Wondering what to call your remote deposit-capture service? Just wait a few months and Bank of America will solve that problem for you. The bank, and its $175 million advertising budget (see NetBanker May 17), is on the verge of making check-scanning ATMs a household name.

According to last week's Wall Street Journal (May 8), "The Envelope-Free ATM," BofA will use television to trumpet the new feature as it rolls out 1700 next-generation ATMs by the end of the year. Bank of America has an ATM base of 15,000.

As you recall, the last time BofA used its advertising budget to push a new high-tech feature, free bill pay, in 2002, it set off a chain reaction that has resulted in bill payment being free at most U.S. financial institutions.

We expect the BofA advertising to be the beginning of mass adoption of check scanning at ATMs, self-service teller-assisted stations in branches, and for business customers, in-home/office devices.

Analysis
Today there are only about 4000 check-scanning ATMs in the United States compared to 396,000 conventional machines, so it will be years before there is a critical mass of the new machines. TowerGroup predicts that 25% of the 200,000 bank-owned machines will feature check imaging in 2010 (see chart below).

Financial institutions of all sizes should accelerate their plans to harness the technology. As the branch network is downsized, this is one of the ways the impact on consumers will be minimized. The extra $10,000 to $15,000 per ATM expense is relatively insignificant considering the labor savings from the device. TowerGroup estimates a 75% decrease in processing costs to just $0.40 per item compared to $1.70 for checks deposited with a teller or by means of an envelope dropped into an ATM. That means the breakeven is often less than 10,000 deposited items per machine, assuming the bank is able to reduce back-office or branch labor. This does not include the expected lower fraud costs.

However, this particular technology is more about customer satisfaction than cost reductions. Customers will love this system once they understand it. Not only is there instant feedback with an image of the deposited items, users also get the peace of mind of being able to access the image through their online bank system. Yet, another way that online banking adds value to the relationship.

--JB