Next Generation Recognition Solutions


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Next Generation Recognition Solutions

  1. 1. Next Generation Check Recognition Technologies For Teller Image Capture & Remote Deposit Capture Written By: Joe J. Gregory, Vice President Marketing March 2013
  2. 2. Introduction New recognition technologies continue to be ‘invented’ for the financial industry, particularly for teller image capture (TIC) as well as remote deposit capture (RDC). “Next Generation Recognition Technologies” will review the key technologies now available which enable image workflows to move from a state of average performance to exceptional. Early Generations vs. Next Gen Generally speaking, when first generation products are introduced to a new market, the primary objectives include: First generation products are focused on confirming the business case, achieving stability and penetrating the market. • • • • Prove out the concept and confirm a value proposition Achieve product stability Penetrate the market with awareness and use cases Provide attractive packaging during the product introduction stage to achieve overall market growth TIC and RDC both followed this path during the mid 2000’s, bringing innovation to distributed capture. The focus during this period was on the overall deliverable, rather than targeting implementation of best of breed components. Related to the check recognition component, early adopters were less concerned about read rates and misread rates, and most focused on proving out the workflow. The fact that many implementations only achieved read rates in the 60’s or 70’s was overlooked for the bigger picture. Now that platform stability and added value functionality for TIC and RDC has been achieved, it is time for new TIC and RDC implementations to take advantage of “next generation” check recognition technologies that solve various business problems associated with these workflows.
  3. 3. Solvable Business Problems #1 – The promise of “straight-through-processing” in a check processing workflow is very difficult to achieve due to capacity limitations in toolkit vendor’s CAR/LAR (courtesy amount recognition/legal amount recognition) engines. Although exceptions, including rejects and unreadable checks are now passed to tellers and merchants, the desired process is to eliminate human intervention. With technologies that deliver performance levels in the 60’s, 70’s and even 80’s, most implementations are still not even close to this goal. Once the infrastructure is in place for TIC and RDC, more advanced concepts can be pursued to address several remaining business problems. #2 – Balancing continues to be a problem for medium sized and large deposits. When items are misread or miskeyed, an intensive balancing process can be required, starting off with a manual review of most items. To put it into perspective, many recognition systems deliver 2-3 misreads per 100 items. It is problematic enough to locate these 2-3 items, but when a batch of 1,000 items is deposited, that’s 20-30 that must be corrected! #3 – Fraud and operational risk are major considerations when looking at TIC and RDC. Today, the ability to run real image fraud detection for on-us and transit checks including automated signature verification, check stock validation and alteration detection provides protection against counterfeits, forgeries and alterations. #4 – Eliminating over-the-counter paper completely is not yet realistic, but there are ways to dramatically consolidate and minimize the number of documents with new recognition capabilities. Impact Points Let’s assume for the moment that new generation recognition technologies solve the aforementioned business problems. The benefits are simply impactful; both tangibly and intangibly. When looking through the eyes of a cost analysis, savings can be over $1M per year for every 1M items processed.
  4. 4. There are many impact points which are improved with Next Generation Recognition 1. Smoother customer experience a. Faster customer transaction time b. Additional interaction & cross sale c. Greater customer satisfaction 2. Reduction in teller effort a. Reduce teller keystrokes and maximize efficiency b. Detect missing endorsements & signatures c. Easier training for part timers d. Less IQUA false positives e. Minimize rejects and exceptions enterprise-wide f. Improve the employee experience 3. Large and medium sized deposits a. Reduce “provisional” transactions and adjustments b. Reduce balancing frustrations 4. Operations a. Superior IQUA = Less NCI b. Research and adjustments savings 5. Management a. Staffing and high volume branch optimization b. Manage & monitor the performance systematically with minimal overhead c. Optimize staffing models 6. Support/IT a. Less issues with teller computers for recognition rates b. Easier to control and verify c. Push out changes seamlessly 7. Fraud a. Reduce on-us check fraud in cash checks and split deposits b. Reduce deposit fraud on transit checks Technology Behind Next Generation Performance The recognition vendors in the marketplace continue to provide incremental functionality and improvements. However, the true jump to Next Generation performance is predicated on these capabilities: 1. Multi-engine correlation with new voting and merge schemes: Each recognition toolkit utilizes somewhere between 3-10 recognition technologies depending on how they utilize
  5. 5. CAR/LAR/ICR/OCR/ALR, etc. These unique technologies or algorithms need to be aggregated and profiled based on the strengths and weaknesses of each set of algorithms. Next Generation recognition utilizes a sophisticated data mining approach to profile each engine and merge the results together to a single, usable score which minimizes misreads and maximizes read rates. The result: nearly 100% recognition performance on personal and business checks for smaller transactions. 2. Dynamic thresholding: This approach utilizes new engine logic to on-the-fly modify thresholds based on transaction size. A unique approach is needed by implementing new technologies to reach Next Generation status. The result: reducing misreads to 2 per 1,000 items, which dramatically reduces the number of errors in mid-sized and large deposits, thus improving balancing processes for TIC and RDC. 3. Item verification and “rebalancing”: This technology improvement leverages detailed multi-engine results to identify and flag potential items which are misread or miskeyed. The result: a reordering process can be implemented to streamline balancing even further. 4. Check box detection: Internal bank tickets are challenging to manage and can be very expensive. Although teller image capture does reduce some percentage of internal documents, the ideal scenario would be to consolidate to a single document for branch or teller image capture. The Universal Teller Document concept can achieve this by assigning specific tran codes to “check boxes” on the ticket.
  6. 6. Conclusion Next Generation recognition solutions provide a wide range of benefits including cost reduction (drive down unit costs), efficiency improvements, improved employee experience, increased staff utilization, fraud reduction and reduced paper. However, the most important benefit is an improved customer experience for both Teller Image Capture and Remote Deposit Capture. Feel free to contact Orbograph at or for support on any of these concepts. Orbograph has extensive experience and provide cost analysis models to help quantify these potential benefits. Phone: 800-995-2502, Extension 5042