Financial Update (July-September 1998)


Cover Story

Choice of Capital Instruments

New Look for Financial Update

Check Growth

Bank Consolidation and Lending

Technology in Banking


Year 2000

Did You Know?

Data Bank

The Docket

Atlanta Fed Experiences
Unprecedented Check Growth

S ome futurists predict that checks will go the way of the dinosaur, but staff in the Atlanta Fed's Atlanta Branch see no signs of checks dying out soon. In fact, during the last several years the branch has seen dramatic growth in check collection.

In 1997, the Atlanta Branch processed 767 million checks, 10 percent more than in 1996. In December 1997, the branch processed a monthly volume of 74 million checks — a record that was broken in March 1998 when the branch processed over 77 million checks. The volume of checks processed during the first quarter of 1998 was higher than during the same period in 1997.

Driving the Growth

This increase in check volume can be attributed primarily to three factors.

  • The consolidation to the Atlanta Branch of the weekend volume of checks sent to Reserve Banks in other districts from the Jacksonville, Birmingham and Nashville Branches added 45 million checks to the Atlanta Branch's 1997 volume. Additionally, the number of checks sent to other Reserve Banks from the Atlanta Branch's own in-zone depositors increased 14 percent in 1997 compared to 1996.
  • The interterritory group sort products (checks payable at out-of-zone banks) brought to the Atlanta Branch added 7.5 million items in 1997 and could add 20 million items in 1998. These products have attracted commercial lock-box volume held by large regional banks. The group sort processing simplifies depositors' sorting requirements and allows institutions to take advantage of later deposit times.
  • The intraterritory group sort products (checks payable at in-zone banks) increased 15 percent from 1996 to 1997. These products have attracted midsize to large commercial banks because they offered extended deposit deadlines, competitive pricing and greater flexibility in sorting. Volume increases for the first quarter of 1998 are 20 percent above 1997 totals for the same period.

Some of the volume increases are the direct result of regional bank mergers, re-structuring and operational consolodations. Volume increases dictated a number of operational changes at the Atlanta Branch in 1997 and 1998. The branch added new high- and low-speed processing equipment, upgraded or replaced mainframe computers, added new operating shifts and increased management and staff resources in all processing, balancing and adjustment units.

Electronic Payments

Despite the Atlanta Branch's record growth in check volume, the strategic goal of converting paper checks to electronic payments is still a high priority. Electronic check presentment and imaging transactions increased by 18 percent in 1997 over 1996 and by 10 percent in the first quarter of 1998, compared to the same period in 1997. Through education, marketing efforts and technological advances, the Fed continues its efforts to increase electronic volume.