Pendum

Study: auto-deposit ATMs past the 'tipping point'

At the end of 2011, there were 670,000 automated deposit terminals installed around the world. This represents an increase of 45 percent compared with two years earlier — impressive growth considering that non-deposit ATMs grew by just 14 percent over the same period.

These figures come from the new study, "Deposit Automation and Recycling 2012," from London-based strategic research and consulting firm RBR. The study takes a look at the rise of automated deposit terminals worldwide and the continued impact they are likely to have on financial services delivery.

Auto-deposit ATMs becoming 'standard'

RBR found that ADTs are becoming a "standard feature" in many markets, and that despite economic pressures, FIs are continuing to invest in the technology. "ADTs bring tangible benefits to both the deploying bank and its customers, and they are becoming a standard feature of many markets," RBR said in summary of the study. In fact, globally, the research firm said, ADTs now outnumber envelope-deposit ATMs two to one.

Not surprisingly, China, and a little surprisingly, Russia, accounted for more than half of new ADT installations between 2009 and 2011. Overall, China is a major growth market for retail banking and ATMs. In Russia, retail banks are also expanding their footprints.

Additionally, many Russian banks have heavily expanded their retail business, particularly in the fields of consumer lending and utility bill payments, RBR found. ADTs have helped to reduce the load on teller lines that these services have created.

Efficiency and access drive demand

It's no secret why ADTs are so popular: The 133 banks interviewed by RBR for the new research identified the migration of transactions to self-service as the principal driver of ADT installation, with extended access to deposit facilities also an important factor.

In short, when ADTs go in, the number of self-service check deposits goes up — by an average of 33 percent, said Michael Croal senior director at Cornerstone Advisors, a consulting firm serving FIs, in a BAI commentary.

In the RBR study, banks cited various reasons for wishing to divert routine transactions away from the teller; not just to reduce queues, but also to facilitate staff redeployment and cost cutting. In some cases ADTs enable banks to implement a cashless or tellerless branch format.

The savings are not just in the reduction of teller-window transactions, said Alicia Moore, head of ATM banking at Wells Fargo in a telephone interview in May. "It's really allowed our bank staff — the ones that used to open ATMs twice a day to [collect] envelopes — it's saved them trips to the ATM to do that every day. Generally now they go about once a week."

In 5 years, twice the auto-deposit ATMs

As automated deposit has become standard in markets, it has put pressure on those banks that don't offer auto deposit to add it as a service to customers.

"Some of the other banks that are in those same markets are seeing the value those machines bring to consumers, they're seeing the increase in deposits at those ATMs," said Chad Bruhn, VP of the Wincor Nixdorf banking division for the eastern U.S. "[W]ithin the last two to three years, there's actually been a very large influx of financial institutions that are now migrating to the technology. They were just following the first pioneers in the U.S. market."

RBR forecasts that the number of ADTs worldwide will double by 2017, to about 1.3 million. This represents an annual growth rate of 12 percent, triple that of non-deposit ATMs.

The outlook for recycling ATMs

In its new study, RBR also looked at the growth rate and prospects for recycling ATMs. Researchers found that half of the world's ADTs also recycle banknotes, although the technology tends to be localized.

"Japan, where all ATMs recycle, accounts for two-thirds of the world's recyclers," the RBR report said. "Outside Japan and South Korea, the other market with a well-established base of recyclers, 18 percent of automated deposit ATMs redispense deposited notes."

RBR said that in some countries, notably China, regulations prevent the use of recycling ATMs. In other locales, the higher cost of terminals and cash-in/cash-out imbalances make the business case questionable for recycling. As a result, banks in those markets are delaying the move to recycling ATMs.

"Many of our locations are not cash positive so it's very hard to do [recycling]," said Moore. "And the attractiveness of recycling is whether or not you can get rid of an armored run, so you have to have enough cash coming in and cash moving out, that you don't need that armored car run. And that's been hard for us to get to from a business case standpoint."

For more on this topic, visit the multi-function ATM research center.

photo: jhritz

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