Bank On Feature-Filled ATMs

For consumers, imaging at ATMs means that funds deposited at the machines are available immediately. For banks, the constant worry of envelope fraud, in which fraudsters deposit an empty envelope and lie about the money they allegedly deposited, becomes a nonissue. Since no envelopes will be involved with digitized deposits, the bank always knows how much money it's receiving.

The cost-savings potential--$2 billion a year, according to TowerGroup's Silva--of eliminating paper using Check 21 technology is impressive. And paper isn't the only dinosaur waiting to be wiped out. The manpower required to process checks deposited at ATMs is something banks would be happy to eliminate. "It costs banks more to process an ATM deposit than one at the teller because you have to send an armored carrier to the machine to pick up the currency daily," Silva says. "They take the deposits to a processing site where people need to open the envelopes. This adds up."

"Our goal is to image-enable all of our ATMs that accept deposits," says Susan Symons, ATM general manager at Wachovia Corp. "This provides huge benefits for customers because they get real-time credit for transactions, and it's just more secure." Wachovia is replacing ATMs in its network so that they can accommodate imaging equipment, Symons says. Though she admits this won't be an easy process, she says, "It will be well worth it."

Wells Fargo already is adding imaging to its ATMs. The bank has been piloting the technology for the past couple of years, Velline says. "Ninety-eight percent of our customers who use the imaging technology say it's easy at the ATMs," he says.

Diebold's Merrell says his company definitely has seen an increase in requests for imaging technology since Check 21 was enacted. "Some banks will purchase ATMs with imaging devices even if they aren't rolling out the technology immediately," he notes.

Perhaps the biggest drawback to installing imaging technology at ATMs is the cost of the equipment and the infrastructure upgrade. Even Merrell admits that the cost of check-imaging technology throughout the ATM industry "is not inexpensive." However, most industry experts agree that the overall savings that will be realized outweigh any negatives.

Forrester's Ensor offers a word of caution about increasing self-service functions such as check imaging at ATMs. North American banks "should think carefully about how they deploy this technology," he says. "If you look at the U.S., Canada, and the U.K., check volume is plummeting, so the business case might not be there soon" for investing in imaging technology.

Ensor's advice isn't lost on most banks. They realize they must be smart about how they deploy their next-generation ATMs. It just doesn't make business sense for every machine to be all things to all customers. The more-complex functions can be time-consuming, leading to long lines at ATMs and annoyed patrons.

Ensor sees different "species" of ATMs coexisting, some with simple functions and others that offer the more-complex transaction features, such as check imaging. "It doesn't make sense, if you think about how customers use the machines, to have multiple-use ATMs everywhere," he says. "We'll see segregation of ATMs that play different roles." Of course, all machines should have a set of baseline functions on them, he acknowledges, adding that banks are likely to deploy their advanced ATMs selectively, depending on the demographics of a given area.

Wachovia plans to approach its customers to gauge the types of features they'd like on the machines. "Every customer can be a bit different," Symons says. "We don't plan on having a massive array of services at all our ATMs--most customers just want to withdraw cash. And there are queuing issues to deal with. But we'll do customer-focus groups to see what they want."

So, will the allure of these new features ultimately lead to more traffic at the machines? Perhaps. However, that's not necessarily the goal of all financial institutions at this time, given the channel's maturity.

"The growth of ATM transactions is only 1% to 2% because the number of machines keeps going up," TowerGroup's Silva says. "This makes the value proposition of experimenting with new features more sensitive because you're dealing with existing customers. You have to think about how to please them rather than attracting new users."

"Each bank has its own goals, and it may not be just to increase traffic," says US Bancorp's Estep. "They may want to better serve their clients or reach out to new ones in different areas."