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STAR Financial Bank Brings Online Bill Payment Service In-House
with ACOM’s EZPayManager Payment Management Solution
THE BACKGROUND
When it began offering online bill payment as a service in
1999, STAR Financial Bank followed the lead of most other
banks. It offloaded Q-Up System files representing its
customers’ payment orders from the web and forwarded them
to Princeton eCom, a third-party bill payment company used
by many banks, which issued the actual checks and ACH
(electronic) payments.
A continuing problem, according to Glenn Bogan and Ralph
Marcuccilli, vice presidents of electronic banking and
operations, respectively, was that with the payment company
on the east coast and payment destinations widely dispersed
geographically, it often took as much as a week for the
payments to arrive.
“When we considered that speed and convenience are the
primary benefits of electronic banking, it was obvious that this
solution was not providing the kind of service our customers
deserved and it wasn’t making our bank look very
progressive,” Bogan said. “Furthermore, we had no control
over the process and we were limited as to the directions we
could go with online bill payment.”
THE SOLUTION
Bogan and Marcuccilli were walking the floor at a Jack Henry
Software user conference, searching for an email system that
could bring electronic notification to the online banking
operation, when the solution found them. The bank already
had an email solution for sending out statements with copies of
cancelled checks, but the executives also wanted a similar
way to send out notices such as overdrafts automatically and
electronically.
They found that an exhibitor, ACOM, had just released such a
solution. ACOM’s solution ran on the iSeries (AS/400)
platform or Windows 2000 Server and it was seamlessly
compatible with the bank’s Jack Henry software. In the course
of their discussion, a broader solution emerged: the email
module was not only available independently, but it was also
integrated with ACOM’s EZPayManager payment
management solution. The bankers were intrigued.
EZPayManager merges payment data from enterprise
software, such as Jack Henry, with stored electronic check
forms, and then spools out the completed check and
remittance advice files (pay stubs) for laser printing or
electronic transmittal. Checks can be printed using MICRenhanced
laser printers situated on either the iSeries network
or on any corporate TCP/IP network. In the same payment
run, it can format data for any necessary electronic payments,
to ACH network specifications, and transfers that data to a
Microsoft NT server, where a NACHA-compliant file is created
and forwarded to the banking network for processing.
Electronic remittance advice notification files are also
transferred to the NT server, which transmits the “pay stub”
information to payees via fax or email.
STAR Financial’s IT environment was perfect for the EZPayManager solution. The bank used an AS/400 computer
and Jack Henry software for its core processing with a Novell
network for Windows-based applications, including the Q-Up
Internet banking software. (Q-Up software allows customers
to access their accounts via the Internet and phone.
According to Dataquest, about 7 million U.S. homes use a
personal computer to do their banking, a figure that is
expected to grow to 24.2 million homes by 2004.)
STAR Financial already had a payment solution from
Bottomline Technologies in-house, but its utility was limited to
MICR laser checks. The bankers wanted the ability to perform
ACH direct deposits and send electronic notifications as well.
EZPayManager represented exactly what they were looking
for, without the need to mix and match solutions from different
vendors.
Online bill payment is still a relatively small part of the bank’s
business, representing about 4,000 transactions per month.
Currently, there is a fee attached to the bill payments,
however, Bogan says they hope to make it a free service, like
electronic banking, as volume increases. Such initiatives, he
says, create customer good will and encourage the use of
other banking business.
THE IMPLEMENTATION
Installation of EZPayManager has brought them
considerably closer to that objective. The software was
installed in September 2001, and the online bill payment
activity was brought in-house immediately. Bogan says
that it’s saving time and money and improving service. “ACOM did all the work,” says Marcuccilli. “We provided
them with an input file indicating the output we needed,
and they implemented the solution very quickly. When
the software was ready, an ACOM trainer came to Fort
Wayne to assist with the installation and to train our
staff.”
EZPayManager is an extendible system that consists of
several modules. The modular architecture of
EZPayManager allows users to implement the parts they
need immediately, and build out the solution as their
needs change. It is seamlessly compatible with all
financial management systems, ERP systems and legacy
system data.
The STAR Financial EZPayManager implementation
includes the MICR laser checks module, the ACH module,
the email module, the PDF module and the autoprocessing
module. The solution runs on a Windows
2000 SQL server, with checks generated on an HP
LaserJet MICR printer previously used with the nowsidelined
Bottomline software.
SUCCESS
Altogether, Bogan says that the bank has invested about
$30,000 in the solution and expects to recover its costs in less
than 12 months.
“We’ve been able to automate a lot,” he says, “We just drop the
file, the system takes over and notification goes out either as a
paper copy or as an email with a PDF attachment, encrypted
with the customer’s password.
Although STAR’s customers can send a payment to anyone,
Bogan estimates the 10 largest billers make up about 40% of
their payments. These billers include the local utility companies
and a handful of national companies, such as American Express
and Verizon Wireless.
Bogan went on to say, “Even though MICR laser checks are
produced at a savings over conventional checks, which are
generated on preprinted forms with production impact printers,
they still cost close to fifty cents each for printing, stationary and
postage. Electronic payments cost about a penny. Meanwhile,
our customers know exactly when the money will leave their
accounts, and electronic notification lets payees know exactly
when the funds arrive at theirs. Nobody has to physically handle
anything, and it is economical and effective for all parties.”
Best of all, he adds, EZPayManager’s flexibility and modularity
has created an online payment environment that enables the
bank to go in any direction they choose.
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