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Personal cheques to flourish in China
By Zhao Renfeng (China Business Weekly)
Updated: 2004-04-11 14:23

Though opening a chequing account is still a novel idea for many Chinese individuals, foreign technology companies are now bracing for a windfall in the niche market, seeking opportunities to help banks facilitate their businesses.

They believe a jump-start within banks' personal cheque sector is in the near future despite the market's long-time lukewarm response to the service.

"China now is still in the transitional period to introduce personal cheques ... the business is about to take off within three to five years," said Paul Lim, chief tech officer, Asia-Pacific with the NCR, a world leading financial tech company.

"We are very positive about China's private cheque business, given the current market conditions here," Lim told China Business Weekly.

Cheques in China, though widely used in the corporate world, have been long kept away from common consumers. Although some big cities such as Shanghai and Guangzhou have gradually allowed the applications of personal cheques, people do not take to the new payment option due to the inconvenience and relatively high threshold for applications.

Banks also appear hesitant to promote personal cheques because of the higher risks in transactions resulted from the lack of personal credit systems throughout the country.

Experts say with more and more advanced tech applications employed by domestic banks, barriers will be gradually removed, resulting in the wider use of personal cheques.

Electronic cheque-imaging and processing technology will play a key role in enhancing banks' chequing accounts as the new technology can help improve processing efficiency for the high volume of cheques, experts say.

In China, cheques are cleared through the central bank, People's Bank of China, and its intra-city clearing centres.

According to Ruth Fornell, vice-president and general manager of NCR's payment solutions department, China's banks already handle a high volume of cheques every day.

In Beijing alone, the clearing centre handles more than 140,000 cheques daily, and in Guangzhou, about 130,000 cheques per day. A bank such as Industrial and Commercial Bank of China in Shanghai handles around 40,000 cheques on a daily basis.

If personal cheques are widely used in China, a much higher volume of cheques will be processed daily.

According to experts, cheque-imaging facilities are expected to meet the growing demands of local financial institutions for imaging technology.

It is anticipated that the demand for imaging technology will increase as the economy flourishes following China's entry to World Trade Organization. The imaging technology can help banks create electronic storage instead of traditional microfilming of the physical items processed.

Image-assisted operations processing can also enable the adoption of Automatic Chop Verification (ACV) to further improve inward clearing processes.

In the longer term, the introduction of this technology will enable consumers to have access to images via Internet channels, and will assist in the reduction of fraud.

"Market trends strongly indicate image adoption is on the rise, and the industry is looking for technology that offers increased throughput, high quality and strong business economics," Fornell said.

"The introduction of the cheque-imaging product will play a strategic role in the advancement of China's cheque processing system and improve service offerings that only imaging can offer."

NCR announced last week a series of cheque-imaging products in China. The US-headquartered company claimed it has been a market leader with innovative cheque-processing solutions for the global market for over 40 years.

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