica is now bundling cheque clearances into its other offerings, which allow banks to benefit from the volume of processes it concludes annually.
Grunewald adds that BankservAfrica has been pursuing a centralisation strategy because of the benefits it offers to banks that are seeing a decline in some forms of payments types. However, the company has not yet started talking with other banks, but hopes to do so to benefit from economies of scale as cheque use drops about 20% each year.
Automating processes
BankservAfrica will use solutions such as Sybrin Systems and Unisys to upgrade its reader sorter machines. It will also buy new high-performance reader sorters equipped with high-resolution imaging capabilities that will aid with character recognition, says Grunewald.
The new processes will aid fraud checks, as the technology matches signatures automatically, he adds. Grunewald says the bank will now have the cheque in electronic format, which can be sent back to clients if needed.
Adriaan du Plessis, executive head of transactional banking at Nedbank Corporate, says the new system will improve accuracy within the clearance process. “Our clients will enjoy greater accuracy and improved availability of cheque and deposit slip images to expedite their reconciliation processes, as well as improved signature and technical verification processes which will further reduce the risk of fraud.”
He adds that the bank will be able to re-engineer and automate its existing processes, which will result in improved internal reporting and accuracy of payment information, as well as the overall efficiency of this payment stream.
“Importantly, it will improve risk management practices, and over time, reduce the high fixed costs of processing cheques”, he says.
Earlier this month, the Competition Commission approved BankservAfrica's proposed acquisition of Nomad and Emid. The acquisitions form part of its strategy to innovate.
Nomad provides software solutions to facilitate co-operative transactional and value-add services on behalf of banks and their clients and will enable BankservAfrica to add value to the retail component of the payments value chain. Emid is a specialist provider of integrated account client management systems for companies, low-volume and entry-level banks.
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