Pre-printed checks have been a standard office supply at banks for decades. These checks, and the costs associated with them, have long been perceived as a necessary part of banking. Use of pre-printed checks is so ingrained in bank practices that most bank managers and financial executives think little of the associated costs. Many are unaware that pre-printed checks incur tens of thousands of dollars worth of unnecessary expenses every year.
There's an alternative. MICR check printing and toner save financial institutions money and time, reduce the risk of fraud and can lead to improved customer service. If you're a banking executive making decisions for your branch or several branches, here's what you need to know.
Inefficiencies of Pre-Printed Check Stock
Pre-printed checks require a laser printer and encoder for every check issuance. This type of hardware costs approximately $1,000 more than the cost to issue pre printed checks via MICR printer and toner. Pre-printed checks also cost $2.13 per check, while checks made with MICR printers and toner cost approximately $0.21 per check.
The costs of pre-printed check stock goes well beyond the direct expenses mentioned above. The security risks and business practices associated with those risks cost banks money everyday. These expenses are intangible and difficult to measure, so they often go unnoticed by bank executives and branch managers.
Security Risks
Pre-printed checks are themselves a security risk, because they are "live checks" from the moment they're received by the bank. They are kept under lock and key and stored in the bank's vault where a small number of them must be accessed everyday to be distributed to tellers. Storage and use of live checks must be tightly controlled to prevent fraudulent activity that could cost the bank hundreds or thousands of dollars.
Unprinted, blank check stock is not a security risk because it is blank. Check stock is not a live check until it is printed. The risk of fraudulent activity on such stock is low, as long as the MICR technology is itself kept secure. Blank check stock need not be kept locked, checked in an out, inventoried or monitored in the same way that pre printed business checks must be.
Audit Trails
To mitigate the security risk presented by pre-printed checks, banks create audit trails that allow them to track each check individually. Pre printed checks are counted and inventoried before they are placed in the vault for secure storage.
Everyday, some checks are removed from the vault and distributed to tellers. Which checks have been removed is noted on the inventory before they're handed out. These checks spend the day locked in a drawer, unless they are issued to a customer. When a check is used, this is noted in the inventory. At the end of the day, the checks are returned to the vault, and the inventory is updated.
This audit trail is essential for tracking the movement of checks throughout the bank. If a check goes missing, the inventory list will reveal the problem.
Audit trails are essential for bank security if that bank is using pre printed checks. However, audit trails are time consuming to maintain and onerous for bank employees. The constant back and forth between the vault and the teller, as well as the ongoing need to update the inventory list, can cost banks valuable time and money.
Branch Management
Tracking and securing pre printed checks can take important time out of the day for tellers and other bank branch managers. They slow the efficiency of the staff and can lead to longer lines, slower customer service, longer wait times, fewer customers helped and overall lower rates of customer satisfaction. While many of the delays mentioned above are small throughout the day, they add up over time.
Human Error
The more steps to checking in and checking out pre printed checks, the greater the possibility for human error, which puts banks at risk for financial losses and potentially expensive investigations to find the source of the error. Human error ties up staff and wastes time every time a new error occurs.
The Need for MICR Printers and Toner
MICR printing and toner does everything that pre printed checks can do, but better. Secure printing software can reduce customer wait times by 75%, reduce paper costs by 80%, and eliminate labor costs associated with distribution, storage, inventory and security of pre printed checks.
Unlike pre printed checks, which require complex systems to prevent potential fraud, MICR printing devices are associated with minimal risk to the bank. MICR printing devices work quickly to print checks as needed throughout the day. While it takes up to 8 minutes to issue a pre printed check, it takes only two minutes to issue a check via an MICR printing device.
- Improved staff efficiency. MICR printing devices can free up time for staff throughout the work day, by eliminating the need to maintain an audit trail.
- Better customer service. Customers benefit from faster check issuance and lower wait times.
- Reduced costs. Your bank will spend less on staff and less on supplies using MICR printing devices.
Switching to an Automated Solution
Let's go over the statistics one more time:
- MICR check printing devices help financial institutions save up to 82% on internal processes and paper costs.
- MICR check printing devices take 2 minutes to issue one check, versus 8 minutes to issue a pre printed check.
- Paper for blank checks costs only $0.21 per check, while paper for pre-printed checks cost $2.13.
- The estimated 3-year savings for a bank that switches from pre-printed check usage to MICR check printing is approximately $307,540.
- The estimated 5-year savings for a bank that switches from pre-printed check usage to MICR check printing is approximately $511,900.
Want more proof that MICR check printing can benefit your bank or financial institution? See more helpful statistics on our blog.
Save Money and Time with an MICR Printer and Toner
Installation of secure printing hardware and software in your bank or financial institution saves money in ways that are both direct and indirect. To find out more about how you can reduce costs at your bank branch, contact Source Technologies to set up a product demo. We can answer your questions and tell you more about how our solutions can change the way your bank does business.
