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Wednesday, March 19, 2014

Trends: Intelligent Deposit demistified

I know this can sound like an echo or an annoying phrase: Reduce Costs. This phrase will be present in a number of posts but it´s quite important to point.   Something that Banks look for is to obtain more profit, so, if they are able to gain more Revenue and reduce costs, everything looks fine. We could visualize also the chance that has not increase in revenue but the cost reduction strategy makes the difference. The intelligent deposit concept is quite easy: accept bills and checks without envelop and providing on-line processing, it means that customer´s funds are inmediately available after completing the deposit transaction.
In such effort, one of the current trends in Banking Services is the so called: Intelligent Deposit. The purpose is to transform the way that Banks offer services for deposits, shrink queues at branch offices at the teller stations and reduce time needed for transaction execution from start to end.  Currently, users (customers) have become very familiar with Self Deposit stations, this means banks and customers have adopted the concept and are ready.  Banks report operational savings, but there is something else, consumer adoption has surpassed expectations in many cases creating a 2nd line business case mainly due increase in branch sales thanks to productivity increase. And more important, customer´s loyalty increases with this solution.  In some studies, using advanced machines for Intelligent Deposit, the average customer can be served in just 1 minute; it is only the 30%- of the transaction service time needed at teller station. As a conclusion, banks that do not adopt intelligent Deposit Solutions are clear losers, since they won´t attract customers due apparition of service and loyalty gaps, worse than that, they will lose customers.

According to RBR, there is a global increase on Deposit Automation trend. It is possible to see that USA and Brazil are leading this change in the Americas since they are adopting solutions to replace envelop deposit. The overhead of envelop deposit is crunched by allowing customers to deposit checks and money directly in the machine, it means zero hand writing for deposit forms, proof of deposit as soon as the transaction ends with checks images printed in the receipt.  One of the key drivers in Intelligent Deposit is the improved efficiency for check deposits.  In USA alone, the first forecast predicted to have around 135.000 ATMs for 2018 with this feature enabled. It looks reasonable to see this feature as a commodity in the coming years.

To sum up, there are 3 main advantages when Banks opt for intelligent deposit:
  • .       Cost reduction through operational efficiency
  • .       Improvement in CX
  • .       Revenue generation

Just imagine the possibility to enable users to perform transactions at any time and location faster than at branches, reducing time needed to access brick and mortar facilities and with less wait time in queue or none.  Some banks are taking advantage of those savings to sell additional products. Any change in process that reduces steps is a good change, more if it comes with such advantages as the 3 aforementioned.

But, further reasons to adopt intelligent deposits, among them is fraud reduction, since the mechanisms used in such terminals allows positive recognition of cash and checks that were deposited.  Bills are validated and counterfeit ones are rejected immediately. As for checks, those undergo a validation process using the MICR line and an OCR validates CAR and LAR along an on-line scanning feature that prepares the check for remote deposit, sending the image to first line ACH system. Finally it eliminates empty envelops and the need of personnel activities that hast to do with manual empty of containers boxes at specific times during the day for manual processing. Customers receive its receipt that verifies its transaction and timely credit for its deposits.

On the other hand, banks can extend the deposit cut-off because they are no longer dependent upon physical check processing.  Also, they can expand its delivery channel by locating ATMs with intelligent deposit enabled at strategic locations, let´s talk about residential or business areas considered in increasing demand for branch services. It´s said that for the same cost of a classic brick and mortar branch office, it is possible to expand the branch in a neighborhood, installing ATMs with intelligent deposit enabled, in such way the branch office is not only a small spot in the map but a large octopus alike with virtual tellers disseminated in an specific space, each of them separated by a few streets.

Banks are facing a new channel together with increases in amounts deposited and confirmed adoption from its customers. AS for now, there are considerations for banks, they should look for solutions where processing speed and consumer experience will go hand and hand, allowing customers to execute bunch bill recycling, bunch and single check deposit for improved item processing, bunch and single bill deposit for deposit and payment transaction automation. Thus, you can envision additional services like payments, ticket selling, SIM cards dispense, top up cards and more.  Not bad huh!

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