The world has changed tremendously for Barbara A. Wagner and Creditors Interchange Receivables Management.
Just two years ago, the Cheektowagabased collections agency was sending staffers to the KeyBank branch at least twice a day, carting piles of checks, cash and deposit tickets worth about $1 million a day.
Those deposits were posted to one of the agency's 60 accounts, and often took a couple of days for them to clear. That was a frustration for Wagner, the agency's controller.
But those days are gone. Today, the vast bulk of the agency's customer transactions are handled electronically through KeyBank using a variety of technological advances, leaving cash to be processed the old way. So most of the agency's money is available immediately, without leaving the office.
A year ago, Creditors Interchange had more than $1.4 million in deposits in limbo on Nov. 30 - in its possession, but not yet available. This year, on the same date, it had one deposit stuck in the process: $50 cash, dropped off at its office by a local consumer.
"I can't live without it," Wagner said of the technology, which allows electronic debits from a consumer's checking account and scans paper checks into electronic images from her desk and transmit them to the bank.
"I don't have employees driving to the bank. They're not writing up paper deposit tickets. My money is there so much faster."
Banks have been one of the most aggressive industries in capitalizing on new developments in technology, investing billions of dollars annually to better serve their customers. Such technology has radically altered how consumers and businesses work with banks.
Where previous generations wrote checks, visited their bank branches often, and took money out at the teller line, today's customers use technology to do their banking from their office, living room - or even bedroom. Convenience is still king, but where customers used to base that on proximity to a branch, today it's based on computer, telephone and plastic.
"There has been nothing that has changed banking more than technology," said Michelle Trolli, chief information officer at M&T Bank Corp.
"Our society is built on instant gratification. No one wants to wait any longer," said James Tilley, CEO of Evans Bancorp.
In the last couple of years, electronic transactions surpassed paper checks in the United States for the first time. And while billions of checks are still written, consumers are now more comfortable with debit and other electronic alternatives.
"It all comes back to the convenience factor," said Paul Graning, senior vice president of Key's Virtual Distribution Channels group. "Everyone's pressed for time. We laugh about it, but that's the demand that's put on everyone."
Both credit and debit cards can now be used at more merchants than ever before - even movie theaters, many fast-food restaurants, and other businesses whose small-sized transactions used to be only in cash. ATMs can now be programmed remotely, via satellite, and can display pictures and advertising while dispensing coupons, stamps, or event tickets if a bank desires.
Cards with embedded microchips - so-called "smart" cards - and magnetic-stripe "stored-value" cards allow significantly more information, or even money itself, to be electronically stored and recalled. Such cards can even buy candy from a machine. Radio frequency chips on keyfobs, credit or debit cards, and even in cell phones allow transactions to be conducted with a wave of the hand.
But it's online banking, bill-payment and related features that have most revolutionized consumers' interactions with banks. Consumers can check and reconcile their balances, transfer money, open checking and savings accounts, apply for loans, and purchase almost anything with the click of a mouse.
Instead of paper statements, consumers get e-mail statements or alerts that the statement is available online. Bank of America even lets customers receive bills from other companies, such as utilities, with over 370 companies using the bank to deliver more than 7 million electronic bills per month.
They can also pay most bills online, or even send money to individuals. Or they can program automatic payments and transfers by credit card, debit card, or electronic withdrawal from their checking accounts. KeyBank last month even introduced an option to pay bills from more than one account.
As a result, electronic banking is booming. At M&T Bank, online transactions have doubled in the last four years, and 55 percent of its customer households bank online. About one-third of HSBC Bank USA's customers do their banking online, and the bank's online savings product has amassed $6.3 billion in 250,000 accounts.
About 35 percent of First Niagara's checking account customers bank online, though only 10 percent get e-statements.
Bank of America has 20 million online customers and nearly 11 million bill-pay clients. That's more than one-third of all U.S. online banking customers and more than half of all online billing customers.
"We've experienced really, really strong growth there," said Sanjay Gupta, senior vice president and e-commerce executive at Bank of America. "Customers enjoy banking online."
Even small banks see it. At Greater Buffalo Savings Bank, 16 percent of customers bank online. "It's become something that customers have really started to use and has really taken off," said Jamel C. Perkins, chief information officer for Greater Buffalo.
And about 2,500 customers, or 25 percent of the total, at Cattaraugus County Bank in Little Valley bank online, with the small bank creating an electronic banking coordinator position a year ago for the first time. Half of the bank's transactions are now electronic.
Such online services are valuable to banks, because customers are more likely to stay with a bank once they've set up online banking and bill-payment. "Once you get customers locked onto bill-pay, they're pretty much going to be with you for a long time," Perkins said.
For example, KeyBank normally loses about 16 percent of its customer base, but that drops to just 10 percent for online banking customers and just 7 percent for those who pay bills online. About half of its checking account customers - or about 800,000 households - bank online, and about 22 percent of that group pay bills online.
Customers can even set up e-mail or text-messaging alerts to inform them if their account is low on money, if a bill has come in or been paid, or if something suspected of being fraudulent is happening. And if customers need to talk to someone, they can do it by e-mail or live "chat" online.
Similar features are available for businesses through cash management services at banks of all sizes. Executives can monitor and manage their accounts, billing, payroll, and other financial needs online, including wiring money, sending invoices, conducting electronic transactions and stopping payments.
Bank of America even allows an owner of more than one business to view all the companies at one place. "We can help a small business act like a big business," Gupta said.
> Clearing checks faster
But perhaps one of the biggest innovations in the last few years is the growth of imaging, which converts a paper check into an electronic picture or signal.
Many consumers no longer get paper checks returned to them, but see images of them online or printed on their bank statement. If they need a copy, they can get it by e-mail and print it on their computer. ATMs can accept checks without an envelope or deposit ticket, displaying a picture of the check on the screen and even the receipt. And many merchants now scan checks at the register, "capture" the information, and hand them back to the customers.
"Before you even get home from making a purchase, those funds have been debited from your account," Perkins said.
Congress also changed federal law to allow such electronic images of checks to be legally accepted for payment, dramatically speeding the check-clearing process. So the volume of checks being transported has dropped sharply as more banks share images electronically.
It also led to the newest innovation: "remote deposit capture." That means businesses that get a lot of checks can now scan them into electronic form at their office and transmit them to the bank instead of transporting them. The desktop machine, about the size of a toaster, connects to the bank through the client's laptop or desktop computer, and shuffles the checks through the scanner.
That's what Wagner raves about. Creditors Interchange collects as many as 50,000 payments a month for up to $25 million. Until two years ago, everything was paper, and the agency had eight people whose primary task was to write up deposit tickets and post r e - ceipts.
In 2004, it began using electronic withdrawals, and added the KeyCapture remote service in early 2006. Now, only $3.5 million of its volume is paper, requiring only two to three trips per month to the bank.
Deposits can now be made until 10 p.m. for posting that day. And only two people are needed for KeyCapture, with the other six on other duties.
Key started marketing Key- Capture in early 2005. Today, it has several hundred clients nationwide, with 35 to 40 here.
"It can mean one to two days' improvement in the speed in which they get their money available to them," said Edward J. Hackett, vice president and senior treasury adviser for Key Global Treasury Management in Western New York.
M&T introduced its own service to business customers in late summer and now has more than 50 customers. More are "eager" to sign up, but the bank is managing the rollout cautiously, said Jeffrey L. Barbeau, senior vice president and manager of central technology.
Citizens Financial Group's EZ Deposit service was launched a year ago, and is "growing pretty fast," since it's a lot better than "bagging checks and standing in line," said William Wray, chief information officer for Rhode Island-based Citizens.
"It makes deposits less of a hassle than it used to be," agreed Frank Polino, chief information officer at Lockport-based First Niagara Financial Group.
It can also be installed in branches to help banks. Each Key branch locally, for example, normally bundles its checks together and delivers them to a central point in the region to be flown to the bank's Eastern processing facility in Albany. Similarly, First Niagara will have less need for couriers to transport checks from Central New York to its two back-office sites in Buffalo and Albany.
And Cattaraugus County Bank will save as much as $90,000 a year, or 10 percent of its annual profits, without "bags flying all over the place" among its seven rural Southern Tier branches. "It's going to speed things up and save us a ton of money," said president and CEO Salvatore Marranca.
Electronic scanning also reduces human error when encoding checks. And the bank can have fewer staff at branches or give them other work.
> Improves efficiency
All of this investment doesn't come cheap, of course. And with the technology has come a greater risk of fraud and a need to invest in new online security.
But technology has also made banks more efficient and gave them the ability to better understand their customers' needs and habits. As a result, they can monitor their business and prevent fraud better than before.
And it ensures they can operate seamlessly through a disaster by using distant backup data centers hundreds of miles away.
Finally, it enables small banks like Evans Bancorp to offer the same basic services as Citigroup and Bank of America, and serve customers anywhere, without vast branch and ATM networks. Indeed, smaller banks can often install new technology faster than big banks.
Evans, Bank of Akron and Lake Shore Bancorp were among the first locally to have imaging eight years ago. And Evans will have "branch capture" machines bankwide in 90 days.
"Technology has allowed smaller banks to compete on a more level playing field with the big guys," said Evans President David J. Nasca. "We don't have to be on every corner and we can still be competitive."