Editor's Note: In the second of this 5-part series, find out how you can make profits in the financial market.

Jeffersonville, Ind.-based manufacturer MICR Express mainly offers Magnetic Ink Character Recognition (MICR) documents used in the banking industry. These include cash tickets, general ledger forms, counter forms, process-control documents, teller receipts, notice forms and official checks. Thomas Lathan, senior partnership executive at the firm, discusses some opportunities:

1. Check 21 Act has created a demand for new products. The banking industry is moving toward full digital image capture, Lathan says. Banks began experimenting with image capturing in the early 1990s. The Check 21 Act, enacted by Congress and signed by President Bush in October 2004, once again brought image capture to the forefront. Check 21 creates a new, negotiable "substitute check" that allows traditional paper checks to be truncated at any point in the presentment process. The source document still exists, but the physical transportation of the original isn't necessary.

Banks have installed image equipment to receive and transmit digital images of negotiable documents. The image systems require different types of documents than the traditional proofing systems. Banks need to redesign and replace nearly every internal document (cash tickets, general ledger tickets, transaction documents, counter forms, official checks, etc.) they use, Lathan says. That's where the opportunity for distributors and ultimately the manufacturers exists.

2. Commercial checks remain substantial. The Check 21 Act also requires that all negotiable documents such as personal, commercial and official checks meet ANSI X9.7 standards for image-readiness. ANSI X9.7 covers all areas of image-readiness and specifically sets standards for five vital areas on negotiable documents: date, pay-to, amount, legal amount and signature area. According to ANSI X9.7, these areas must be free of any clutter that may cause the data to be indistinguishable in an image environment.

Manufacturers of personal checks adopted the standards early on, but those offering commercial and official checks haven't, Lathan says. Manufacturers producing commercial checks have lacked consistency: Many checks have backgrounds that are too dark for image systems and also use a variety of pantographs (phantoms, step-and-repeats and voids), which create problems after Check 21. "I couldn't say specifically how much volume there is here, but there is no doubt that it's very significant," Lathan says. "As we know, every commercial business in the country is using both payroll and payables checks. And the bottom line is that according to a pre-Check 21 survey, only 30 percent of existing business checks at that time were image-ready."

3. Community banks are thriving. Most distributors view mergers and acquisitions of banks as a negative development. But these mergers create displaced management and as a result, community bank start-ups continue at a brisk pace, Lathan says.

According to the Independent Community Bankers of America, 1999 saw the highest number of new community banks formed in nearly a decade, with 268 new charters reported. The last record was in 1989 when 192 new banks were formed. In spite of the rush to full digital image capture, Lathan says community banks still use paper documents such as cash tickets and general ledger forms, plus a variety of counter and operations forms.