Co-Op Readies a Credit-Union Entry Into ATM Check Imaging

Big banks get most of the attention when the topic turns to check imaging at ATMs. Now credit unions are about to get into the act. Ontario, Calif.-based Co-Op Financial Services, formerly known as the Co-Op Network, plans to make check imaging available to its nearly 2,000 credit-union members in 2007. Ten already plan to start imaging services in January, Kathy Herziger, vice president of product development, tells Digital Transactions News. “We might have another 50 that step up,” she adds. Co-Op, which supports 6,000 deposit-taking machines within its network of more than 25,000 surcharge-free ATMs, began testing imaging with an NCR Corp. machine, the Personas M 5886, at the main office of Rancho Cucamonga, Calif.-based California Center Credit Union (CCCU) in November 2005. Over the past year, the number of checks deposited at that location has increased six-fold, says RaAnn Wood, CCCU's chief executive. The ATMs image both sides of a check, show the front to the depositor for confirmation, and print that front image on the receipt. The ATMs also include bulk note acceptors. In June, CCCU deployed a Personas M about 20 miles away in an office building. Courier costs for that remote ATM fell immediately because imaging eliminated the need to pick up envelope deposits every business day. “It's sufficient to go out there only two times a month,” Wood says. “What's nice about it is we've already gotten credit for those [checks] because the images go in daily.” Labor savings also come from the elimination of the need to have two employees handle envelope-opening tasks in the main office. Fraud also is down, mostly because of the elimination of the so-called empty-envelope syndrome in which a depositor enters a deposit amount into the ATM but does not put checks or cash in the envelope. Depending on the financial institution's funds-availability policies, some or all of the deposit becomes a loss. Offsetting the lower operations costs are the higher up-front expenses of an imaging ATM, which can cost $30,000 or more, up to 50% higher than a standard ATM. Each credit union must make its own return-on-investment decision, but, from a customer point of view, the machines have been a hit, according to Wood. A big reason is that the check images and currency counters overcome one of the biggest disadvantages to ATM envelope deposits: consumers' perceived lack of confirmation of their deposits. “The number of cardholders using [ATM deposit availability] has gone way up,” she says. “I think it's that higher degree of confidence.” In contrast to large banks that develop at least some of their imaging technology or operational infrastructure themselves, Co-Op's system is entirely outsourced or vendor-supplied, a strategy that helps the network make imaging available to members faster, according to Herziger. Image files are sent from ATMs to a consolidation server run by Scottsdale, Ariz.-based processor eFunds Corp., whose Connex Advantage program manages the network's ATMs. The eFunds server batches the transactions for review and balancing by individual credit unions. The system uses validation software that enables a credit union to review the amounts, endorsements, magnetic character recognition (MICR) line, and other check information. Co-Op's suppliers of this software are Dayton, Ohio-based NCR, maker of the ImageMark application, and San Mateo, Calif.-based Ensenta Corp. Once the credit union approves the batch and converts it into the proper file format, it is sent to San Dimas, Calif.-based WesCorp, an item processor and services organization for credit unions, which in turn sends it on to Federal Reserve or private clearing networks. The network is working with other vendors, including North Canton, Ohio-based ATM manufacturer Diebold Inc., as it rolls out its imaging program, according to Herziger. Co-Op reports that it had certified its current imaging partners by late November.