1. ECP in Today’s Changing Payments Environment
Rodney D. Chard
Executive Vice President
Whitney National Bank
BITS ECP Forum
Birmingham, Alabama
January 14, 2003

2. Agenda ECP and Image Exchange Barriers Check Operations Whitney Bank
OTC Dollars Distribution by Presentment Method
ECP/Image and More Efficient Payments
Who Writes Checks and Why
Some Fully Electronic Payments Solutions

3. ECP and Image Exchange Barriers at Regional Banks
Regional banks like Whitney typically have:
strong centralized processing operations;
single integrated check capture and posting systems;
low/zero cost clearing arrangements with local banks;
only limited reliance on Fed as a source of checks.
These elements produce efficient check posting operations.
Such regional banks have insufficient out-of-region check volume/value to generate cost/float savings to pay for ECP.
Customer acceptance of new fully electronic payment alternatives shortens the life span for ECP/image technology.

4. Check Operations Whitney Bank

5. OTC Dollars - Distribution by Presentment Method
Where do we send for value checks we take on deposit in our branches?
On-us are posted to customers’ accounts = 62%
Regional same-day-settlement contracts = 11%
Free clearing house exchanges till 8 p.m. = 10%
Fed value not really significant = 17%
Result is little float and low operating costs.

6. ECP/Image and More Efficient Payments
ECP and Image prolong the life of checks, but produce less efficient payments instruments than:
Telecheck’s check electronification at the POS;
imaging checks at the lock box;
electronic bill pay over the Internet by CheckFree et al;
SafeCheck’s model.
Unit costs of checks must increase as volumes decline.
If banks focus solely upon technology solutions designed to extend the life of checks, others will offer electronic payments.
We spend our limited IT resources on electronic payments.

7. Who Writes Checks and Why
People write checks to businesses at P.O.S.
People write checks to businesses to pay bills
Businesses write checks to pay employees
Businesses write checks to other businesses to pay their bills
People write checks to each other

8. Some Fully Electronic Payments Solutions
PIN-debit cards at P.O.S.
Internet EBPP or EBP to pay bills
ACH direct credits or stored value cards for businesses to pay employees
Internet EBPP or ACH direct credits to pay B2B bills
Direct A2A funds transfers

9. For Additional Information
Rodney D. Chard
Executive Vice President
L. Andrew McDonald
Senior Vice President
Whitney National Bank
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