Friday, April 22, 2011

Teller Capture- Myths and Realities- Part I

While the U.S. check payments industry has seen a dramatic transformation from being awash in oceans of paper, to an almost all-image environment in less than a decade, there is debate about where images are best captured. The alternatives are many- teller stations, branch back offices, ATMs, central processing centers, offices, stores, homes and mobile phones, to name a few.

Capture points of entry can be broadly divided into two categories:

1. Interior points, within a bank’s infrastructure like tellers, branches and ATMs, where the driving imperative is one of cost reduction and efficiency.

2. Exterior points, like offices, stores, homes and mobile phones, where the drivers are combinations of revenue uplift, customer convenience and efficiency.

This is the first of a series of posts on the pluses and minuses of various capture strategies. We begin with Teller Capture.

Let me begin by saying that I have never liked the term “Capture”. It is a holdover from the times when MICR (and later image) data were read and “captured” on electro-mechanical reader/ sorters. While sorters have been relegated to museums and the odd eBay page, the term lingers. I find the term limiting because it tries to describe a workflow which is far more comprehensive than the mere capture of information. I submit that the capture-correct-balance continuum that is typical of the many “capture” processes in use today is better referred to as Deposit Automation.

Now that I have my pet peeve out of the way, let us look at Teller Deposit Automation (TDA). The quick take on TDA is to have a proofed, balanced, and ready-to-post deposit, before the customer making the deposit has left the teller station.

That last statement sometimes lets loose a flurry of concerns:

  • I don’t want to make sorter operators out of my tellers
  • Error rates will go up because tellers aren’t trained to be proof and balancing operators
  • Queue length will go through the roof because each deposit is going to take much longer
  • Tellers (and perhaps customers) will not accept this new and different process
  • A scanner, computer and software at each station will be tough to justify

To be honest, there are also issues of a political nature that can rise to the top. TDA lies in that No-Man’s-Land between Retail Banking and Operations. In some institutions, particularly larger ones, TDA can be a lightning rod for turf battles. Nevertheless, let us look at the other end of the telescope and examine the benefits touted by proponents of TDA.

The hard benefits that drive the business case are:

  • Truncation and reduction of transportation
  • Central proofing and balancing elimination
  • Float gains through early capture (yes, I know…but interest rates will not always remain subterranean)

The soft benefits that supplement and sometimes drive the decision (depending on the institution’s strategic priorities) are:

  • Keystroke reduction freeing up more teller time for customer service
  • Error reduction through lower keyboard data entry
  • Potential risk reduction through integration of TDA with risk management systems
  • Potential for enhanced service through integration of TDA with Customer Relationship Management (CRM) systems

The business case battles are fought on multiple fronts with hard and soft benefits challenged, defended and examined from many angles. My next post will take you through some of the battlefields (I’ll admit I have a few scars from these skirmishes).