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It's been slow to take off, but most industry insiders agree the roll over from 2007 to 2008 will be marked by a spike in the adoption of deposit-automation technology.
As more banks and credit unions replace and upgrade ATMs to accept envelope-free deposits, the ATM playing field is expected to level, for financial institutions as well as manufacturers.
Tony Hayes, vice president of financial services for Boston-based Dove Consulting Inc., a division of Hitachi Consulting, says research suggests that consumers prefer envelope-free deposits, and FIs are reacting.
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According to Dove, 21 percent of banks and 24 percent of credit unions deployed deposit-imaging ATMs in 2006. Another 58 percent of banks and 65 percent of credit unions said they planned to deploy the technology at the ATM within the next year.
To date, only the United States' largest banks have made a splash in the deposit-automation space. Charlotte, N.C.-based Bank of America is the most notable of the bunch, with some 2,500 imaging machines now up and running in 11 markets.
San Francisco-based Wells Fargo & Company is another one. Wells is deploying ATMs that can accept bulk-note and check deposits. One deposit can include up to 50 bills or 30 checks. And the bulk deposit feature, designed by Paderborn, Germany-based Wincor Nixdorf International, has progressed to the next level. In fact, Wincor Nixdorf touts that its new deposit feature, which allows users to bulk-deposit up to 50 notes or checks at one time without an envelope, is the first of its kind deployed in the market today.
Wincor Nixdorf, which has spent the last 24 months pouring resources into growing its ATM presence in the United States, says it expects the latter part of 2007 to be a period of massive Check 21 - short for the Check Clearing for the 21st Century Act - adoption.
"I think you will see mass rollouts of Check 21 this year," said Alan Walsh, Wincor Nixdorf's vice president of banking in the United States. "We see the top banks doing that now; and in 2008, you will see massive rollouts, with other financial institutions following suit."
Peg Bost, a Check 21 expert at Diebold Inc., says by 2011, about one-third of all ATMs in the United States will accept automated deposits for cash and check. (Read also, A tipping point for check imaging?)
Other manufacturers, including Long Beach, Miss.-based Triton Systems, agree that deposit automation is poised for growth.
"We think check scanning is really getting ready to take off," said Mark Smith, Triton's senior manager for the company's value-added resellers. "And we think that 2008 is when we'll see it take a prevalent jump."
Alicia Blanda, a spokeswoman for Triton, said credit unions and other smaller FIs are likely to use automated-deposit features for checks as a way to compete with larger FIs. The features also offer opportunity for ATM manufacturers to compete with Diebold and NCR Corp., which dominate the U.S. FI ATM market.
"At some of the trade shows we've gone to recently, credit unions specifically say they're looking for check-scanning capabilities when they make their (ATM) upgrades," Blanda said. "They say they aren't ready for it now, but they will be. And they are looking for units they can easily upgrade. That's where the 7000 comes in."
Triton's FT7000, which the company is pushing in the FI space, does not come equipped with check-imaging tech but can be upgraded, Smith said. The company plans to release a check-scanner during the first quarter of 2008.
"There's a large range of costs out there for check imaging - it can range anywhere from 10 to 20,000 dollars in increased cost," Smith said, "because of all of the backend expenses. Triton has not decided what it is going to do from a vendor standpoint, but we're investigating it."
For Wincor, the story is similar. By pushing its bulk-note and check deposit features, the company expects to have an impact on the market.
"We have 800 units deployed with bulk deposit in the U.S.," Walsh said. "As for deposit automation, we have 50 large projects worldwide right now. Technology is what has driven the market."
Walsh said that three, including Wells, of the United States' top five FIs are piloting Wincor's depositing technology. Walsh would not name the other two FIs involved in pilots.
"Deposit automation offers customers a unique experience," Walsh said.
Dayton, Ohio-based NCR Corp. also is forging ahead with the technology. To date, NCR has deployed more than 2,200 intelligent-deposit ATMs capable of accepting check and cash envelope-free deposits in the United States.
Unforeseen benefits for merchants
To date, merchants have been the crusaders of Check 21 tech. The ability for merchants to remotely send check deposits to their FIs was an unforeseen benefit of Check 21 legislation.
Simply put, Sarah Fankhauser of Hutchinson, Kan.-based DCI Inc. says, "Merchant capture is huge right now."
DCI, which provides bank processing and technology solutions, works with a number of FIs in remote/rural locations throughout the western United States. To help its FI customers extend their service reach and reduce check-processing costs, DCI is encouraging them to implement merchant/remote capture.
"We're trying to build a network of DCI banks that are exchanging information between each other," said Jerry Rempe, DCI's senior vice president of operations and item processing. "We're trying to have them send checks directly to each other by 'interbanking,' rather than sending checks to the Fed."
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