Communications of the IIMA


Over the last decade, banks have spent a great deal of resources on technology improvements. With decreasing interest rate spreads, banks are being forced to look for new ways to increase profits. Recently, new legislation was passed that will allow banks to become more efficient in check truncation through technology. The new legislation is commonly referred to as Check 21. If used properly. Check 21 will increase employee efficiency and reduce other operational costs such as courier services. This paper examines the short history of Check 21 and discusses how technology affects banks profitability. Key areas where banks can become more efficient with the help of the new technology will also be determined. The paper will give ROl, NPV, and IRR estimates for what the new technology investments will provide. There is also a checklist for managers that will help determine the best technology for their banks.