Credit Unions Outpace Banks in Imaging ATMs

Countering the perception that they’re not as tech-savvy as their banking brethren, credit unions are adopting imaging ATMs at a greater rate than banks, according to new findings from Celent LLC.

In fact, when it comes to adoption of 14 tech-related services or operations for branches, including imaging ATMs, credit unions are ahead of banks in 11, according to Celent. The Boston-based research firm’s findings are based on interviews with financial executives and executive responses from a Web-based survey about current and future technology in branches.

Thirty-eight percent of credit-union respondents reported that their branches have imaging ATMs compared with only 15% for banks. Such machines, which can cost $30,000 or more, enable customers to deposit checks without putting them into envelopes. The machines produce images suitable for clearing under so-called Check 21 protocols and, while expensive, have lower operating costs than conventional envelope-taking ATMs because checks don’t need to be retrieved daily.

It’s no surprise that credit unions devote considerable resources to their branches, according to Celent senior analyst Robert Meara. Banks often devote most of their attention to corporate banking or other business-oriented services, whereas credit unions, because of their charters, are more consumer-focused. “That’s forced credit unions to pay more attention to their branch … and to cultivate customer service, a sales culture,” Meara tells Digital Transactions News.

In addition, credit unions frequently are on a single processing platform or get all of their tech services through one provider. That can make technological changes easier for them than for a bank that has bought out other banks and is using multiple operational platforms.

Credit unions and many banks typically do not replace their entire ATM fleets with imaging machines all at once because of the expense. “Generally, financial institutions are replacing as they go,” Meara says.

Meara obtained 187 usable responses for his “Branch Banking in a Multichannel World” report. He cautions that while his results indicate which way the technological winds are blowing, they can’t support statistically valid inferences about the entire banking industry. For example, a financial institution that reported having imaging ATMs couldn’t be assumed to have such a machine in all of its branches, he notes.

Still, Celent’s findings add more evidence to a growing body of opinion that banks and credit unions face some tough choices about the future of the vast but expensive branch networks they have built in recent decades. The United States had 13,511 financial institutions and 21,839 branches in 1970, Celent says, citing data from the Federal Deposit Insurance Corp. and the U.S. Bureau of the Census. By 2009, the number of financial institutions had dwindled to 6,839, but they had 83,320 branches. That’s one branch for every 3,684 people compared to one for every 9,340 people in 1970.

Thanks to new technology, including self-service channels such as imaging ATMs and remote deposit capture, bank and credit-union executives expect more transactions to move out of teller lines, according to Celent. Some 31% of respondents expect 10% to 25% of their current branch transactions to migrate to self-service channels over the next five years, and 41% of respondents expect branches to lose 25% to 40% of such traffic.