Academic journal article ABA Banking Journal

The Teller Line of the Future

Academic journal article ABA Banking Journal

The Teller Line of the Future

Article excerpt

You're in the bank. Someone calls your name. It's the teller. Not only does she know your name, she knows where you were last night--surfing the Web for auto-loan rates. As the teller suggests you talk to the loan officer across the room, she flashes a message on the loan officer's screen telling her to come hither. Or, maybe the message is to call you at work, later on, because, after all, the car loan wasn't what brought you here.

You're here to deposit some checks and get some cash--$10 worth of quarters. No, you don't need to write a check to "cash;" just swipe your ATM card on that new machine the teller has. Then she takes your checks and deposit slip and runs them through the check reader. From the MICR numbers the reader instantly extracts the deposit account number.

As each check goes through the reader, the teller keys in the check amount. Software matches the unique MICR of every check with its given amount, adds the values of all checks presented, and makes sure that it corresponds with the total deposit on your deposit slip.

From the point of view of you, the consumer, there's no notable difference in the transaction, except that it's quicker. From the bank's point of view, however, that transaction has been balanced before it reaches the backroom. Every transaction handled this way obviates the need for proof-of-deposit personnel who, like Dickensian clerks, spend their days unclipping bundles of checks and their associated paperwork, keying in the debits and credits, and making sure they balance. These backroom operators are repeating what the teller has already done, because in the traditional environment the teller keys the amount off-line on a calculator.

Now, instead of each little batch of checks being hand-fed into a manual encoder (which would print the check amount on the check in magnetic ink), a stack automatically feeds into a so-called power encoder. This device encodes the checks about six times faster than the manual machine, partly because it needs only to map incoming MICR numbers against an electronic file of the MICR numbers it expects. The file has been received from the teller's check reader, via software on the host computer.

With information being received on-line, there's no need for periodic courier runs to bring checks to the central processing center day. There's just one run at day's end.

The foregoing account describes the teller line of the future. It attempts to turn teller contact into sales leads, an effort we'll look at later. More fundamentally, it introduces transaction processing earlier in the sequence, to decrease the cost of item processing and of fraud. (The topic of check fraud, and how it is being countered by making check information available quicker, will be addressed in the August issue. Here we will look at how branches become more efficient by increasing the tellers' contribution.)

Easy cost justification

The changes occurring at the teller line are being brought about by disparate vendors. Some of these are also vying for the role of integrator of all the systems that allow the whole to work. Many banks, which ultimately would like their teller lines to function as outlined above, are cautiously approaching that goal, adding one piece at a time.

For some, the fraud savings from check readers are sufficient to justify their purchase. For others, free of serious fraud problems, cheaper and faster item processing is the issue. And most seem to regard cross-selling as icing on the cake.

Among banks willing to discuss the return on investment they anticipate, from this area, the longest payback period is three years. That's expected by Central Fidelity National Bank ($10.5 billion in assets), which some believe will be the first bank to have all aspects of the futuristic teller line--item truncation, fraud detection and cross-selling. The start will be the installation of 1,250 check readers at teller stations between September and December. …

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