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Bank of America Corp., which became the first national bank to deploy envelope-free ATMs two years ago to reduce operating expenses, improve customer service and increase deposits, has accomplished all three goals as the rollout nears completion, according to a company spokesperson and an industry analyst. 

BofA is scheduled to complete the deployment of 13,800 of the so-called intelligent-deposit ATMs before the end of the year, says Anne Pace, a bank spokesperson. The ATMs enable consumers to deposit checks and cash without using a deposit envelope.
The financial institution is the nation's largest bank owner of ATMs. As of Sept. 30, it owned 18,254 machines. The bank's other ATMs are cash dispensers that do not accept deposits. 

Charlotte, N.C.-based BofA began deploying envelope-free ATMs during a pilot in 2007 involving 700 machines located in 200 sites across the United States, Pace says. "We are on the last 200 sites," she says, noting the ocations are not concentrated in any particular region of the country.

BofA is the largest bank to commit its entire fleet to image-deposit ATMs, notes Gil Luria, an analyst with Los Angeles-based Wedbush Securities. Wells Fargo & Co. and JPMorgan Chase & Co., two other large national banks, also have been major purchasers of  intelligent-deposit ATMs, though neither is nearing complete deployment of the machines. Regional and community banks generally have not been buying envelope-free ATMs, however.

BofA made a strong effort to ensure the machines' success. It installed signs directing cardholders to the ATMs, and it stationed employees nearby to instruct consumers how to use them. The bank also provided accountholders immediate access to funds deposited before 8 p.m., Luria says.

Bank executives also understood accountholders' anxiety about depositing cash and checks directly into an ATM without a deposit envelope. They addressed those concerns by having the ATMs issue receipts with images of the deposited  checks.  The receipt provides  consumers a breakdown of  cash depositsby banknote denomination.

Once accountholders became comfortable using the machines, deposits soared, BofA says. In October, accountholders deposited 23 million checks and banknotes into the ATMs, eclipsing the previous record of 21 million set in June, Pace says. "So you can see, there has been a steady increase," she says.

Large deposits at ATMs means BofA also is cutting operating expenses, Luria says. "When customers deposit money into an ATM with an envelope, it costs the bank $1.50 to $2 to accept the deposit," says Luria, citing expenses related to employees having to open the envelope and removing  the checks and bank notes. "With envelope-free ATMs, a deposit only costs the bank 50 cents."

BofA purchased its envelope-free ATMs from North Canton, Ohio-based Diebold Inc. and Duluth, Ga.-based NCR Corp. The two manufacturers list an average price of $30,000 for their envelope-free machines, but BofA likely paid less because of the volume of its orders, Luria says.

"If Bank of America paid $23,000 for each machine, the bank would recover in 18 months each machine's purchase price," Luria says. "Not only are the ATMs providing a strong customer benefit,  they quickly are paying back their purchase prices. This is technology that is very easy to sell to banks." Wedbush does and seeks to  do  business with companies covered in its research reports. BofA's completion of the deployment of envelope-free machines could negatively affect NCR and Diebold.

For Diebold, shipments of intelligent-deposit ATMs could drop by as much as 20%, Thomas W. Swidarski, Diebold president and CEO, told analysts last Tuesday during a conference call to discuss the company's third-quarter earnings. However, other banks are buying envelope-free ATMs, and they are in various stages of deployment, he says.

"I would say we would be down either [in] the teens to maybe 20%." Swidarski adds. NCR declined to comment. 

San Francisco-based Wells Fargo, the nation's third-largest bank owner of ATMs with 12,352 machines, has deployed  3,260 envelope-free ATMs, a spokesperson tells ATM&Debit News, noting the bank is committed to deploying the machines across its entire network.

 "We may have a few hundred ATMs that only dispense cash," the spokesperson adds.  A spokesperson for New York-based Chase, the nation's second-largest bank owner of ATMs with 15,083 machines, says the bank plans to convert most of its entire network to envelope-free ATMs. Some ATMs still will dispense only cash. ATM

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