2007 Could Be the Year Deposit Automation Takes Off At the ATM

Implications: Banks and credit unions are rolling out check imaging ATMs that scan checks and cash, eliminates the need for envelopes, reduces the cost to process checks, providers customers with immediate access to funds and verifies that the deposit has been received. The potential cost savings for banks and credit unions who integrate check imaging technology into their ATM fleets could surpass two billion by 2008. With over 200,000 bank owned ATMs in the U.S., banks are targeting high traffic areas for new ATMs and opting to replace their older ATMs which can be seven to ten years old. The ATM replacement market is poised for growth, which will fuel growth for ATM manufacturers, servicers, cash providers and the industry as a whole, resulting in more jobs worldwide. ATM replacements is driving sales at the ATM and so are new deployments at branches and off-premise locations. Because checking imaging ATMs can cost as much as $30,000 or more banks will be selective in deployments.

Analysis: Comments/Perspective:

Deposit automation is paving the way for enhanced services and an uptake of deposits at the ATM, while offering a host of features including the elimination of deposit slips, no envelopes needed, deposits occur in realtime and funds are available immediately to customers. Banks and credit unions cut-off times have been extended for deposits at the ATM and customers benefit by receiving same day credit on deposits. Banks and credit unions are also reaping the benefits of integrating check imaging technology into their infrastructure and realizing ROI through reduced transportation costs, fewer courier runs, elimination of fraud at the ATM, an increase in consumer confidence and migrating customers from the teller line to the ATM, which is saving banks and credit unions on transaction processing costs.

1.  By eliminating envelopes, banks can process deposited checks immediately and the original checks can reside in the machine as long as a week, therefore pickups from ATMs at non-bank branches can occur less often than once or twice a day because the scanning technology  converts the deposits into electronic transaction/image and processing costs is reduced to about 50 cents per deposit

2.  With checks remaining the largest non-cash payment option in the U.S., check imaging has become one of the fastest growing areas in retail banking and deposit automation and a strong demand for new ATM deployments and replacements are keeping ATM vendors upbeat about the growth prospects of deposit automation at the ATM in 2007 and 2008

Trends show that once customers embrace the new process of making deposits with no envelope and overcome their fears of being stuck in the envelope, banks may see an increase in deposits at the ATM and an improvement in customer retention.