January 01, 2007

More than 10 million American households do not have accounts at banks and other mainstream financial institutions, according to the Federal Deposit Insurance Corp., Cleveland-based KeyBank ($91.8 billion in assets) has been successfully serving these "unbanked" customers with its own check-cashing service at several of its branches. Launched in February 2004, KeyBank Plus offers individuals check cashing for payroll and government checks, and money order purchasing, all at a discounted rate, without requiring the opening of an account with KeyBank.

Unlike other check-cashing services, KeyBank Plus also offers help with long-term financial goals through one-on-one counseling and classes. The bank's ultimate goal is to convert the KeyBank Plus customers into traditional checking account holders, says KeyBank's Michael B. Griffin, director, multicultural markets and asset management, community development banking. KeyBank Plus has attracted more than 4,500 clients so far, he adds.

Check-Cashing Security

KeyBank's teller-enabled check-cashing service is powered by Valid Systems (Fort Worth, Texas) software and transaction processing services. During the KeyBank Plus transaction, the teller will slide the customer's driver's license and scan his or her fingerprint, says Griffin. The Valid Systems' software subsequently runs the data from the license against several databases, including Social Security and credit reporting databases, to verify the identity of the KeyBank Plus customer, he says.

In April, KeyBank deployed its first check-cashing-enabled ATM adjacent to a supermarket branch. The self-service terminal, powered by Diebold (North Canton, Ohio), is cardless and doesn't require an envelope. Checks are scanned in, then customers get an image of the check and immediately receive cash. Valid Systems also provided the back end for this ATM, which is currently only for KeyBank Plus customers.

KeyBank is working on its ATM network to program the check-cashing service to run along its ATM platform. The bank plans to roll out the check-cashing capabilities to ATMs at several branches in the near future, Griffin says. Right now it is just keeping a close eye on the one ATM to make sure it's effectively serving the KeyBank Plus customers.

In November, KeyBank extended its check-cashing service to six nonurban branches to target areas where many unbanked people work. "The underbanked are usually lower-wage earners who need to get their money as soon as they can," says Griffin. The new locations, which bring the total to 26 branches, are in the vicinity of large shopping centers and industrial parks, he says. * --Nancy Feig

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