Bob Meara, Senior Analyst, Celent, a research and advisory firm based in Boston

Changes in payment systems always carry risk. As a payments analyst in the US, the UK’s planned Image Clearing System looks pretty low-risk to me.

Moreover, based on the US experience with its own image clearing initiative that began more than a decade ago, I can confidently predict that UK consumers, businesses and banks will all benefit. Here’s why.  While similar on the surface, there are a number of significant differences between the US and UK approaches to cheque imaging. The short story is this: UK payments authorities studied the US approach and made several improvements

Among them:

  • All details of the implementation have been worked out in the UK before any bank implements the new programme. In the US, banks were free to implement on their own.  The result was a five-year migration period from paper-to-image clearing. The UK transition will be much more rapid. New capabilities such as remote deposit capture (RDC) will become available quickly and that’s good for everyone.
     
  • UK businesses and consumers will see 100% next-day clearing on paid-in cheques. In the US, clearing was faster too, but the speed of clearing cheques still varies.

Like the US, UK consumers, businesses and charities don’t need to do anything differently to enjoy the benefits of the new Image Clearing System if they don’t want to. But, some banks will be offering the ability to pay in cheques by RDC using desktop scanners or smartphones. In the US, roughly six thousand financial institutions now offer what many call ‘mobile deposit’ as a standard part of their mobile banking app.  A 2016 survey of US consumers sponsored by the US Federal Reserve found that 70% of US mobile banking users enjoy mobile deposit. Mobile deposit has become so popular in the US, it now ranks as one of the most appreciated aspects of mobile banking. So much so that some industry observers speculate that mobile deposit may actually influence the continued use of cheques. I’m not so sure about that, but we do continue to write over 15 billion of them annually over here!

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Bob Meara, Senior Analyst, Celent