October 15, 2015

Outsourcing Continues to Grow as a Lockbox Solution

Whitepaper documents continuing importance of lockbox as a bank service, and reports on increasing popularity of outsourcing as a service delivery solution

A new study sponsored by BNY Mellon's Treasury Services business and produced by Aite Group casts an interesting light on the continuing importance of lockbox processing as a banking service. Titled Outsourcing Lockbox Processing: Making the Right Choice, the study also analyzes the factors that are making outsourcing lockbox processing an increasingly popular solution for banks that recognize the competitive importance of providing lockbox service but cannot justify the investment required to keep pace with advances in lockbox processing technology, and reviews the criteria used by banks in selecting an outsourcing solution provider.

As indicated in Aite's white paper, the volume of payments being made by check is still substantial, especially in the U.S. Reliance on paper-based payments for business transactions continues to be especially strong, with Federal Reserve check services data indicating that daily commercial check volume during the first quarter of 2015 averaged 1.3 million items valued at just under $2B.

Banks understand the importance of providing lockbox services to clients receiving paper-based payments — Aite's white paper reports on bank surveys showing the strategic value attached by banks to lockbox service as an important part of building and maintaining relationships with corporates and other institutional clients.

But with electronic payments capturing an ever growing percentage of payment volumes, lockbox volumes are projected to increase at only nominal rates. This lack of significant growth leaves many banks searching for an outsourcing solution, especially when decisions are needed to be made to upgrade current processing platforms and technology, and the white paper analyzes in detail the criteria banks are using to select an outsourcing services provider.

BNY Mellon is an industry leader as a provider of lockbox services to client banks in the U.S., employing the latest in imaging and processing technology to move nearly 24 million check payments per month — 20 million retail and more than three million commercial — through Treasury Services' lockbox operation. The Aite white paper explains the importance of this service and why it will continue to grow as more banks turn to outsourcing as a lockbox solution.