Using VALID in the Bank Branch To Acquire Customers

Why Check Cashing?

At U.S. Bank, we focus on customer service and customer acquisition. We are always looking for new ways to attract customers to the bank. Check cashing is one strategy that we believe will attract new potential customers to our bank. We believe if we could attract individuals using other check cashing services into our branches, we would have the opportunity to introduce them to our more traditional banking services, resulting in a full service customer. VALID provides us a tool that enables us to accomplish this issue

Why VALID?

We looked at a number of companies as a partner for non customer check cashing. VALID understood our idea and we were comfortable working with them because they were extremely flexible, and open to discussing new ideas.

There were several important selling points. The implementation process for the system and hardware was simple and training was accomplished with our in house trainers. In addition, enrollment and the transaction time for the customer cashing a check was quick.

Another important factor for us was the risk of bad checks. With VALID's risk guarantee program that has not been a problem.

Major Benefits

The biggest benefit of doing something like this is that it opens up a whole new avenue of potential customers to the bank, attracting people we might never have been able to reach otherwise.

Our repeat business is averaging around 40 % and we are starting to convert check cashing customers into banking customers. We're pleased with the conversation rate so far. It shows that there are new customers in our markets – you just have to give them the right product to walk through the door.

Chuck Tufts
Executive Vice President and Director of Retail Services

Check Cashing: The Cornerstone of Successful Underbanked Strategy

Using Check Cashing to Reinvigorate Branches

KeyBank got into check cashing as part of a broader initiative to better serve the underbanked. About a fourth of our branches are in low to moderate income areas. These branches often have a hard time meeting their goals. So we asked ourselves, what products will attract customers in those areas into the bank, generate revenues and lead to full-service relationships. Check cashing is a crucial element of the strategy we developed to achieve that goal.

Impressive Customer Experience & Risk Mitigation

Before discovering VALID, the products we used required quite a bit of work to identify the customer and the check. It was very slow, and not an enjoyable process for the customer or the teller. Customers felt interrogated; tellers complained.When we saw VALID's application demonstrated, we were impressed with its speed and ease of use. As we found out more about how its risk mitigation function worked, we were even more impressed. So we made a decision in the middle of our initial expansion to switch to VALID, both at the branches that were up and running, and the new branches. That was in October, 2005. We originally rolled VALID's application out to about 20 branches. The program has been so successful that we have rolled out into new markets and locations across the country. We focus on heavily trafficked branches in metro and suburban areas that are both close to people's homes, and close to where they work – where people are likely to be when they get paid.

A Great Product, Great People

Everything about the experience has been extremely positive. The installation process is easy. One of the nicest things about getting started is that you only have two peripherals: a fingerprint scanner, and a combo ID/Check scanner. Then you just have to establish the link to VALID's web site. Because the system is Internet based, all the processing goes on their servers. We don't have to support it anywhere at the bank. From a customer's point of view, they feel comfortable with the system. It's quick, pleasant, and doesn't feel intrusive. From a teller's point of view, it's easy to use, and because the customer is satisfied, it makes the teller's job easier. We know the system is working the way we wanted, because repeat volume is up significantly. The VALID team is a great bunch of people. They have always been straightforward, responsible and helpful, above and beyond the call of duty. Customer service response is very fast. They don't just deliver on technical issues, either. They work with us on how to optimize the program, how to increase volume – more like a consultant than a vendor. We believe very strongly in the company and the system. It's going to be the next big thing to take off.

Small Footprint, Big Performance: Giving Retailers Convenience, Speed, Revenue and Protection

Adding Value and Convenience

We are always looking for new value-added solutions to expand our ATM product line. For our retail customers, an ATM takes up valuable floor space, and costs money to install. So a value-added solution delivers more than just cash withdrawal. Ideally, it supplies additional revenue, offers customer convenience, draws customers into the store and makes it easier for them to get their needs met there. VALID achieves all those goals.

Experienced Team, Easy Solution

VALID has been in the check cashing business a long time, and they have learned a lot from their experiences. Their solution is more flexible and elegant. By elegant, I mean no one has to jump through a lot of hoops to get the check cashed. VALID understands how important ease and convenience is to the customer. They understand the issue of the clerk's time, and how important it is not to keep people waiting in line. The process is simple and very cost effective, which is important to our customers. We are always looking to optimize the cost/convenience ratio. VALID offers more convenience at lower cost than any other check cashing product we have seen. It's a great solution.

Risk and Reward

Minimizing risk is also an important factor. It would kill the business for the merchant if risk was problem. You can tell by the fact that several large banks have chosen VALID that their risk mitigation process works. At the same time, VALID's high approval rate – weighed against the risk – is also very important. Customers are coming in to get their money. If they don't get their money, they won't go to that store again. Retailers want good checks cashed, so people can spend their money in the store. So retailers need a solution that approves well, as well as protects well; VALID does both.

Meeting the Needs of Underbanked Consumers

One of the major objectives of our company is to meet the needs of underbanked consumers. We believe the best way to do that is to provide a convenient product at a low price. The underbanked market is very large. They need a fast, easy way to cash their paycheck, buy their groceries, pay their bills. Whether our customers are unbanked, underbanked, or just working very hard with limited free time, our product line is designed to assist them. Offer a reliable, convenient product, and they will use it. That is why we decided to go with VALID.

Hansup Kwon, President & CEO

Mike Griffin, SVP, Community Development Banking

Achieving Rapid Expansion in the Retail Sector

Speed Is Key

We selected VALID because it allows us to execute and get into the field quickly. Additionally, I really like what they've done with regard to speed and ease of use. Speed is important because we're expanding rapidly. We've addressed check fraud through training, but there are still improvement opportunities for which additional training will need to be developed and it will not be as immediate as putting VALID in our stores. Repetitive transactions are quicker, more appealing and more secure for the customer as well as for us. This creates customer loyalty, the profit driver of any retailer. We want to compel customers to come to our locations, and then become successful in the cross sell of other products.

An Improved Experience in an Expanding Market

A much wider group of consumers fall into the underbanked category now, particularly the growing Hispanic population. They have different needs than other consumers, and banks are not offering products that meet those needs, especially short term loans and check cashing. It's not merely a function of having a bank relationship. It's about convenience, customer service, and products at the right price – the overall customer experience. Last year there were 4 billion dollars in revenues from check cashing in the US market. But there are many retailers, such as grocery stores, that cash checks and do not segment report on the revenue, so the market potential is significantly larger.

Future Growth

We currently cash checks in 300 stores, and plan to build another 100 to 150 locations in this year. We'll build another 150-250 stores next year. Our goal is 1,000 financial services centers by 2012. This will be more readily achieved by using VALID's product. From an economic perspective, VALID has reduced this to a process where it makes more sense to buy it, rather than develop something ourselves. It's a robust, flexible, reliable system. Our people will not be fearful to cash a check, and the fraud reduction pays for the program in the very near-term. This program fits nicely with our recently launched VIP Select MasterCard. We are able to cash checks and load the funds to the card if the customer chooses.

A Great Partner

I've known the principals of VALID; for years. In fact, we were all co-workers at one time and have had similar experiences in this industry. Having said that, the decision was easy because I trust them. They know the customer, they know the space, and they know the technology. I've been watching them for the past five or six years as they have built this product up.

I think VALID is a great partner for delivering this innovation. The customers will appreciate the process as their ID with VALID is now transportable no matter where they go.

Brent Turner, VP, Financial Services

Serving Merchants and Customers With Easy, Cost-Effective Debit Card Pay-Out

Having worked with VALID since its beginning, providing back end processing services, I have been impressed with the team and the development of its products. They're good people, and they understand the business very well, especially the retail sector. Their retail product is cost-effective and easy to use. Merchants can understand it; the customers can understand it. One big advantage is that unlike earlier attempts by other companies, VALID doesn't require a big, hybrid ATM – they have developed a better solution.

We are expanding the relationship because we have a number of retail customers that we want to sell the VALID product to. Features such as the guarantee program make it more attractive to merchants than the other alternatives out there. We like the fact that in addition to ATM and cash drawer pay-out, VALID's products offer a pre-paid debit card load option. That works well with our PayNGo reloadable spending card, and will enable us to expand our card program with retail customers in addition to its use by employers as a payroll card. Now workers can access their paychecks less expensively and more conveniently by loading their card at work, or at the store, allowing people without bank account to achieve direct deposit without a bank account.

Ron Schuldt, CEO

Streamlining Check Cashing Services and Revenues While Enhancing the Customer Experience

Tremendous Revenue Potential

We first learned about VALID through their work with Keybank on its in-branch check cashing solution; they approached us about putting the application on the ATM system there. We have since worked with them both on the Keybank project and a couple of other institutions, and we have been impressed with the team and with the product. They have a lot of experience in check handling, and they understand what works and what does not work in a self-service environment.

VALID's solution is attractive for many reasons. Its approach is very cost-effective and appealing. It dovetails nicely with the current trends toward branch transformation and deposit automation. Diebold is committed to providing solutions that will serve the underbanked market, and VALID's application offers the prospect of revenue potential for financial institutions while meeting an important need for these consumers. It also provides the financial institution with an opportunity to develop a relationship with unbanked or underbanked consumers who may later be transitioned into more traditional financial services.

A Quality Customer Experience

All consumers expect and deserve a quality customer experience, and VALID's solution provides that. The check cashing process itself is very quick, whether it is conducted by the teller or in a self-service environment. By migrating check cashing out of the bank branch and onto a financial institution's ATM network, consumers can cash checks any time, at more locations, with no waiting in line. So you get location convenience and time convenience for the check-cashing consumer and you free branch personnel to focus on advice and sales for other customers.

Better Leveraging of Channels and Technology

Some financial institutions have been reporting that transaction volume has been leveling off or declining at their ATMs. They are looking for ways to reverse that trend. Deposit automation, which uses check scanners and currency validators for customer deposits, is one avenue for drawing more activity to the ATM. VALID's check cashing application uses the same technology to provide a new transaction offering to a new customer base, generating increased transaction volume and a new revenue stream. We like the fact that VALID' solution reinvigorates the ATM channel and leverages existing technology.

An additional advantage of offering check cashing as a self-service transaction is that the ATM is perfectly poised to educate the consumer about other products and services inside the bank. It is the best possible way to serve these newly acquired customers and bring them deeper into the bank relationship.