Reduce liability for losses on commercial accounts by adhering to four requirements.
RDC and Small Business
With more than 20 million small businesses in the United States, and fewer than 5 percent of them currently using remote deposit capture, community banks have an enormous opportunity to expand into this untapped market and, in the process, to increase revenue from current and new small-business clients. With the advent of mobile RDC, moreover, this opportunity has expanded to include micro-businesses (i.e., businesses with less than $1 million in annual revenue) and professional services that do not have the check volume to use scanner-based RDC but want the convenience of remote deposit.
Christine Barry, research director at Aite Group, delivered this message in her session, “The Greenfield Opportunity: Small Business RDC,” during the 2012 RDC Summit, held Sept. 26–28 in Orlando, Fla. “Despite increased focus on the small-business segment,” Barry pointed out, “many of their needs remain unmet, creating opportunities for those financial institutions that ‘get them.’” Two critical needs among small businesses are improved cash flow and more effective ways to collect money — needs solved with RDC.
Unfortunately, many community banks have not grasped the increased interest in RDC among their business clients. The number of banks offering business banking online has more than doubled in the last two years, and is now at 20 percent. According to a survey by Aite Group, 38 percent of small-business respondents said it was “important” or “very important” that their financial institutions offer RDC, and 69 percent “would” or “might” consider using RDC if offered. The rising importance of mobile RDC among small businesses has been corroborated in a recent Javelin Strategy & Research survey, which found that 30 percent of small-business owners consider mobile RDC a “desirable” or “very desirable” service.
This year’s theme for the RDC Summit was “evolution.” And, without question, remote deposit capture is evolving in technology, applications and use. Community financial institutions should not — cannot — ignore this evolution and be successful. The challenge, rather, is developing an RDC offering that addresses the needs of their consumer and business customers.
Perhaps most important is determining a price structure. Although the trend thus far is to offer consumer mobile RDC as a free service, surveys have found that small businesses are willing to pay for RDC if it increases convenience and saves time. The general consensus of speakers at the RDC Summit was that financial institutions need to charge for RDC, either as a standalone product or, preferably, as part of a bundled service with a monthly charge.
Of course, the first step is selecting the right RDC solution. And three options are available: installed technology, or IT, solution; an outsourced-partner, or ASP, solution; and a third-party processor. Each approach has its pros and cons, which vary from bank to bank. It is critical, therefore, for the financial institution to establish a team to determine the best approach to an RDC offering and consider such issues as control vs. flexibility; security and compliance; implementation time; deliverability; customer guidelines; customer service; technical support; training; marketing; and operational impact.
Next month’s column will take a closer look at these options and some of the leading companies offering RDC solutions. In the meantime, mark your calendar for the 2013 RDC Summit, scheduled for Sept. 25–27, 2013, in Orlando. For more information about RDC and to access presentations from this year’s conference, visit www.remotedepositcapture.com.
If your financial institution offers RDC or is planning to introduce RDC, download an RDC checklist. The checklist is in an Excel spreadsheet and can be customized to fit your specific needs.
Michael Scheibach is executive editor of BankNews.
Copyright (c) November 2012 by BankNews Media