After Some Delay, Check Imaging at ATMs Is Serious Business

Check imaging at ATMs is poised to become a big business, much bigger even than some experts had thought up to now. Driven by the Check Clearing Act for the 21st Century (Check 21), enacted in October 2004, banks are just now starting to equip machines to take so-called envelopeless deposits, image the checks in the ATM, and transmit the images to the bank. And they're laying plans to install more and more image-enabled machines. “This is predicated on Check 21, which passed a couple of years ago, and nothing happened, so I thought envelopeless deposits were a lot of hype,” says Tony Hayes, managing director of the financial-services practice at Dove Consulting, Boston, a unit of Hitachi Consulting. “I've changed my thinking. A lot was going on in the back office.” Wells Fargo & Co. said recently it will equip 400 ATMs for imaging by year's end, and Bank of America Corp. said it plans to install 1,500 such machines within the same time span. Overall, though just 2% of large banks' ATMs are image-enabled now, nearly one-third will be within two years, according to a major survey on ATM deployment recently released by Dove (Digital Transactions News, Sept. 12) and sponsored by several major electronic-funds transfer networks. For large credit unions, the current figure is 10%, going to 45% by 2008. Meanwhile, while 21% of large banks now deploy imaging ATMs, another 37% say they plan to within 12 months, the survey says. Some 41% of large credit unions plan to, while 21% already have. Even large independent sales organizations, which have yet to deploy imaging machines, are poised to get into the act, with 57% saying they plan to switch on imaging ATMs within the coming year. Among smaller ISOs, nearly one-fifth report such plans. The delay between the enactment of Check 21, which encourages electronic check imaging and exchange, and the current outbreak of activity stems from banks' need to equip their back offices to deal with the flow of ATM-generated images, Hayes says. Banks, he says, wanted to be sure that not only could their ATMs make and send images, but that they could process those images once they arrived without the need to convert the items back into paper documents. “Let's get the plumbing right,” Hayes say of banks' thinking on the matter. The impact of such complex new ATM functions on ISOs could be dramatic, as it may force those that have pursued bank-branding strategies to rejigger machines to mimic what that client banks' own ATMs are doing. Some ISOs have recently sought to counter a trend toward lower per-machine transaction averages by cutting deals with banks to run machines in retail stores that are branded by the banks and appear to cardholders to belong to those banks. Now, says Hayes, banks will expect ISOs to add new features like envelopeless deposits and targeted marketing messages (Digital Transactions News, Aug. 18) so these branded off-premise machines behave the same way as the banks' other terminals. “What we're going to see is these ATMs becoming more sophisticated because the ISOs' customers?in this case banks?are going to demand it,” he notes. “The cardholder is unaware that the machine branded by the bank is owned by the ISO.”