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Economics of cheques in a declining volume environment

23 April 2004  |  990 views  |  0 cheque book

Rapidly declining cheque volumes will force US banks to take extreme measures to maintain profitable and viable cheque processing operations, according to this study by Meta Software Corporation.

For this study, which applied a workflow simulation model of a 'prototypical' cheque processing operation, Meta sought to quantify the magnitude of impact of declining cheque volumes and to understand what steps banks must take – and when – to minimise profit erosion or, conversely, to possibly establish competitive advantage.

The major finding of the research is that, given the nature of this volume decline, the industry cannot rely solely on variable expense reduction or new technology to 'manage down'. Rather, industry consolidation will be required, leading to at least 50% reduction of fixed expense in order to minimise the impact of unit cost increase.» Download the document now 330Kb - PDF

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