|Retail imaging pauses before moving further|
Branch image capture adoption is now nearly ubiquitous. With less urgency, banks are now determining their end game. Image (also known as intelligent deposit) ATMs now represent 43% of deposit-taking ATMs, says Celent.
Fueled by image exchange adoption and the increasing cost of processing paper checks, branch capture solutions have been installed or are being installed at 9 out of 10 U.S. financial institutions. As traditional paper check processing infrastructures are dismantled, distributed capture models will become a practical necessity among the remaining institutions.
According to a new report, Celent expects a 98% adoption rate of branch and/or teller capture solutions within the next two years. Image ATM adoption will be far more measured by comparison. For most financial institutions, the ATM channel will be the last domino to fall in image migration.
Key findings of the report include:
In the past few years, distributed capture has moved from being an item processing phenomenon to being in the mainstream of retail banking, taking a prominent spot in both branch and ATM channels. Over the past year, just under 900 financial institutions installed some form of branch capture, less than half the rate of previous years.
The past year has been a difficult one for financial services firms, one in which capital spending was sharply reduced. This climate slowed the growth of distributed capture, but not by much.
Distributed capture has seen broad-based adoption, but growth continues, and the manner of adoption continues to evolve. There is significant variation among financial institutions. Smaller financial institutions are overwhelmingly choosing enterprise-wide approaches offering consistent consumer experiences and operating procedures among branches and ATMs. Larger U.S. banks—particularly the top 50 or so—are choosing incremental approaches in an attempt to manage cost and complexity in an ever-changing check processing environment. Many banks are learning as they go, balancing elevated exception rates and branch training requirements against rising paper processing and clearing costs.
Image ATM adoption remains measured. For most financial institutions, the ATM channel will be the last domino to fall in their image migration. Others will opt out of imaging for on-premise ATMs, choosing to pay branch staff to do the imaging instead. The relatively few banks placing image ATM on the front burner are doing so to improve the customer experience with the ATM channel. While some expect mobile RDC to lessen the enthusiasm for investments in the ATM channel, Celent disagrees. In all cases, the business case is compelling, and customers love them.
The biggest drama will be with mobile RDC as multiple large banks announce products. Celent expects the growing acceptance of nonMICR capture devices to continue alongside a general calm related to RDC risk. The fear, uncertainty, and doubt ushered in by the FFIEC guidance will subside as banks get audits behind them and experience low levels of RDC-inflicted losses. Then, observing a growing number of competitive initiatives, more financial institutions will investigate and ultimately deploy solutions. This will occur as banks continue to struggle with branch channel profitability. In this context, a minority of banks will grasp RDC as a self-service channel capable of displacing significant branch transactions at lower cost, and they will act accordingly.
“After a fast-paced ball game over the past several years, banks are taking a seventh inning stretch,” says Bob Meara, senior analyst with Celent’s Banking Group and author of the report. “Under growing cost pressures, many banks are taking time to consider their imaging end game, in terms of both capture and downstream processing. Lots of options are in play now.”
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