Zions on cutting edge with NetDeposit

Anticipating the implementation of the Check 21 Act, Zions Bank decided it wanted to get out in front, to be "entrepreneurially nimble."

Check 21, a law passed last year that goes into effect Oct. 28, allows banks and other financial institutions to create and transmit digital images of original checks in lieu of the originals, hastening the clearing process.

Zions Bank's answer to Check 21 is NetDeposit, established in 2001 as a wholly owned subsidiary of Salt Lake-based Zions Bancorp. The company specializes in technology that captures and validates electronic check deposits and sends image deposits directly to participating financial institutions for clearing.

"The impact of this on the economy is immense, because the velocity of money is such an important part of the economics of this country," said Grant Hurst, senior vice president and manager of Zions' correspondent services group. "And here we are at Zions Bank in Salt Lake City, Utah, right on the cutting edge of this thing. Other people are working on this. We have it right now, and we've processed over a million items through this system already. There's no other bank, anywhere, that even comes close."

NetDeposit equipment and technology costs about $65 per month to lease. The machines come in varying sizes, the smallest being about the size of the individual check scanners at most bank teller stations. They scan an image of the check, front and back, and convert the image into a "substitute check." The original is then voided, and the substitute check can be transmitted electronically through the clearing process or reproduced as legal proof of purchase.

For banks and small businesses, NetDeposit presents "enormous" opportunities, cost savings and convenience, said Donaldson Hartman, vice president in the bank's correspondent banking division.

"As a former bank analyst, it was my job to understand where a bank's revenue comes from," Hartman said. "If you look at industry studies of banking, almost half of it comes from how it deals with payments. So this is going to represent a significant driver of revenue and a reducer of cost for these institutions."

Small businesses "won't have to go to the bank any more. They eliminate their courier. They don't have to hire someone to take checks to the bank, or to all of those paying banks across the country. They can bank from their office," he said.

The more remote a bank or business is, the more valuable NetDeposit's technology will be, said George Hofmann, Zions' executive vice president.