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Financial Institutions
and Imaging Systems
What You Need to Know About Designing Documents
BY SHARON McLOONEFORM, March 1994
MICR quality has improved greatly over the past decade, but one of the biggest advances in MICR efficiency is the use of image processing. The basic idea behind image processing is to reduce the manual processing of MICR documents such as checks and deposit tickets. In addition, banks are using high volume image processing instead of returning paper checks to customers after they have cleared all necessary banks. "It's important to note that an image reader is a compatible technology with MICR documents, not a replaceable one," says Jim Stewart, marketing manager of Stewart Business Forms Inc., a Blackwood, N.J., manufacturer.
Image Processing of MICR Documents
Almost any MICR document can be electronically scanned, such as:
• Cash Tickets
• Checks (Personal, Business)
• Control Documents
• Debit/Credit Slips
• Deposit and Withdrawal Tickets
• General Ledger Forms
• Gift Certificates
• Loan Coupon Books
• Traffic TicketsWhen image processing is used, incoming checks are sent through a high-speed reader/sorter where the dollar amount and other predetermined data are scanned by a high resolution camera that converts the information to a digitized format. The technology enables systems to read handwritten check amounts, increasing the speed of the encoding process. These systems work with "recognition logic" that allows a computer to process information by recognizing patterns in signals. According to the Bank Administration Institute, the average check proofreader can examine amount fields on checks and manually encode 1,200 checks per hour. When the identical checks are imaged and displayed on screen, the encoding rate improves to more than 2,400 items per hour. Image recognition technology (IRT) combines optical scanning with MICR. NCR, IBM and Unisys have developed their own IRT equipment that was recently put on the market.
Only about 9 percent of all banks used image processing in 1992, but this number is growing rapidly, according to Ed Alwood, public relations director of the American Bankers Association in Washington, D.C. The technology has been around for about 15 years, he says, but its use is increasing now that cost and efficiency are making it more practical, although the cost is still high. "Systems can cost $3 to $5 million or more," he says. "Banks aren't rushing to invest in the technology, but are waiting for the price to go down and its efficiency to go up."
"Previously, a lot of (information on a MICR document) was recorded manually such as the date, account number and amount," says Stan Klarenbeek, vice president of sales and marketing for General Financial Supply, a manufacturer in Nevada, Iowa. "With the new technology, the handwritten characters are recognized in the machine," he says. "And now banks can bypass their proof stations and go straight to the optical scanner to input the check information." Any documents that the scanner can't read are imaged on the screen and then entered manually. "There's about a 60 percent average capture rate on the images," according to Klarenbeek. This means there are 60 percent fewer documents that need to be manually prepared for the sorter.
Another benefit is that after scanning the document, it does not have to be run through a sorter more than once, according to Klarenbeek. Currently, banks without imaging systems run an initial sort of checks that divide the checks into different categories. Then, the checks are subdivided into smaller categories such as the customers' bank of deposit (home bank) by running several "fine sorts."
Forms Design
Documents scanned by these systems require a different design than traditional MICR documents. While each hardware vendor requires its own specifications, vendors have agreed on certain design characteristics. Each form has a recognition area (called RECO by IBM). This area contains either a dollar sign or an asterisk, usually printed in black ink. Following are field indicators, which contain character field boxes. The field indicators are low contrast ink areas that guide the scanner to the handwritten information inside the field boxes. For example, the 1040 EZ form used for filing federal taxes contains a light blue field around the numbers written by the tax filer. Light aqua colors and 10 percent screens of red, green and blue for the field indicators are recommended for scanning, according to Klarenbeek.Other factors that must be taken into consideration are: document size, paper color, types and color of inks, effective use of dropout inks, paper opacity, contrast, reflectance, halftone screening, preprinted MICR line information and the locations and dimensions of the data field. "White paper is probably the best because the way the light reflects off of canary, blues and greens can cause problems for a scanner trying to read the image," says Stewart. A 24# long grain white paper with a reflectance greater than 80 percent is recommended by Bill Falstad, president of Kansas Bank Note Co., a manufacturer in Fredonia, Kan., and a past member of NBFA's board of directors. "A 20# paper is acceptable, but the 24# processes better with most equipment." Check with your manufacturer and ask the end user about equipment specifications.
Sharon McLoone is assistant editor of FORM magazine.