BofA’s Envelope-less ATMs Show Imaging Is Catching on with Users

Bank of America Corp.'s announcement this week that more than one-fifth of its deposit-taking ATMs now image checks?and thus don't require deposit envelopes?shows that so-called envelope-less ATMs are starting to catch on with consumers, says an expert observer. “The announcement is significant if only as a sort of marker showing the adoption of image-based ATMs,” says Tony Hayes, a vice president at Boston-based Dove Consulting. “We're now seeing some mature traction.” The Charlotte, N.C.-based banking giant, which has been experimenting with the machines since 2003, said it now has 2,500 imaging ATMs in place in 11 markets, including the country's three largest cities. This represents 21% of the bank's deposit-taking machines and 15% of its total fleet of 17,000 ATMs. It's also the largest deployment of such ATMs by any bank so far. Though the technology to image checks at the ATM and transmit images to banks' back offices for processing has existed for some time, banks have been slow to deploy it, largely because of costs. The Check Clearing Act for the 21st Century (Check 21), which gave the trafficking of images between banks a big boost, went into effect almost three years ago, and since then banks have worked to reconfigure their back offices to handle images, investments that may now be laying the groundwork for further deployment of imaging ATMs. BofA says over the next several months it will add check imaging at ATMs in two more markets, Baltimore and San Francisco. According to research Dove released last year, 21% of banks and 24% of credit unions had deployed image-based machines, while 58% of banks and 65% of credit unions planned to within a year. Hayes says banks are reacting to consumer sentiments. “Consumers prefer envelope-less ATMs,” he says. “What we're hearing from banks is that, before and after at the same ATM, once you move to image, deposit usage goes up dramatically.” With image-based ATMs, consumers can feed checks straight into the machine, which creates images of them for electronic transmission. In BofA's case, the machines add up the deposit for the customer, doing away with the need for a deposit slip, and print the images on the customer's receipt. The bank offers same-day credit up to 8 p.m. if the deposit is made in the same state as that where the account is kept. The feature costs more?a new machine enabled for images runs about $30,000, compared to $15,000 to $20,000 for a new ATM with conventional envelope capability?but there can be significant payback to the bank, Hayes says. With imaging, banks don't have to send armored couriers the machine as often, and fraud from “deposits” made with empty envelopes is no longer a problem. Also, Hayes says, at least some of the increase in deposit activity at these machines is coming from customers who otherwise used teller windows, creating further savings. Indeed, the biggest benefit from envelope-less ATMs may turn out to be that consumers, who have long preferred branches to ATMs for deposits, will finally start using the machines for a key banking function other than cash withdrawals. Just printing the image on the receipt, he says, boosts consumer confidence and encourages usage. “Before, it was your word against the bank's word” that the deposit had been inserted into the ATM, he says.