Innoventry Corp., best known for its face-recognizing check-cashing machines for the unbanked, has teamed up with Diebold Inc. to sell similar high-tech terminals to banks.
San Francisco-based Innoventry - a joint venture of Wells Fargo & Co. and the pawnshop chain Cash America International Inc. - has focused so far on deploying its terminals in retail locations such as Kroger grocery stores and Texaco gas stations. Now the company is pitching a new model as a way for financial institutions to keep their teller lines free of noncustomers, who tend to be people without bank accounts or people who do not have enough money in a bank account to cover a check while it clears.
Most banks feel obliged to cash checks drawn by their own customers but hate to waste time on nonaccountholders, Innoventry says. "Many banks have expressed a strong interest in finding a way of diverting that heavy traffic of nonaccountholders out of their branches and certainly away from their tellers," said Mike Preiss, vice president of strategic alliances for Innoventry.
In a marketing agreement announced last week, Diebold, which makes automated teller machines for many sizable banks, will build the check-cashing machines - to be branded by Diebold and the banks - and then market them to its customers. The Canton, Ohio, company is an investor in Innoventry and supplies the core components of Innoventry's flagship product, the RPM Cash Management Machine.
Like the RPM, the new product will require no card or personal identification number, relying instead on face-recognition technology, the company's chosen method of biometric identification. The machine will take a photo of the user's face during each visit, and verify the user's identity by comparing the latest photo with a running record of photos recorded by the company. A Social Security number or other password must also be entered for each use.
Diebold plans to charge banks between $50,000 to $55,000 per unit, which includes Diebold hardware and Innoventry software. Innoventry will charge separately for transaction processing, fees for which will depend on the type of check and other factors.
Mr. Preiss said banks tell Innoventry that 30% to 45% of their walk-in traffic is noncustomers cashing checks. The company estimates that banks incur a cost of $2.50 to $3.50 per transaction. Many banks have historically not charged nonaccountholders to cash checks drawn by their customers, but more are beginning to assess a fee, said Ken Kurant, manager for the financial industry in global marketing at Diebold.
Fifth Third Bancorp of Cincinnati, which has roughly a fifth of its 643 banking centers in grocery stores, began charging a $5 fee to noncustomers in February 1999. "We were having a difficult time, frankly, providing service to those folk who did bank with us," said spokeswoman Roberta R. Jennings.
Mr. Preiss said that he has found that most banks do not charge, and that most will find it worthwhile to offer free use of Innoventry machines. He said the self-service terminals, particularly those that draw at least 1,500 to 1,800 transactions each month, will be "considerably cheaper" for banks.