Right-time visibility set to address cheque fraud in enterprise payments

Visibility is the new business buzzword. Maximising business processes, input, output, effectiveness, compliance and profitability requires complete visibility across the organisation.

At any given point, members in an organisation should easily see and understand any aspect of the business; and appreciate the different impacts achievable throughout the organisation when new elements are introduced.

Two major issues currently burden financial institutions: compliance with the plethora of regulations, such as King II, Basel II, the Financial Intelligence Centre Act (FICA) and the Financial Advisory and Intermediary Services Act (FAIS); and reducing unnecessary costs to the business through the introduction of technology and new methodologies.

While compliance issues and costs are significant, consider the impact on enterprise payments, particularly as it relates to the cheque as a payment instrument.

Estimates released by the Bank for International Settlement indicate that electronic payments worldwide surpassed paper payments back in 2000: 88.2 billion electronic payments versus 83 billion cheque payments. This presents something of a conundrum: cheque processing is an expensive endeavour for any bank, but it can also be lucrative, accounting for $23 billion in revenue in the US in 2001. Having said that, as cheque volumes decline, processing costs are set to increase. 2005 figures, as released by the UK payments association APACS, show that just over 5.3 billion cheques are issued globally every day. Yet, according to the British Association for Payment Clearing Services, 2009 will see a fall in cheque payments to a mere 1.55 billion.

Technology vendors and banking institutions are scrambling to find solutions that will help consolidate and reduce the costs of cheque processing, eg in South Africa, Absa and Standard Bank "co-sourced" their processing efforts through the creation of IPS. Others will have to do the same to drive down costs and to ensure that all compliance requirements are met in curbing among others, the increasing incidence of cheque fraud.

The answer lies in the combination of methodology, processes and technology; all based on the framework of right-time visibility, the ability to adapt rapidly to changing customer requirements and business environments.

Right-time visibility hinges on the ability to have an infrastructure in place that is modular and changeable and that supports the crucial business processes. A blueprint must be in place that illustrates the interconnectedness of each of the four layers in any business: strategic, operations, application and infrastructure. This map empowers the organisation to deploy the right processes and technology at the right time.

The philosophy embraces visibility of the bank's infrastructure and operations, visibility of its service offerings and associated processes, and visibility of its customers.

Applied to the cheque payments process, right-time visibility enables the bank to monitor the movement of each individual cheque from the moment it was printed through to its being banked at an ATM or branch, tracking it through the processing stream to the day it is archived or destroyed. Throughout this secure banking process, detailed audit trails are recorded, delays in the process highlighted and possible fraud identified. If a cheque leaves a remote branch and only arrives at the next point in its journey days after it is expected, or does not arrive at all, alerts can be activated and investigations launched into why this happened and what impact it has had on the cheque.

Was the cheque's delay caused by an employee tampering with it along the way? If it has disappeared, triggers need to be placed to identify the AWOL culprit when it resurfaces, trace where it came from and so get closer to fraudsters.

Right-time visibility of cheque processes empowers banks to fine-tune their operations. They are more easily able to identify where costs can be saved, where security measures need to be tightened, where customer reassurance can be enhanced and where unnecessary processes can be eliminated.

For greater impact, right-time visibility can be further extended into areas that only briefly touch the cheque in its movement through the system. For example, more visibility can be achieved around the person who wrote the cheque and the account for which the funds are intended. What efficiencies can be achieved in the processes related more directly to customers? Having a clear view of the customer enables the bank to cross sell its products, monitor account transactions and improve its customer service.

As the presence of cheques diminishes worldwide, banks that embrace right-time visibility will have the power to streamline the necessary processes. They will not be forced to begrudgingly carry the burden of increasingly expensive cheque processing. Instead they will be able to maximise the presence of the cheque as one of many services they viably, profitably and securely offer.