Check 21 Second Anniversary Approaches: UMB Bank's Terry D'Amore Offers Perspective.

KANSAS CITY, Mo. -- The decline in check volume is well-known and documented. In 2000, checks represented the majority, 58 percent, of all non-cash payments in the United States. Three years later, checks claimed only 45 percent. Lower check volume means processing costs are spread over a diminishing volume of checks. The Federal Reserve has already begun to consolidate check-processing sites to minimize their costs.

For years, the banking industry has sought a more efficient clearing strategy. In 2003, the Federal Reserve proposed a solution to Congress. Enacted on October 28, 2004, the Check Clearing for the 21st Century Act (Check 21) allowed a digital image, or substitute check, to legally replace the original paper check. With Check 21, the physical check stays put; instead, its image and data are transmitted between financial institutions, allowing checks to be cleared quicker.

"Financial institutions have been slow to adopt image conversion full-scale," said Terry D'Amore, executive vice president and director of the Payment & Technology Solutions Division of UMB Bank. "The high entry cost for banks to image all their items certainly has contributed to Check 21's lukewarm welcome. Even though Check 21 has not triumphed as the conversion of choice inside banks today, it has birthed an innovation for business. Remote deposit allows corporate clients to scan checks, literally at their desks, convert them to digital images, and electronically transmit them to their financial institution, saving them a trip to their local branch."

Check 21 has also driven unexpected competitive innovations, leading to yet another reason why it hasn't surfaced as the standard for check conversion. Automated Clearing House (ACH) payments are making significant forays into electronic check conversion and, soon, across the business landscape. Where Check 21 converts check to images whose data is read and stored through optical character recognition, ACH converts checks to straight data.

"The future of check conversion is open," said D'Amore. "Banks and businesses are faced with two choices: Check 21 and check-to-image conversion, or ACH and check-to-data conversion. Businesses aren't going to stop writing checks. And checks are going to be converted, either at the site of business or at the bank. Business can opt for the usual, leaving the choice of conversion up to their financial institution. Or they can make the choice in their back office."

For further insight or to schedule an interview with Terry D'Amore, please contact Jeremy McNeive at 816-860-5088.

UMB Financial Corporation (NASDQ: UMBF) is a multi-bank holding company headquartered in Kansas City, Mo., offering complete banking and related financial services to both individual and business customers nationwide. Its banking subsidiaries own and operate 141 banking centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. Subsidiaries of the holding company and the lead bank, UMB Bank, n.a., include an investment services group based in Milwaukee, Wisconsin, a trust management company in South Dakota, and single-purpose companies that deal with brokerage services, consulting services and insurance. UMB was named one of Business Week's "Web Smart 50" companies in 2005.