Blog Financial Institution
Bangor Savings Bank, headquartered in Bangor, Maine, embodies customer experience. Founded in 1852 and driven by the motto “You Matter More," the community bank continuously strives to create a seamless and convenient experience for the businesses and consumers it serves.
As a bank comprised of border communities, with customers spread across Maine, New Hampshire and Canada, the financial institution’s remote deposit capture (RDC) offering came up short. Check 21 legislation, which enabled the electronic exchange of check payments, made image-driven deposit of U.S. items fast and convenient, but until recently, Canada still required paper checks. That saddled Bangor Savings Bank, and its valued business customers with delays, foreign exchange (FX) risk and sluggish cash flow.
For Bangor Savings Bank, the challenges posed by paper checks were significant, particularly around FX. The bank posted a daily Canadian Exchange Rate that the customer would receive on the day the check was deposited at the bank.
“It gave the bank a lot of foreign currency exposure,” said Jaime Shapiro Berg, the bank’s Director of Treasury and Payment Services. “You were not guaranteed a rate until the checks were received at the Federal Reserve. That could be three days to 10 days, in some situations. When you’re talking about almost $2 million, a one, two, three or four basis point spread can be pretty significant.”
With 58 branches across Maine and New Hampshire, the bank relied on couriers to transport their Canadian items. First, they collected checks from the individual branches, then consolidated all deposits at the bank’s operations center in Bangor. Smaller branches, with lower volumes, might only receive pickups twice a week, further delaying the cycle. In a final step, checks were sent to the Federal Reserve.
Berg knew there had to be a better way than physically transporting paper checks. When Canada recently legalized image cash letters, Bangor Savings Bank saw a new opportunity to improve service. The project team issued an RFP for their international payments, and replaced the Federal Reserve endpoint with a more sophisticated correspondent banking partner.
Right away, the new correspondent bank helped Bangor Savings Bank implement Canadian check imaging at their 58 branches. Tellers scanned Canadian checks and sent the items for electronic deposit.
While this new efficiency benefited the bank, their business customers still needed to drive their Canadian items to the nearest branch. Berg reached out to Deluxe to see if their current RDC solution could be enhanced to read Canadian routing numbers.
“I definitely had a vision for the deposits,” Berg said. “I wanted them to be easily identifiable as a Canadian deposit. I also wanted the opportunity to bring in additional fee income, to charge for those particular items coming in. I didn’t want them to look like the standard RDC deposit.”
The solution also needed to be simple and intuitive for RDC business customers. In less than a month, Deluxe rolled out the enhanced capabilities. Bangor’s clients set up a Canadian check location, which enabled them to deposit a Canadian check into any of their accounts.
“There was a lot of collaboration with Deluxe, and they’ve been wonderful to work with,” Berg said. “When we bring ideas to them, they’re always willing to listen. They see, like I see, that if we collaborate, it becomes a win-win for both of us.”
She added, “One of the biggest value adds Deluxe brings to our business is their willingness to work directly with our RDC clients when we’re looking to give a particular client a more integrated solution.”
With electronic processing now possible via RDC and at the teller lines, Bangor Savings Bank took one final step to streamline their process.
“We combined the two image cash letters, the one from Deluxe and the one from the teller line, to create one for U.S. dollar checks, and one for Canadian,” Berg explained. Now, instead of laborious and slow movement of physical checks over the better part of a week, the bank can send two electronic files to their correspondent bank every day.
“When we rolled this out, [customers] were thrilled,” Berg said. “One, to have the opportunity to scan the check and not go to the bank, and two, just knowing that it would expedite the timing. They appreciated our forethought.”
Customers have stronger cash flow, more flexibility with their working capital, and speedier notification of any issues.
“They save time, and there are opportunities to reduce interest expense or earn interest, depending on their financial position,” she said. “The deposits can go in every day, versus when they had time to get to the bank. It’s a huge advantage.”
For Bangor Savings Bank, creating an end-to-end electronic work flow gives the bank a strong foundation for future enhancements.
“We’re not doing any manual processing,” Berg said. “We’ve eliminated the stranded Canadian deposits. If there is a chargeback or issue, we’re finding it more quickly.”
She added, “We’re getting more competitive rates, and tiered rates for larger Canadian dollar checks, which is not an option that the Federal Reserved offered to us. We get next-day funding from our correspondent bank. It’s a huge enhancement.”
To other financial institutions, Berg simply challenges them to ask, why not? With their seamless Canadian deposit process, “People couldn’t believe that it was as simple as it was. Part of it is just asking the questions, having the foresight,” she said.
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