IMAGE BROKER ROLE TO CUT CHECK COSTS FOR COCC CLIENTS

AVON, Conn. JUNE 30, 2004 — COCC, a leading provider of next generation technology services for community banks and credit unions, has designed an image exchange strategy to extract the greatest cost benefits from changes to the payment processing system as a result of recent Check 21 legislation and deliver them to COCC’s check processing clients.

“COCC has both the check volume and the image expertise to achieve the greatest cost savings on behalf of community banks and credit unions,” said Joseph D. Lockwood, Chief Technology Officer for COCC. “Our strategy is to aggregate the outgoing check images, ship them electronically to the exchanges that offer the best funds availability and lowest processing cost, and pass the savings to our clients. That will make Check 21 a win for the financial institution and the public.”

COCC’s strategy is based on forging alliances with the major image exchanges and implementing custom software that distributes check images to the most efficient exchange “endpoint.” The company recently announced its alliance with the Endpoint Exchange Network and the National Clearing House. Additional alliances with image exchange networks are planned prior to the Check 21 legislation’s effective date — October 28, 2004.

At full utilization of image exchange, the typical financial institution could reduce its check collection fees by as much as a 50% while increasing the next day availability of funds by an estimated 90%. Industry wide, banks and credit unions expect to save as much as $4 billion in annual check processing costs. However, the interim period between present day paper processing and full image exchange will challenge the banking industry to offer efficient hybrid systems to start delivering the expected cost savings in a less than perfect world.

“The check processing industry won’t switch everyone over to image on October 28!” said Lockwood. “We’re going to see paper and images for a long time, but hopefully a dramatic reduction in the paper.”

Lockwood’s staff is working to ensure that the fundamentals of check processing are in focus. “Image or not, we still need to monitor the items, balance, return, settle, archive, and report all checks – imaged or not – on behalf of our clients,” he said. “The first major hurdle will be getting end customers to feel comfortable with the new substitute checks that become legal equivalents of original checks on October 28.”

COCC has prepared automated mechanisms for community banks and credit unions to communicate the check processing changes to their customers. Lockwood said that image processing will not be an issue since COCC has been an all-image shop since 1998. At the same time, COCC is assembling the business relationships necessary for check and image settlement.

Beyond the initial image exchange rollout, COCC offers branch image capture. Lockwood says this is the most efficient way to move to imaged items and realize the value of Check 21. Branch image capture devices cost no more than a microfilm machine while providing the additional benefits of more efficient branch archiving plus rapid, high quality research capabilities.

“As image capture devices are deployed in the branches, tellers can scan their items on the spot and find out if the paying account has sufficient funds,” said Lockwood. “In addition, the institution gains access to the images for a variety of purposes. As soon as the images are transmitted to COCC, they become part of our image archive system which enables staff to view the images on their workstations.”

By imaging check items instead of microfilming, bank and credit union staff have the added benefit of improving customer service. Check images are easier to search and clearer when viewed onscreen or printed on paper. They’re also available via home banking services.

“COCC is pleased to be at the forefront of this historic change in our payments system,” said Lockwood. “We are looking forward to October 28 as the date that paper checks truly begin to disappear. The ‘checkless society’ is finally within our reach.”