Small Banks Seek Lockbox Solutions

By Mark Brousseau

Demand from community and mid-sized banks for image-based lockbox solutions is on the upswing, says Bob Pangrac (rpangrac@creditron.com), national account manager for bank lockbox providers at Creditron. The reason? Smaller banks are looking to defend their commercial account base from large “national banks,” which Pangrac says are now showing up in regional and small markets with cash management services such as wholesale and retail lockbox processing.

“Previously, the cost of an image-based payments solution was cost-prohibitive for a smaller financial institution,” Pangrac told me. “With the introduction of Microsoft-based solutions, smaller banks can now afford a solution that will provide new revenue streams for the bank.”

But why not outsource?

One reason is that banks can keep more of the revenue from their lockbox services, Pangrac said. Another factor is that in-house systems offer better cost-controls than outsourced providers. Finally, in-house systems allow banks to clear exceptions “as they happen” or at the end of the day, rather than waiting for them to arrive from the outsource provider. “With an in-house system, exceptions can be handled the same processing day, benefiting the bank and the bank’s customer – retail or commercial – alike,” he explained.

As an example, Pangrac recounts the story of a $250 million bank that sensed that they were experiencing holdover with their lockbox provider. “By bringing their lockbox processing in-house, they seldom have holdover, which translates into more efficient customer service, deposit management, and cash management. The bank can also handle their ‘on-us’ accounts, such as the bank-branded Visa card, and their home and car loans,” Pangrac said.

So what functions are smaller banks looking for in image-based lockbox systems? Pangrac said ease of use tops the list, followed by ease of account setup, an R&D path for electronic payments, and the ability for customers to research items and receive invoices via the Web.

Are you a small bank that has successfully deployed an image-based lockbox solution? E-mail me at m_brousseau@msn.com.