Lockbox: Still Crazy After All These Years

Lockbox: Still Crazy After All These Years
Wholesale lockbox (WLBX) has been a staple treasury management product for five decades or so. It amazes me that after all these years, the market for WLBX continues to grow and innovate. A far cry from retail lockbox, WLBX enjoys significant revenue growth opportunities. By Celent estimates, over 12,000 eligible U.S. companies with over $25 million in revenue do not use WLBX services. So, how do banks pursue this opportunity? For starters, banks need to offer WLBX services. Most don’t. For years, WLBX has been the purview of the large cash management banks. Lockbox operations are expensive and required a good book of business to justify the large capital investment. But, imaging technology and intelligent workflow tools now allow extraction and image capture to be entirely separate from the downstream processing. “Capture anywhere” and “correct anywhere” workflows have created hub and spoke operations, with multiple capture sites and perhaps a single processing site (with a disaster recovery site).

Hub and Spoke Lockbox Architecture

This has makes it relatively easy for banks to augment their WLBX operations by using third party capture capability in new and interesting geographies. It is also allowing banks and third party processors to offer outsourced WLBX services to smaller banks that might not otherwise justify investing in their own operations. But, more capture locations are needed to move farther down market. Most processors have just a few sites. Most clients want pretty basic WLBX services. Features like same-day decisioning and AR matching appeal to a minority of clients. Most just want basic image lockbox. And, they’d rather not have their customers mail payments to a distant P.O. Box. A lack of capture sites has, at least modestly, been a barrier to more widespread lockbox adoption. If only someone could figure out how to cost effectively create a good number of capture sites so most metro areas could be easily served. Enter Brinks. Brink’s U.S. is a division of Brink’s, Incorporated. Traditionally a cash logistics provider, it provides a variety of services including cash in transit (CiT) services, cash and coin processing, ATM servicing and a variety of security services. In so doing, Brinks has built a nationwide network of some 285 vaults. Brinks has been quietly building its capability to provide check imaging services (through a relationship with FIS) and just recently announced an outsourced lockbox service provided through a relationship with Cash Management Solutions (CMS). CMS is a provider of wholesale and retail lockbox software and operates its own outsourced lockbox solutions under the Image Remit brand – with a few capture sites. The combination looks to be a win-win. Brinks has yet another service line, further diversifying its business and leveraging its relationship with a large number of U.S. banks. CMS has access to a nationwide network of image capture sites to differentiate itself from several larger competitors. It wouldn’t surprise me to see Brinks open up its capture capability to banks and other third party processors, regardless of operating platform(s) in use. Still crazy after all these years…
Bob Meara About Bob Meara

Bob Meara is a senior analyst with Celent's banking practice and is based in Atlanta, Georgia. His research focuses on the branch and ATM delivery channels, customer analytics and check and cash payment processing technologies. A well known authority on remote deposit capture, Bob has led multiple consulting engagements including proprietary research projects involving financial services hardware, software and the impact of self-service on branch banking.

Before joining Celent, Bob was the director of product marketing at Alogent. In this role, he positioned and launched a series of Check 21 payments solutions.

Prior to Alogent, Bob also held positions in marketing and brand management at BellSouth, Hayes Corporation, and Procter & Gamble in addition to being a commissioned naval officer.

Bob earned a Bachelor of Science in Applied Physics and Electrical Engineering from Case Western Reserve University.

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