The business case for Teller Deposit Automation (TDA) rests on the hard benefits of central proof elimination, reduced transportation and float, and the softer advantages of improved customer service, error elimination and early risk detection. Let’s take a closer look.
If you have a ready-to-post transaction at the teller station, clearly there is no need for any further proofing and balancing. This was a no-brainer benefit in the early days of Check 21 when branch alternatives were compared to centralized processing centers. The headcount reduction in central proofing alone could underwrite the business case for either teller or back counter deposit automation (BDA). In a strange way, the case is more complex now because trade-offs are made, not against central processing, but between TDA and BDA. An added twist in the tale is the financial institution’s workflow preference. The US is made up of institutions that prefer to proof and balance at the branch, and those that like to proof at the branch, but balance centrally. Not surprisingly, most small institutions exhibit a branch balancing preference, while larger ones opt for centralized balancing.
The actual business case analysis involves running scenarios that are unique to the institution. Nevertheless, it is relevant to make a few broad observations. Those that object to TDA actually increasing teller workload and queue length have a point when it comes to large commercial deposits. Thus TDA is not right for all deposits. Many institutions limit TDA to deposits containing, say, ten items. The rest are either dealt with through a separate BDA system, or set aside for tellers to process during slow periods.
Does TDA reduce keystrokes, or does it actually imply more work for the teller? I am one of those strange people that actually counts keystrokes whenever I go to make a deposit at a branch (yes, I still visit branches). I have accounts at institutions that use TDA, and those that do not. My experience is that TDA drastically cuts down keystrokes. Contrary to the claim that TDA makes tellers into proof operators, I find similar deposits taking about half the time in TDA institutions. I have deliberately made deposits with addition errors on the deposit slip, and I find that TDA institutions catch them faster. The key is that with improved recognition software, and vastly better MICR readers, technology is doing the heavy lifting, leaving little as a teller burden. The keystroke reduction is borne out by statistics including one from a large institution that observed a reduction from 75 to 5 keystrokes (what were they doing previously with 75 strokes??). Now, the theory is that reduced keystrokes allow more teller “face time”, to allow cross selling. Not once in my informal mystery shopping did I experience the “selling teller”. The institutions I visited seem to use the reduction in keystrokes to drive efficiency over cross-selling.
While the back counter versus teller trade-off requires more space than a blog post, there are key (no pun) considerations for BDA in larger institutions. Typically, these are environments where items are scanned at the branch but corrected and balanced at the center. If an item needs to be rescanned, or an operator needs access to the original paper, the fact that the check item is at a branch many miles away presents challenges. There are systems with instant messaging capability back to the branch, butthe DRIFT principle (DO IT Right the First Time) that TDA offers is compelling.
Transportation savings are trickier. While check truncation does eliminate the need to move paper, there is still a lot more paper that needs to be moved daily from the branch- not the least of which is cash, the only paper that cannot be truncated. There is an emerging move towards “the paperless branch”- an interesting convergence between check truncation and document management. It will be interesting to watch how this scenario pans out in the absence of a legislative catalyst like Check 21. Nevertheless, with careful analysis it is possible to quantify transportation savings due to TDA.
An aspect that is often overlooked is the potential to identify risky deposits at the very outset through TDA. We have accelerated the movement of money to the speed of light. Both inadvertent errors and outright fraud have kept pace. Yet, our industry still chooses to address risk on a batch basis on “Day Two”- a hold over to the old centralized mechanical capture days. It is my take that TDA and Day Zero Risk Management make perfect bedfellows. More on this in another post.
I know no one looks at float anymore because we are about as close to “free money” as one can get. While I don’t have a crystal ball, it doesn’t take rocket science to know that the sizeable national debt will push inflation and drive rates northwards in the not too distant future.
Lastly, the single biggest barrier to TDA is the difficulty in integrating deposit automation with teller platforms. With many core vendors having acquired check imaging companies, this should become easier. This, however, is not as straightforward as it might appear. Not all integrations are equal and, like everything else, there are trade-offs here as well. More on that in Part III.
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