Small and midsize institutions are showing increased interest in advanced automated teller machines, according to Diebold Inc. and NCR Corp.
In two recent contracts, credit unions agreed to install ATMs that accept envelope-free deposits, a feature that to date has been installed mainly by the largest banks.
And executives for both ATM companies told analysts during their earnings conference calls last month that they were getting more inquiries about their advanced ATMs from smaller financial companies.
Diebold unveiled a five-year, integrated ATM-services contract last week with Alliance Credit Union that includes machines supporting envelope-free deposits. The bicoastal credit union with offices in San Jose and in Wilmington, N.C., has installed five intelligent-deposit ATMs at the California sites and four in Wilmington.
The credit union also owns three basic, cash dispenser ATMs — two in California and one in North Carolina. It has 45,000 members and once was named General Electric Co. Credit Union. Diebold and Alliance disclosed their pact May 5 but had signed the deal Dec. 31, said Melina Schoonover, an Alliance assistant vice president.
Alliance is hoping that envelope-free ATMs will draw members away from teller lines, Schoonover said. "In Wilmington, a lot of members congregate in our office's lobby, waiting for the teller," she said.
As part of the contract, Diebold, through U.S. Bancorp's Elan Financial Services processing unit, is to process transactions initiated by Alliance's 22,000 MasterCard debit cardholders, replacing Co-op Financial Services, a Rancho Cucamonga, Calif., credit union-owned ATM network, Schoonover said. Diebold also will provide ATM fraud protection and prevention, software-patch deployment and currency management.
The deal also reduces the number of vendors managing the credit union's ATMs to one, from nine, she said.
Schoonover said it is too soon to tell whether the envelope-free ATMs have enabled a deposit increase because Diebold is still installing some of them.
Alliance's agreement with Diebold ends a nearly two-decade relationship with Co-op, which declined to comment on Alliance's decision. However, shortly after Alliance parted ways with the network, Co-op disclosed a managed-services agreement with Bellco Credit Union, Colorado's second-largest credit union based on assets.
Bellco upgraded most of its ATMs to envelope-free, image-deposit machines after signing a multiyear contract with Co-op. The agreement, announced March 25, ends an arrangement Bellco had with U.S. Bancorp that let Bellco members deposit checks and banknotes in ATMs owned or operated by U.S. Bancorp or the Fastbank network of its Elan unit.
U.S. Bancorp declined to discuss Bellco's contract.
Co-op either has replaced or upgraded 50 of the Greenwood Village, Colo., credit union's 66 multifunction ATMs with Diebold machines that accept envelope-free deposits, said Eric Porter, Co-op's executive vice president of business development and marketing. Bellco either bought or leased new machines. The 16 other ATMs are cash dispensers.
Co-op works with both Diebold and NCR. The latter, a Duluth, Ga., ATM maker, signed a three-year outsourcing agreement with Co-op in December, enabling its nearly 3,000 credit union members to lease new ATMs.
The network's Co-op Payment Processing unit supplies ATM terminal driving and signature and ATM PIN processing. Bellco's more than 190,000 members have more than 86,000 Visa debit cards. Co-op's platform does ATM monitoring, and it lets Bellco display marketing messages on ATM screens, Porter said.
Bellco members appear to like the intelligent-deposit ATMs, Georgeen Goodell, Bellco's director of systems operations, said in a press release. "We have rolled out check imaging on 50 ATMs, and the feedback from our members has been extremely positive," she stated. "Our processing costs have been greatly reduced by eliminating the need for daily couriers and error checking since the computer confirms accuracy of the deposit before the transaction is complete."
Porter declined to disclose how much the envelope-free ATMs have boosted Bellco deposits. And despite the Alliance and Bellco announcements, he said, credit unions lag banks in adopting envelope-free machines. Co-op is "trying to help credit unions learn the value of intelligent deposit" ATMs, he said.