When Wells Fargo deployed its first deposit automation ATM in 2002, there was no Check 21 Act. The bank's back shop didn't have imaging technology; they imaged at the ATM and printed IRDs on the back end.
"We sort of spoofed it on the front end, and then very quickly as we were starting to roll out, we did image-enable the back end," said Alicia Moore, head of ATM banking at Wells Fargo.
To say that the bank's deposit automation ATMs have advanced somewhat since its first sidecar test machine in Sacramento, Calif., is like saying that Apple has added a few features since the Macintosh IIe.
Over the past decade Wells Fargo has conducted pilots, listened to customers, talked with manufacturers and tweaked the system. A lot. ("We've probably made over 150 changes since we started," Moore said.) By last November, the bank had in place a fleet of 12,000 deposit automation ATMs built to anticipate customers' desires — and their blunders.
Working out the kinks
And customers do blunder. "I think the majority of the issues experienced have more to do with consumer failure than actual product issues," said Mark Smith, VP of financial solutions at Kahuna ATM Solutions.
For instance, users had a tendency to insert checks into the acceptor with staples or paper clips attached. To solve the problem, Wells asked for a metal detect feature, Moore said.
Getting customer to orient checks correctly in the acceptor was also a chore. "It didn't matter if we used video or stickers or decals or whatever … customers just didn't get that right," she said. "So we figured out a way in our software to take it — and we actually call it — 'Any Which Way.'"
Wincor Nixdorf took a hardware approach to the problem, said Chad Bruhn, VP of the banking division for the company's east region in the U.S. "We created our quad-MICR CCDM (check-cash deposit module), so that it allowed for that four-way orientation. It doesn't matter whether it's up or down or left or right."
Wincor also pioneered mixed media deposit automation, Bruhn said. "We wanted to bring to market a device that was one slot, just like envelope deposit had been for 20 years." Bruhn believes that decision was a key factor in the company's ability to capture nearly a third of the U.S. deposit automation market.
Wells Fargo implemented mixed media last year in collaboration with NCR, purely as a customer convenience. "[E]ven though it wasn't business case-worthy, it was still worth it to us from a consumer interaction standpoint," Moore said.
The benefits of the upgrade went beyond customer satisfaction, though. "[T]he technology is improved," Moore said. "The throughput is better, the speed is better, the jam rates are lower."
Collaboration between the big banks and manufacturers on deposit automation benefits smaller FIs, too. While the majors get an early competitive advantage, others get fully developed and debugged technology from the moment they dive into the market.
And they are making the dive, said Bruhn. "I would say, within 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."
Smith said it was still hard for smaller FIs to justify the cost center, though. "The hardware alone is $20,000. Then the back end development is $20,000 here, another $20,000 there. To implement unit one, at a minimum, you're adding about $60,000 to the cost of the ATM," he said.
The difference for small FIs will be the decline in cost that naturally occurs as a technology gains widespread acceptance, Smith said. "Of all the technologies that are emerging, that one is clearly on a steady growth path, and what will drive it further is the release of less expensive models that maybe are not as feature rich and that will start to be used more in the community bank and smaller credit union space."
By now, the industry is widely aware of the benefits that accompany deposit automation ATMs: a 25 to 50 percent increase in deposits; a reduction in costs from daily bin-emptying runs (which can cost an FI from $800 to $1,000 per machine per month, Bruhn said) and check retrieval; the elimination of "empty-envelope" and related frauds; and the all-important benefit — migration from cost-intensive teller services to lower cost self-service.
Customer relations benefits accrue as well: immediate access to funds; 24/7 service and no waiting in a teller line; no scrounging around for a pen, deposit slip and envelope. ("One of the biggest complaints we used to get when we did satisfaction surveys … was that 14 percent of the time when a customer needed to make a deposit they couldn't find an envelope," Moore said.)
And finally, there's the coolness factor. "It's a wonderful blend of technology and finance," said Leslie Kenagy, a conference center manager at the Kauffman foundation in Kansas City.
A future competitive edge?
Adding the deposit automation feature opens a wealth of other new revenue sources for the FI, Bruhn said. The ability to take in and post deposits in real time gives deployers the option to enable services such as bill pay, card top-up, money transfer and more.
"So no longer is the ATM the machine that you get cash and do deposits," Bruhn said. "Now they're getting closer to being a "bank in a box" where financial institutions can put ATMs out there instead of branches in a lot of locations. And when they start thinking like that, the business case is just overwhelming."
Bruhn said Wincor was using its multi-vendor software to help customers connect with other systems — such as their online banking platform. "if you can do a transaction with online banking, most of the times we can take that same transaction and migrate [it] to the ATM".
For more on this topic, visit our bank automation research center.
/ Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally. She is now the editor of ATMmarketplace.com and BlockChainTechNews.com