|~|michael-wakileh.jpg|~|Progress Soft’s business development manager, Michael Wakileh.|~|The Central Bank of Jordan (CBJ) has deployed an electronic cheque clearing (ECC) system to streamline the Hashemite Kingdom’s move toward electronic banking. Based on Progress Soft’s ECC (PS-ECC) solution, the deployment reflects the banking industry’s commitment to the digital cheque clearing process.
Even in mature markets like the US, where most transactions take place electronically, over 40 billion cheques are written manually each year. Estimates show that for every dollar spent in processing a cheque, between 20 cents to 40 cents are spent on transporting them to different locations. CBJ was faced with similar costs and operational issues.
Since all of the Kingdom’s cheques and transactions are processed at CBJ’s clearing house, the bank had implemented an image-based automated cheque clearing system in 1997. However, with a substantial increase in volume of cheques from its 25 member banks and 700 branches across Jordan, the financial institution was unable to scale up with its existing dated solution.
“We receive on average between 50 to 100,000 cheques daily. During the peak times, such as the end of the month, the cheques for salary slips, rentals and annual payments increase to about 150,000 in one day. The previous system could only process a limited volume of cheques and had some deficiencies. We wanted to make the entire banking operation fully electronic and process the cheques more efficiently,” explains Jamal Qasem, executive director of the IT department at the CBJ.
Although electronic image-based cheque clearing was invented in 1996, CBJ’s plans received an impetus after the successful implementation of a similar ECC solution by the Qatar Central Bank three years ago.
Furthermore, Jordan’s initiative also received a boost when the US government approved a Cheque Clearing Act for the 21st Century (Cheque 21 Act), which came into effect this October. Although the US Act is not completely applicable to the Jordanian bank, the Kingdom’s government, has recently passed similar electronic transaction legislation, which legally validates an electronic document. This convinced CBJ to go ahead with its digitising plans.
After evaluating other vendor offerings and customer references, the financial institution decided to use a Progress Soft solution. The bank’s staff and the vendor then set out to overhaul CBJ’s heterogeneous IT environment, which comprises Unix servers, running on HP-UX and IBM’s AIX, and thousands of Windows clients attached to a RAID storage system. ||**|||~|Jamal-Qasem_centrabankofjor.jpg|~|Jamal Qasem, executive director of the IT department at the CBJ. |~|Progress Soft’s web-based multi-lingual, multi currency application serves as a platform, as well as an independent database. With the ECC solution, the minute a customer deposits a cheque the PS-ECC’s prime-pass image-lift process captures cheque images on both sides as they are run through a transport.
The software then creates a database of the image and the unique magnetic ink character recognition (MICR) — the special characters found on the lower end of a cheque. As items are sorted, sequential document identification numbers are assigned to each item throughout the scanning cycle. This number helps the bank’s staff differentiate the new cheques from the old ones.
Once the information is captured by the teller’s Windows clients, the data is stored in an encrypted RDBMS such as Oracle. This data is then transmitted to the respective head office and clearinghouses.
For Jordanian banks, which are still averse to transacting over public infrastructure such as the internet, PS-ECC supports proprietary networks that have dedicated communication links already established between the banks and the clearing houses. It also supports SWIFT Net and virtual private networks (VPN) over the internet. In either of these modes, the transmission is secured via PKI and SSL based 128-bit encryption.
A final security level is also implemented on PS-ECC that allows administrators to provide privacy to users accessing system features. The component design of PS-ECC, allows CBJ to scale up system performance by increasing the cluster nodes.
“As soon as the teller collects a cheque it is truncated at that point at the branch level itself — there is no more physical movement of that cheque, henceforth. The entire process from the de-posting to the crediting is completely automated with no manual processes involved. It’s like sending an e-mail compared to sending mail by post,” explains Progress Soft’s business development manager, Michael Wakileh.
Once the application is rolled out across all the branches of CBJ in 2005, the total number of users will be over 1500. The users will span across the outward cheque clearing departments, where a teller in the back office receives the cheque. The smaller branches are estimated to have up to three users, while the larger branches will have more than 10 active users taking advantage of the ECC solution.||**||For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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