Virtual Vaults: They're Not Just for Cash Anymore

by Bob Meara, May 22, 2006


New York, NY, USA May 22, 2006

Remote deposit and vault capture services will consolidate banking relationships among major retailers over the next two years, with over US$100 billion of cash and check deposits changing hands annually, and widespread outsourcing of cash vault operations.

Banks have had lots to worry about over the past few years. The last thing many banks thought they would have to revisit is their antiquated cash vault operations. After all, vaults have not typically been a hotbed of technology adoption. Some banks have turned to outsourcing their cash vaults to expand into new markets without investing in physical infrastructure. These "virtual vaults" are provided by the large cash logistics companies (aka, armored couriers) that operate nationwide cash logistics infrastructures.

Interest in virtual vaults has been increasing. In the past, they were limited to cash and coin. But according to a new Celent report, ,they are now being used for check processing.

Celent predicts that banks will face two choices in revamping cash vault operations: either invest significantly in their aging cash vault infrastructures or outsource their cash vaults to cash logistics providers. "Doing neither will likely not be an option, because that would render unsuspecting banks wholly uncompetitive in an increasingly challenging deposit services battleground," says Bob Meara, senior analyst and author of the report. "The Federal Reserve's new Cash Recirculation policy will compel many banks to revisit their cash logistics operations. While they're at it, banks should examine the benefits of check image capture in their vaults. Winning at retail will soon require it."

Following the lead of cash logistics providers, banks will increasingly capitalize on the link between check and cash operations reengineering. In particular, distributed check image capture in the cash vault can deliver a big win with banks' customers. Once obscure, cash vault capture will become commonplace as centralized item processing centers give way to distributed capture. The idea is no longer theoretical. Several cash logistics providers are live, capturing and truncating checks in their vaults, and one provider, Loomis, Fargo & Co., is accelerating deployment across its network. Celent's new report concludes with a case study of the Loomis experience.

The 36-page report contains 16 figures and 9 tables. A table of contents is available online.

Members of Celent's Wholesale Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

New York, NY, USA May 22, 2006


Executive Summary 3
Cashless Society - Not (Yet)! 5
"Virtual Vault" To The Rescue 9
Today's Vault - The Unwelcome Check  12
Drivers of Change 15
Winning at Retail 19
Case Study: Loomis Fargo's Image ExchangeTM 23
Conclusion: There's No Turning Back 32
Objectivity & Methodology 33

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