ARLINGTON, Va. — Slowly and surely the ATM industry in the U.S. is building the infrastructure and developing the technology it will need to completely handle and clear paper checks electronically, in the hope that eventually financial institutions and consumers will want to use it.
"Last year the big news was the roll out of the check imaging ATMs that could take a member's check and print the image on the receipt," said Jim Hanisch, an executive vice president with CO-OP Financial Services, a cooperative that has taken a leading role in the check imaging development. "Now we are starting to see credit unions and banks deploy those machines and consumers start using them and we need to finish up the network side."
Hanisch favors the analogy of check imaging to the early automobile industry in the U.S. When the Ford Company started manufacturing the first cars, there were relatively few paved roads in the country suitable for them, but the manufacturer made them anyway because he was convinced that as they became more popular the roads would be built.
"It's a little bit of a chicken and egg thing," Hanisch said. "Will people want to buy the technology when the ATMs are still only really able to take the checks without envelopes and print the receipt on the back and will the networks be willing to set up the infrastructure for a technology which is not yet widely available?"
So far, Hanisch said, the answer seems to be yes. At the most recent Bank Administrative Institute's Retail Delivery Conference and Expo, Hanisch said there were at least 20 companies that were exhibiting some form of ATM, standalone device, add-on device, kiosk or other hardware that could take a check, image it and send the image…somewhere. Now it's up to the industry to determine where the images will be sent.
The first obvious place is a server in the back office of the CU or bank where the check can be routed to accounts, conditionally or otherwise credited and then prepared to be sent through the clearance system.
One ATM manufacturer that has announced a deal to handle that part of the process is Wincor Nixdorf a leading worldwide manufacturer of ATM and IT technology for financial institutions. Wincor has announced a deal with Alogent, a payment processing firm that will allow Wincor to offer a back office solution for electronic check management.
The Wincor solution provides a real-time dialogue between the deposit channel and the check processing back end, using Web services technology, Wincor said. This will allow a specialized check processing platform to be implemented in the branch, item processing center or data center. Any changes to specific business rules can be updated and centrally deployed with real-time distribution and availability, thus eliminating the requirement to manually update the client software.
"In a multi-channel environment, it is imperative that consistent and efficient centralized verification procedures are available to ensure the validity and security of all transactions," said Reinhard Rabenstein, chief technology officer for Wincor.
But Wincor's solution may be a bit ahead of the curve for most CUs and small banks, which Hanisch predicted will be more interested in picking up machines that can images checks.
One of the companies coming into the market is Triton. The company, a leading manufacturer of cash dispensing ATMs that has transitioned to also offering ATMs for financial institutions, has inked a deal that will let credit unions that buy its newest model, the FT7000, accept scanned check deposits.
The company, a subsidiary of the Dover Corporation, made the deal with Infonox, a software producer whose software can also allow the FT7000 to conduct check cashing, bill payment and money transfers and other transactions as well.
"We are pleased to be able to offer Infonox to complement our new full-function ATM. The combination of Infonox's application delivery platform and Triton's cost-efficient ATMs are the perfect choice for financial institutions of all sizes that are anxious to embrace this new technology without breaking their budgets," said Triton CEO Brian Kett.
Triton rolls the first FT7000′s with check imaging capability off its assembly lines in Long Beach, Miss., early next year, the company said. Some of them will be destined for the financial institutions in the U.S., but others for China, indicating that the demand for both the company's products and the check imaging technology is broadening.
But even as the new technology moves forward, Hanisch was shy of giving hard predictions of when imaged checks will be flying back and forth across the country routinely, saying that a couple of problems still remain.
One of the biggest obstacles may be varying places in the system where it appears regulators may require checks to be converted away from an image and back into checks. This may, in effect, turn the Federal Reserve System into a bottleneck in the process of efficiently managing imaged checks rather than a facilitator, but Hanisch declined to comment on different regulatory stances, as did the Federal Reserve.
"I don't think any of the potential problems are insurmountable," Hanisch said. "I think 2007 is going to be the year where we see a lot of progress in building the network infrastructure that we are going to need for coast to coast electronic check transmission." –dmorrison@cutimes.com
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