Switch to electronic cheque system kicks off

By Jackson Okoth

A draft Bill is being prepared to enable commercial banks process electronic cheques.

Apart from amendments to the Bills of Exchange, other preparations taking place as migration to an electronic clearing begins include recruitment of a project manager and acquisition of the required software to run the system.

Sources familiar with the project have put its commencement date to October next year.

Already, samples of the proposed electronic cheques have been made.

So far, only one firm has submitted bids to supply the software although more are expected as the deadline approaches.

"Its success will also depend on availability of broadband to transmit the cheque images", says John Wanyiela-CEO Kenya Bankers Association (KBA).

Presently, customers have to wait for three days for their cheques to be cleared by commercial banks.

Tender

This has led to growth of cash-for-cheques firms, offering cheque-processing services to customers at a premium price.

The Cheque Truncation project is expected to attract the interest of key international and local IT sector players, including imaging companies, document and business process management solution providers.

These firms will be eyeing the business of linking banks to the new cheque processing system.

Cheque truncation is the use of electronic (scanned) images of a cheque for processing.

For customers, this means real time clearances within hours instead of days as the cheque is "truncated" from travelling physically from one bank to the other.

Commercial banks that currently participate in the clearinghouse will need to be IT-enabled to handle cheque truncation.

Already, banks have been engaged in a series of technology upgrades. The most recent is Kenya Commercial Bank, which recently migrated to an Internet-based T24 system, supplied by Temenos of Switzerland.

"T24 will enable us to offer a faster, more effective service to our customers," said Martin Oduor-Otieno, CEO at KCB.