WRITING a cheque is something most of us do without a great deal of thought, unless, of course, we live in Japan where the concept of the bank cheque has yet to penetrate. The Japanese walk about with oodles of cash in their pockets or they use direct bank transfers. Unlike Japan, however, China seems keen to come to terms with a cheque-cashing system and is already taking steps in that direction. It is a complex process, according to Jerome Brown, the director of Australia, Japan, and the Pacific Rim for BancTec, an American company that is one of the world's leaders in providing systems for document work-flow and automated applications solutions for banking and financial services. Mr Brown set aside nearly a full working day to explain patiently how cheques are processed both in China and in his native America. It is one of those things that is patently obvious if you think about it but not something you would normally think about. As one would imagine, banks send all cheques for settlement at the end of every day. What most banks do is set a time that defines the end of the day, usually 2 pm or 3 pm. Any transactions that occur after that time go into the next day's batch. The day's cheques are put together and then sent to a clearing centre to be handled. 'Handling' here means that the cheques are sorted, added up and then the accounts can be tallied. During the day, Standard Chartered may get 10 cheques drawn on Hongkong Bank, totalling HK$5,000. During the same day, Hongkong Bank may get $4,000 worth of cheques drawn on Standard Chartered. That would mean that Standard Chartered would owe Hongkong Bank $1,000. After all the cheques have been added up and all the accounts worked out, the cheques are returned. This process is an enormous task and can cost a great deal of money. In America, for example, it costs the Federal Reserve Bank US$40 billion a year to process these cheques. In China today, it is not possible to have a current account in Shanghai and write a cheque that can be used in Beijing. It is a little as if every town in China was a foreign country to every other town. Although China will eventually have to think about the inter-city problem, the People's Bank of China (PBOC) is concentrating first on the intra-city problem. BancTec has advised that it would ultimately be better to think ahead, but as it would cost more to put a nationwide system in place, there may not be enough of an incentive just now. Mr Brown thinks that it would save a great deal of pain if the PBOC thought about a nationwide system at the outset. In America, the Federal Reserve is desperately trying to deal with 14,000 banks nationwide. The amount of paper that gets passed about is quite extraordinary. China could, if it wanted to, skip the mountains of paper and go directly on to the kind of system that BancTec can provide: A digital imaging system. BancTec produces systems that can scan and sort cheques automatically. The scanned cheques can be printed out on A4 paper or they can be put on a CD-ROM. The data of the cheques can be stored digitally with the image of the paper cheque itself available to those who need it. Mr Brown said: 'I think there is a tremendous opportunity to move the banking system forward by eliminating paper.' If the PBOC were to set things up properly, Mr Brown said, small banks could implement PC-based systems to handle all transactions. This would put China in a leading position in the world in terms of banking technology. China is, in fact, going to set up a digital-only system, but it is taking so long to organise the financial community said it could not wait for it to happen. So it appears they will be going with a paper-based system to start. Much has been said about China leap-frogging the West and going straight into technology that is only just being invented. There is no doubt that this is possible and in many ways is actually happening. In Shanghai, for example, the telephone lines are being laid with fibre-optic cable, not copper. The reasons for this are not always as technologically advanced as one might think. It appears that the some locals dig up the copper and sell it. Fibre-optic cables are pretty much worthless. This becomes a kind of technology advance by default. If China's leaders have the foresight to plan for the things that Mr Brown talked about, China really could move beyond the rest of the world. If, on the other hand, China only concerns itself with immediate solutions, then a golden opportunity will be lost.
