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The Green Sheet

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Branch Networks Set for Technology Facelifts

Thursday, September 06, 2018 ( / Patti Murphy)

A $1 billion asset bank with a branch network that spans rural South Dakota and Nebraska is pioneering a trend toward network-enabled branch banking.
Despite ongoing adoption of electronic banking options, like remote deposit capture and mobile RDC, branches continue to dominate the service strategies of financial institutions large and small. The Federal Deposit Insurance Corporation reports there were 78,774 commercial bank branches in the U.S. in 2017. That’s down from 79,696 in 2016, but up from 76,034 in 2006.

Changes are coming to FI branches, however, and these changes are being driven by some of the same technologies that support electronic banking applications. Leveraging technologies like the Internet and thin client computing networks, for example, FIs can substantially reduce technology footprints at branch locations while improving overall efficiencies and lowering costs. Rather than equipping teller stations with traditional PCs hooked to check scanners, many FIs are now turning to small thin-client workstations that can communicate with a central server that handles transaction processing.

“Deploying Windows PCs to every worker is not a cheap proposition,” explained Rick Ooten, Vice President, Product Management, Digital Check Corporation. It’s not just the hardware; there are application licenses, Internet access, software updates and other ancillary costs.

But there also can be downsides to deploying thin-client configurations. Thin client networks are not set up to have software installed on individual workstations, for example; drivers are required, and that’s not always an easy proposition. That’s not all. “There are performance problems,” too, Ooten explained. Raw imaged check files can be large – upwards of 8 megabytes – and require substantial network bandwidth when transmitting those images to centralized servers.

Rick Monheim, Systems Administrator at Security First Bank in Rapid City, SD, understands these problems first hand. A $1 billion asset FI, Security First operates 29 brick-and-mortar branches and a mobile “branch on wheels” across 100,000 square miles of rural South Dakota and Nebraska. As a workaround for some of the performance limitations of its thin-client network, the bank maintained a separate, off-network thick-client workstation at each branch for back-counter check capture. So, when customers came in with check deposits, tellers would accept the items and provisionally credit the accounts, then set the checks aside for scanning later at the back counter.

“It actually worked out pretty well for us, except that everyone would save all their daily proof work until the very end of the day,” Monheim related. “So they would all slam the servers at 4:00 pm [uploading check images], and we’d have to restart services for everybody, From an IT point of view, we like it a lot better when we can see the traffic flow throughout the day.”

To achieve that goal, Security First turned to Digital Check, which had developed SecureLink, a small device (it measure 3-inches by 4-inches) that adds wireless or hardwired Ethernet capabilities to
Digital Check scanners while simultaneously running necessary drivers and API software. In other words, nothing has to be installed on the workstation.

Security First has connected SecureLink to its TellerScan TS500 check scanners. The unit acts as a mini-computer that runs the scanner and compresses image files prior to sending them across the network. Image files can be reduced by up to 97%, Ooten noted. “They needed to reduce the size of the image files because they were saturating their network,” he said.

Security First also employs a main data center and a separate disaster recovery center, which along with its branches run on a multi-protocol label switching (MPLS) network. With an MPLS configuration, the bank’s internet service provider reroutes interrupted connections to the next shortest path to the target destination. In remote locales where only a single connection path exists, local branch personnel handle transactions offline until the network is back up, sometimes transporting deposited checks to different branches for processing.

It’s an innovative application of technology that has allowed First Security to overcome a challenging situation. And that makes this bank a pioneer in network-enabled banking, Ooten said.

Click here to read the Digital Check white paper.


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