Management Information System (MIS) Practice Exam

Which technology does the banking industry use to read check information like account numbers?

1. Optical character recognition

2. Magnetic ink character recognition

3. Optical mark recognition

4. Bar code reading

The correct answer is: Magnetic ink character recognition

The banking industry primarily utilizes magnetic ink character recognition (MICR) technology to read check information such as account numbers. This technology is specifically designed for processing checks, where sensitive information is printed using magnetic ink. MICR characters are encoded in a style that enables banks to read the information quickly and accurately using special MICR readers. This method is advantageous because it allows for high-speed processing of large volumes of checks while minimizing the risk of errors. The magnetic properties of the ink enable the machines to differentiate between the magnetic characters and other printed text, ensuring that the critical account information is captured reliably, even in various conditions. Other options, while relevant in different contexts, do not serve the same purpose. For instance, optical character recognition (OCR) is useful for reading printed text but doesn't specifically target magnetic ink on checks. Optical mark recognition (OMR) is used for reading marked answers, like those on scantron forms, and bar code reading pertains to scanning codes for inventory or product identification. Hence, MICR stands out as the technology uniquely suited to the banking industry's check processing needs.