October 7, 2003

SVPCo Sponsors FSTC Study on Check Image

As Debate over Black and White versus Grayscale Check Images Continues - Independent Study Will Test Merits of Alternatives

New York - October 7, 2003 -- SVPCo is sponsoring a major independent study to determine the relative merits and risks of using black and white versus grayscale images in check processing. The research, being conducted by the Financial Services Technology Consortium (FSTC), is also sponsored by the U.S. Federal Reserve.

"For industry-wide acceptance of check images and interoperability, this question must be answered," said Hank Farrar, president of SVPCo. "The quantitative results will produce findings to enable decisions regarding investments, policies, procedures, and standards."

The study will determine whether the less expensive black and white images will provide the right level of usability, or if grayscale, which provides a higher definition image, will be more cost effective in the long run for handing exceptions, detecting fraud, and providing customer service.

While banks have accumulated substantial experience working with check images, no systematic studies exist on the relative legibility and usability of black and white versus grayscale images. Particularly, no information is available from vendors or banks regarding the relative performance of the two image types.

SVPCo has commissioned FSTC to perform an independent study of the practical use of black and white front and back images versus grayscale images in their Day 2 (back office) and product delivery environments. FSTC has contracted with Niteo Partners to manage the project. The study is designed to compare the performance of experienced operators (of varying skill levels) in their ordinary job activities using B/W vs. G/S images. The test will focus on the frequency of reading errors, illegible information and the usability of check images.

Zachary Tumin, executive director of FSTC, considers the study to be significant to the banking industry. "FSTC is well positioned to provide SVPCo with an independent study that will withstand industry scrutiny," said Mr. Tumin.

The U.S. Federal Reserve, which is actively involved in the SVPCo Image Exchange project, is helping to sponsor the FSTC study.

"For years the industry has wrestled with the issue of what type of image will allow banks to serve its own and its customers' needs," said Dexter Holt, a vice president at the U.S. Federal Reserve Bank of Boston. "We believe that this collaborative, industry-level study has the potential to objectively address long-standing questions associated with the use of binary and gray-scale images of checks and provide a point around which the industry can rally to initiate image exchange and truncate checks."

The study will take sixteen weeks to complete and engage major vendors, and back-office personnel. It will quantify how the differences in image quality affect potential loss, liability, and service, and compare that to the potential savings from reduced infrastructure, transportation and storage expense.

"This study will give the banks the information needed from the right sources to set a reasonable standard for SVPCo's Image Exchange project and assist the internal acceptance image processing within the back-office environment," said John Dunn, SVPCo Project Manager. "It's something we really need to do within the project and the industry to help gain acceptance, realize the cost savings, efficiencies and service benefits of exchanging images."

About SVPCo

SVPCo (Small Value Payments Company, LLC) is made up of 22 banks committed to "electronifying" the check. SVPCo's services include Electronic Clearing Services, the nation's largest electronic check presentment service, and the Electronic Payments Network, the largest private sector ACH processor. SVPCo is owned by ABN AMRO, Bank of America, Bank of New York, Bank One, BB&T, Citibank, N.A., Citizens Bank, Comerica, Deutsche Bank Trust Company Americas, Fleet National Bank, HSBC Bank USA, JPMorgan Chase Bank, KeyBank, M&T Bank, Mellon Bank Corporation, National City Bank, PNC Bank, SunTrust, Union Bank of California, U.S. Bancorp, Wachovia Bank, N.A. and Wells Fargo & Co. For more information, search www.SVPCO.com.

About FSTC

FSTC is a financial industry research organization comprised of banks, financial service firms, industry partners, national laboratories, universities and government agencies. Its goal is to bring forward interoperable, open-standard technologies for the financial services industry that make possible new products and services. FSTC projects push the envelope of financial services technology, focusing on areas where industry collaboration is possible, and needed, to enable new products, reduce costs and risk, or expand market reach. FSTC provides a unique forum for financial institutions and vendors to work together on taking ideas from concept to pilot to the marketplace. For more information, visit http://www.fstc.org/.