Alaska CUs Eagerly Await Check 21 As State's Climate Makes For Year-Round Transportation Problems

ANCHORAGE, Alaska – Credit unions in the lower 48 states got a taste on 9/11 of what it’s like for the country’s air transportation system to be grounded and to not be able to send checks for processing. That was fortunately only a temporary inconvenience. But imagine working for a credit union in Alaska where bad weather year-round could prevent flights from landing, or bags of checks could be bumped for needed supplies. Add to that the fact of life in Alaska of knowing that in some areas planes aren’t allowed to land during certain times of the year. Alaska USA FCU, the largest CU in the state, faces challenges like these daily, as do most of the 13 credit unions in Alaska. For them, Check 21 couldn’t come soon enough. The $2,297.2 billion credit union has 36 branches, including seven in Washington State and 29 in Alaska in cities such as Ketchikan, Juneau and Bethel in northwest Alaska, which Mark Johnston, vice president of central operations says is in one of the state’s remotest areas and is accessible only by boat or plane. “We face some interesting logistical challenges,” says Johnston. “Credit unions in the lower 48 states can always drive or have their checks transported by ground transportation if airports are shut down.” For the past seven years, Alaska USA has been using TWS System of Alaska a division of TWS Systems Inc., to handle its item processing. The company leases space from the credit union in one of its Anchorage branches located about five miles from the credit union’s headquarters. Checks from Anchorage branches are delivered to TWS each day from 7-8 p.m. and are processed the same day. Checks from Alaska USA’s Washington branches are picked up by DHL and then flown to TWS Systems for delivery the next day. DHL, says Johnston, picks up at different times at different locations, and depending on where the checks are coming from, TWS receives deliveries several times during the day for the credit union. TWS Systems handles about 1 million items a month for Alaska USA FCU. Item processing is mostly done at night so processed checks are ready to be sent to the Fed by midnight. Johnston admits that the Anchorage airport seldom shuts down, “probably because we’re used to dealing with bad weather,” he says. Still, he adds, “we rely on air transportation as a lifeline to the lower 48 states. We’re at a clear disadvantage.” That’s why he’s looking forward to the passage of Check 21. It will make the check processing system more efficient, says Johnston, noting that TWS Systems has a short time window to get processed items out. In addition, Johnston said Alaska USA will save on operation costs because the credit union won’t have to rely on courier service. “Sometimes the courier service misplaces items or deposits,” he says. “In those instances, we have to go in and recreate the transaction.” More important, Johnston says Check 21 will mean Alaska USA will be able to process checks from its remote locations on the second day and not be dependent on weather conditions. Until the legislation passes, Alaska USA is working closely with TWS Systems to determine what equipment it will need to purchase for its remote branches. Johnston says the credit union realizes it may need to look at installing additional technology for these branches so they’ll be able to electronically capture check images and send them to TWS. “Right now we’re going through a period of structured chaos, assessing what we’ll need and relying on TWS’ expertise to put the necessary imaging systems in place for us,” says Johnston. Northern Schools FCU in Fairbanks also relies on DHL to get its items to the Federal Reserve office in Seattle every night. The $72 million, 12,000-member credit union sends around 700 items a day to the Fed worth about $1 million. CEO Mike Lombardino says the community-based credit union has a backup plan for those just-in-case times when planes aren’t flying, but that involves taking pictures of checks using a rotating camera with microfilm. Northern Schools FCU has considered implementing a contingency plan for a while, but Lombardino says “the cost is hard to justify” because of the relatively low volume of checks processed. Still he says it would be worth the while for no other reason than to reduce the credit union’s exposure to risk caused by releasing funds when a check is deposited but there’s a delay in the delivery of checks to the Fed for processing. Lombardino agrees with Johnston that Check 21 will make the process of delivering imaged checks more efficient and reduce operations costs. “It’s a good move directed to moving us towards imaging and electronic processing and away from paper,” he says. For credit unions in Alaska, that’s a move in the right direction, he adds. -