The world is experiencing a boom in deposit automation, according to London-based strategic research and consulting firm Retail Banking Research (RBR), whose latest study "Deposit Automation and Recycling 2010" covers the 46 largest markets worldwide for the technology.
Record numbers of new automated deposit terminals (ADTs) were deployed in 2008 and 2009 - during the height of the global financial crisis. It may be surprising that this relatively expensive technology was given a green light at a time when many IT budgets were frozen and investment plans postponed. However, many financial institutions now consider deposit automation the technological advantage they cannot do without, partly due to a strong financial business case and partly because it has a tangible positive impact on the customer experience.
A total of 464,000 ADTs had been installed worldwide by the end of 2009, a figure that has increased by 44% since 2007. This phenomenal growth rate significantly outpaced that of non-deposit ATMs, which grew by just 12% during the same period, and has helped sustain the major ATM manufacturers during this difficult period.
A notable landmark has been passed, with automated deposit ATMs now outnumbering envelope deposit ATMs worldwide. It should be noted however that this milestone has still to be reached in a number of the world's largest markets, including Brazil, India, Spain and the USA.
Cash recycling is available at two thirds of automated deposit ATMs. The majority of the world's recyclers are in Japan, where all cash-dispensing terminals have such functionality. However, outside Japan and South Korea - the two largest markets for recycling - only 26% of automated deposit ATMs redispense deposited notes.
Deposit automation driven by ability to reduce teller costs and queues
Most ADTs are installed in bank branches - a channel which still heavily depends on staff and carries high operational costs. The 138 banks interviewed for the study identified the migration of transactions to self-service as the most important factor motivating them to deploy ADTs.
Banks are increasingly relying on deposit automation to deliver routine services to their customers, as this helps to reduce both branch queues and teller workload. In many countries where the banking sector is relatively mature, there is a general trend towards tellerless or cashless branches.
25 of the 46 countries surveyed are forecast to have more ADTs than branches by 2020. The average across the 46 countries is expected to be nearly two terminals per outlet, with branches remaining the primary location for ADTs.
The market for deposit automation is forecast to triple in size by 2020
As more banks worldwide roll out automated deposit terminals, the technology is becoming increasingly important. RBR expects the number of ADTs worldwide to triple by 2020, to reach 1.4 million. This corresponds to a CAGR of 11%, more that twice the growth rate forecast for non-deposit ATMs.
The recent growth in demand for ADTs has made it evident that a business case for deposit automation exists for the majority of financial institutions worldwide. For many banks, this technology has not only become a key cost saving solution, but also a feature which offers tangible benefits to their customers. As more deployers commit to mass rollouts of ADTs, it is clear that deposit automation will become an essential part of the modern self-service channel.