Article
ATMs take another step toward next-gen functionality
Automated-deposit technology at the ATM is paving the way for a whole host of new ATM transactions, and a greater need for solid ATM service.
February 9, 2009 by Tracy Kitten — Editor, AMC
EDITOR'S NOTE: This is an excerpt from an upcoming guide about deposit automation. Click here to register for the Coming Soon: Deposit Automation guide.
In the United States, the move to automated deposits was spurred by the October 2004 implementation of Check 21, which made it possible to produce a legally binding paper-replacement document from a check image.
The Check 21 Act got government backing for a number of reasons, namely cost savings in check-processing and environmental benefits. Those cost reductions and environmental benefits also served as a catalyst for automated deposits in other parts of the world, where, though less dependent on paper checks, markets are constantly striving to make their operations more efficient.
The benefits of the automated-deposit technology are far-reaching, since the same technological foundation supports other advanced financial transactions, such as cash recycling, self-service bill-payment, teller-deposit automation and remote-deposit capture.
But implementing automated deposits is complex, especially on a self-service device. ATMs must accept creased, crumpled or curled checks and banknotes. They also must provide true double-check detection, ensuring that each check is individually scanned, even if those checks are deposited in a stack in a single transaction. And ensuring that a quality image of the check is captured during the deposit is critical.
Deposit automation: More than just hardware
Automated deposits comprise a whole host of complementary components that move beyond mere hardware and software. A successful automated-deposit deployment on an ATM must include a viable servicing plan, and concise steps for consumer adoption and successful emulation of the teller experience.
What's first on the list toward deposit automation at the ATM? Serviceability, says Rebekah Falconer, who oversees deposit-automation business development for North Canton, Ohio-based Diebold Inc.
"With this sort of complex equipment and transaction, it's critical for banks and credit unions to have an experienced provider that really knows what is involved in the transaction and what it takes to ensure the ATM environment is up and running," Falconer said. "When transactions become more complex, such as when automated deposits and check-imaging are introduced, then having a skilled service provider who understands the hardware, the software and the back-end systems inside and out can make the difference between a satisfied customer or member and a dissatisfied one."
Third-party service providers such as Portland, Ore.-based Solvport LLC, which in late 2008 was acquired by TRM Copy Centers Corp., admit they have little experience working with automated-deposit-taking ATMs. Most of a third-party service provider's business comprises work on basic cash dispensers.
But as the financial landscape continues to evolve, so will the ATM-servicing paradigm.
Wayne Vanderkraak, who heads up the Solvport division, says he sees servicing ATMs that offer deposit-automation as a necessity, albeit a requirement that many third-party providers are not overly excited to accommodate.
"The ISO industry is facing an interesting dilemma," he said. "Up until now, the ISO industry basically revolved around a cash-dispensing 'vending' machine. But with regulatory requirements and the perceived need for more sophistication, etc., the machine evolved into what we know today. And as the product becomes more complex, the need for subject-matter experts begins to show up, and that's having a big impact on the ISO and the servicing side of the business."
Independent sales organizations have often opted to service their own machines. But as more ISOs strive to build and develop ATM-branding and ATM-management and -operations outsourcing relationships with FIs, comprehensive ATM-service contracts will be a must-have extension of the ISO-FI relationship.
Vanderkraak says that means most ATM technicians, who once were skilled enough to work on five different ATM makes and a subset of ATM models, will not be qualified to work on the new advanced-technology machines hitting the market for automated deposits.
"You'll have subject experts, but you won't have as much flexibility to use techs across larger areas; and that will affect who you use on phone support as well," Vanderkraak said. "Not everyone will know the technology well enough to work in the call center. But the advantage for us right now, as a third party, is that as we get our expertise in place, we will be at an advantage."
At Texas-basedNautilus Hyosung America Inc., part of Korea-based Nautilus Hyosung, working with third parties such as Solvport is part of the business model for FIs and ISOs, says Carlos Siewczynski, Nautilus' vice president for the North American retail self-service division."We train FIs and third parties on our equipment," he said, rather than managing a servicing unit or servicing department in-house. "Solvport,Pendum,Bancsource, Redhawk, and De La Rue (Talaris) are just a few of the third parties working on our equipment. They send their staff here, we train them, and then they take care of the machines."
Serviceability is a big concern, says Diebold's Falconer. Just as many ISOs have historically serviced their own cash-dispensers, so have many FIs, especially where first-line maintenance and service come into play.
"From the FI side, if they are removing the checks themselves, then it becomes very important for the machines to be built in a way that makes it easy to pull money and checks from them," Falconer says. "Serviceability is key."
Diebold, Falconer says, provides videos and step-by-step training for first- and second-line maintenance of deposit-taking terminals. Other dominant players in the automated deposit space, includingWincor Nixdorf AGandNCR Corp., offer similar training materials and guidance.
During NCR's Self-Service Universe in April 2008, NCR lauded its newly released SelfServ ATM line, not just for its ability to "self-heal" but also for its ease of serviceability. And Wincor Nixdorf, during its Wincor World trade fair in January 2007, introduced its new serviceability options on its ProCash ATM line.
Both vendors, like Diebold, have taken modular approaches to ATM design and have designed ATMs that offer technicians and branch staff visual instructions on screens that are actually built into the machines.
Two sides of deposit automation
"One way is to think about stuffing everything into one slot; the other is to have one slot that accepts cash and one that accepts checks," said Mike Shirk, Diebold's director of deposit automation strategy.
From a serviceability and uptime perspective, to go with one or two makes a big difference.
During the Banking Administration Institute's annualRetail Delivery Conference & Expoin November, deposit automation was a central theme, and ATM manufacturers varied in their approaches to automated-deposit technology.
Diebold and Nautilus Hyosung say separate slots for cash and checks improves uptime, deposit accuracy and ATM serviceability. Other companies, such as Wincor Nixdorf, argue just the opposite, saying mixed-bundle deposits of banknotes and checks have proven a better route to pursue.
Shirk says uptime and user experience should dictate what kind of deposit technology an FI settles on. And improved uptime translates into improved FI customer/member satisfaction.
Nautilus Hyosung's Siewczynski says separate slots have been requested by banks and credit unions. With bulk-note acceptance at one slot and bulk-check acceptance at the other, the 7600D is Nautilus Hyosung's highest-quality ATM for the banking side of the business.
"A long time ago we planned to develop a single-slot option for deposits, but most of the (FI) customers said they did not want just one slot, because of the potential failure as well as security concerns," said Antonio Kim, senior sales manager for banking systems at Nautilus Hyosung.
Checks, especially handwritten checks, require more stringent approval/recognition and security measures than cash. And because the failure rate for deposits of handwritten checks averages between 90 percent and 95 percent, check deposits are more often taken offline, Kim says. With one slot for all deposits, when the check-deposit feature goes down, so does the cash-taking feature.
"Uptime is benefited by keeping the deposits separate," he said. "We are now working with around 10 or so FIs in the U.S. on check deposits at ATMs, and many of these FIs have been looking at this technology for a long time. … and they know quite a bit about what works and what is accepted from a consumer point of view."
But Alan Walsh, vice president of banking for Wincor Nixdorf Inc. (USA), has a different view, saying mixed-bundle deposits of cash and check are more reliable, and more closely resemble the envelope deposits users have grown accustomed to at ATMs.
"For years customers have been in the habit of putting cash and checks into one envelope for deposits," Walsh said. "We have tested all of the methods of deposit time and time again — this is our fourth-generation technology on the market right now. A lot of competitors are just now introducing their first-generation technology, and they are just now realizing the challenges that we discovered two years ago."
For FIs, the determining factor may rely more on the serviceability than the separation of the deposits themselves.
Jenee Rawlings is a vice president at Yolo Federal Credit Union in Woodland, Calif. ($170 million in assets). Rawlings says service and maintenance of automated-deposit ATMs is Yolo's primary concern. For Yolo, it made more sense to continue buying hardware and the software from a single vendor, Diebold, and thus adopt the deposit technology that vendor offers.
"The advantages of going with a single vendor are big for us," Rawlings said. "With only 10 ATMs, we are not a significant client for them (Diebold), but we do get some cost breaks in going with one vendor for everything, and it also gives us the peace of mind that the technology is the same at all of the branches."
Yolo's IT department also was pushing for the credit union to sign with a single vendor, as ATM service and ATM uptime are improved when everything is uniform, she says.
"We handle servicing on the onsite machines that are connected or inside our branches and Diebold handles everything that's offsite. They also do the second-line service for us," she said. "Part of the package with Diebold, and why we picked them, was their ability to monitor and fix many of the hiccups at the machine remotely without having to send someone out to service those machines. Uptime on those machines is important. Our benchmark is greater than 97 percent uptime, and they've exceeded that."
DepositsDistributors / ISO / IADRetail / Off-PremisesNorth AmericaBank / Credit UnionBancsourceDiebold NixdorfHyosungPendumSolvportWincor Nixdorf International
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