Fiserv, Inc. (Nasdaq:FISV) has launched the Fiserv Clearing Network - a venture that eventually will offer clearing and settlement services to all of Fiserv's 1,700 check-processing clients - through an agreement with United Bankers' Bank of Bloomington, Minnesota.
In order to clear checks, financial institutions must find a way to settle accounts, a service that's typically handled through a correspondent relationship or through the Federal Reserve. By using the Fiserv Clearing Network, financial institutions will be able to improve efficiency and reduce check-clearing costs.
United Bankers' Bank (UBB) initially will offer clearing and settlement services for checks processed in Fiserv's facility in Eagan, Minnesota. The bank will provide similar services for checks processed in Fiserv's center in Des Moines, Iowa, at a later date.
Mark Damico, President of the Fiserv Item Processing Group, said the Fiserv Clearing Network enables the company - the nation's largest third-party check processor - to directly settle checks drawn on other Fiserv clients.
"We also can pool the outgoing volume of all our clients to further reduce check clearing costs and improve funds availability," Damico said. "And, as Check 21 makes it practical to truncate the paper and provide electronic and image exchange, Fiserv will be able to extend this model and link our 50 item processing centers across the country."
William C. Rosacker, President of United Bankers' Bank, called the agreement a major milestone for Fiserv, UBB and community banks.
"Check 21 will change how community banks both present and are charged for their items," Rosacker said. "The Fiserv Clearing Network should prove to be a great aid to community banks in controlling costs and managing their daily cash position. UBB sees Fiserv as one of the nation's technology leaders in providing check - clearing services. We are pleased to bring the services of this outstanding organization to our community bank customers."
The Fiserv Clearing Network also will offer transit-clearing services to United Bankers' Bank customers, accept co-mingled cash letters of items drawn on Fiserv clients, and improve the return item process. "We believe we can take a full day out of the return cycle and reduce clearing fees by creating endpoint cash letters," Damico said.
Since Fiserv is not a bank, the Fiserv Clearing Network requires settlement partners such as United Bankers Bank to actually settle check collections. Fiserv eventually expects to add settlement partners throughout the country so that all of its 50 centers can participate in the Fiserv Clearing Network.
United Bankers' Bank provides correspondent banking services to community banks in Minnesota, Iowa, North Dakota, South Dakota, Montana, Wyoming and Nebraska. "With more than 700 customers, UBB was the ideal choice for the first Fiserv Clearing Network center in Eagan, Minnesota," Damico said.
Gene Ekness, UBB Senior Vice President, said the bank began working with Fiserv more than a year ago to develop a pilot program for the Fiserv Clearing Network.
"The data from our pilot, coupled with Fiserv's new initiatives, will form the basis for developing an expanded value proposition for community banks through the Fiserv Clearing Network," Ekness said.