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David vs. Goliath
Can in-house check printing work for my bank?


It was amusing to read in a community bank newsletter recently about how costly it is for banks to print personalized checks, in-house. Since the newsletter is published by the Goliath of the check-printing industry, it can be said with great confidence that statements it contains are based on vested self-interest. The article warns that community banks should beware the risk of in-house check printing. The company points out that it has been printing checks for almost a hundred years and has studied the technology utilized to produce them.

Sounding a little like a politician who stretches the truth (we wouldn’t go so far as to use the “L” word — lies), the check producing company makes some pretty ridiculous statements.

1. They estimate production costs as follows:

HOURLY PRODUCTION COSTS  (6 check orders per hour)
-------------------------------------------------------------------------------------------------------------------------
Materials                                              $21.00           ($3.50 per 200 check order)
Labor & Benefits                                    $ 9.75
Equipment                                             $ 1.00
                                                                              =======
TOTAL                                                   $31.75

Their analysis, however, omits one important number – the check order selling price. How about $10 per order? $10 x 6 orders per hour $60.00 per hour

Total Production Cost                    ($31.75) per hour
Total Profit                                    $28.25 per hour

Using the numbers they provide, annual profitability is — would you believe it? — more than $175,000!

You do the calculations – ($28.25 x 6 hours per day x 20 days per month x 52 weeks).

What does this mean? First off, it means that Goliath did some serious stretching exercises with the truth. No wonder they are scared!

Beyond that, however, the banker needs to know that ChIPS is a REAL money maker. This is new profit with zero loan risk. That’s right – zero loan risk. The total “pass through” (that really means Goliath got the money) never hits the banker’s books so he never misses it.

2. The check producer suggests that community banks must invest upwards of $20,000 for one check-producing station.

Of course, you would expect Goliath to do their analysis based on the most expensive system available. By contrast, ChIPS is about the price of a second hand single pocket proof machine.

BandEntrance3. MICR document quality was called into question by the Goliath of the check -producing industry.

One community banker, Edith Stevens of Heritage Bank in Jonesboro, GA, is quoted as saying that 10 to 15 percent of checks her bank printed were unreadable. Ms. Stevens says that was a primary reason her bank switched back to Goliath.

Mr. Bob Steen, CEO of Bridge Community Bank, Mechanicsville, IA says; “It sounds like the bank in Georgia got the wrong system. Our customers like the quick service, the staff finds the system very user-friendly, and I like the money we save.”

ChIPS’ Production Software is written to comply with strict ANSI standard specifications and the laser printer MICR document technology has long-standing banker acceptance.

Mr. Tony Perry of Colorado Springs, CO is quoted as saying; “I have been the Manager of Information Systems for two different banks here in Colorado over a span of about eight years. I have personally implemented the MICR Prime Services’ system for both of them and am now doing it for a third.”

“There is absolutely no question as to the quality of the product that the MICR Prime Services’ system puts out. As a matter of fact, the end product looks better than what we were getting before. Everyone is happy with the MPS product, wonder how they ever got along without it and would seriously resist going back to the old way of doing things. Just have them call me if they want to hear what I think of the system. It’s terrific!”

What appears to be happening in this newsletter is a fear-based drive to help keep Goliath from losing any more bank clients to little MICR Prime Services. It’s a little like fear-based threats involving Social Security and Medicare … and is no more true than statements made by one political party about the other.

A lot of community banks want things to change. And, that is the reason for the Once Upon a Time story so many community bankers received from Goliath corporate headquarters – and it is a story – about why community bankers should not seek alternatives to the poor service quality Goliath provides your bank’s customers. Just think about it, when Goliath charges sky-high prices AND makes clients wait for their order it reflects badly on the bank, not on Goliath.

Perhaps what the Goliath newsletter really says is, “Ouch! Enough already! We’re losing too much business to these upstarts. Let’s scare community bankers so they won’t look elsewhere.”

The reason so many community banks use MICR Prime Services products? They retake control of heretofore lost profitability and service quality.

When you want profitability along with improved customer service, give us a call at: 1-800-229-0597


 

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