Going … Going… Goingbut not yet gone.

Greetings from BAI Transpay where bankers and vendors gathered to discuss payment issues. Check volumes are dropping and banks are racing to drop costs as quickly as customers are dropping volume. Checks are being imaged, converted to ACH and replaced by debit so that paper check handling is dropping dramatically.

Banks are making mighty efforts to drop costs in line with these decreases. JPMorgan Chase (plus WaMu) has dropped from 3200 people to 1400 in check processing and gone from 21 processing centers to 13.

BB&T has moved to 99% image exchange for sending and receiving images and has branch capture in 400 out of 1500 branches. Frost Bank has dropped head count in check processing by 30%. All banks are racing to reduce costs.

The most painful part of the process will be deciding when volumes get really low. A bank will need to decide whether to:

- Stop working with paper all together

- Keep what little remains in house

- Outsource the remainder

We aren’t there yet, but even the largest banks will soon get there.