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Community Banks Embrace Electronic Payments

ICBA Survey Shows Two-Thirds of Community Banks Embrace Check 21

Washington, D.C. (May 9, 2006)—The Independent Community Bankers of America (ICBA) released the results of a first-ever ICBA Community Bank Payments Survey that shows community banks are leading the way in electronic payments, particularly in adopting Check 21.

Two-thirds of community banks have embraced Check 21, three-quarters originate direct deposit and ACH bill payments, 67% offer online bill payment. The national average for all financial institutions offering direct deposit and automated bill payment is roughly 60%, according to ICBA. Thirty-two percent of the respondents offer Internet-initiated ACH transactions today and 19% plan to offer these products within two years.

"Community banks are adapting well to new electronic payments and in so doing are giving customers greater flexibility to bank anytime, anywhere: at the point of sale, at teller machines and online," said Mike Menzies, chairman of ICBA's Payments and Technology Committee and president and chairman of Easton Bank & Trust Co., Easton, Md.

The survey found that business debit cards are the next growth product in the card marketplace. While 49% of community banks offer business debit cards today, 17% say they will offer this product within two years. "We wanted to examine the extent to which community banks are adapting to new electronic payment options," said Viveca Ware, ICBA director of payments policy. "What we found is that community bankers are embracing and offering multiple options to their customers to pay bills and have even easier access to their money."

Among other findings:

  • 73% of community banks offer checking account image statements to their customers, which ideally positions community banks for the rollout of check image clearing.

  • 14% have adopted check image clearing and settlement while 58% plan to implement this technology within two years. Forty-three percent plan to reengineer their backroom check operations as well.

  • Remote image check capture at business locations has exceptional growth potential -- 41% of banks plan to implement remote image check capture within the next two years.

  • Electronic bill presentment is poised for growth with 20% of community banks planning to offer the service within two years.

  • Nearly one-fifth of community banks plan to offer payroll cards within two years, up from 2% today.

The survey was conducted from November 17 - December 23, 2005 and included 32 questions with responses from 400 community banks with asset sizes from under $100 million to more than $500 million. For more information, visit www.icba.org.