Reflections on a Decade of Cheque Truncation: What Others Can Learn from the US Experience

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26 September 2016


Celent has published a new report titled Reflections on a Decade of Cheque Truncation: What Others Can Learn from the US Experience.The report was written by Bob Meara, senior analyst in Celent’s Banking practice.

Celent offers a retrospective on the US cheque truncation experience to distill principles banks in other jurisdictions can apply to similar initiatives.

The Check Clearing in the 21st Century Act (Check 21) aimed to improve the safety and soundness of the US check payment system. It had nothing to do with products such as mobile deposit that have become such a success. After a slow start, US banks rapidly adopted check truncation because of the manifest and compelling business case for doing so. Regulatory pressure was not needed.

The US experience would have been improved, however, had the industry used cheque truncation as an invitation for wholesale process redesign, rather than an opportunity to simply electronify paper-based processes.

“Though the US financial services landscape is unique in many ways, other jurisdictions embarking on cheque truncation initiatives can learn much from the US experience,” says Meara.