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Remote Deposit: a customer convenience that cuts costs

By: Greg Council

It is no surprise that financial services providers are undergoing a major transition following the 2008 financial crisis. Many are struggling to remain relevant, or worse, solvent. Consumers are looking even harder at alternatives and introducing new fees or reducing services only serves to hasten this trend.

Community banks, which continue to make up the majority of banks in the United States, are on the front line of this battle for consumers’ mindshare. With consumers’ lost faith in larger institutions, community banks have benefited. However, as large national firms continue to expand their financial product breadth and invest heavily in branch services, the focus for community banks needs to turn to how they can be everywhere their customers need them to be.

A January 2011 Director’s Digest article raised the issue that one of the most dangerous trends in community banking is a lack of real focus on customer service. According to that article, examining all of the bank’s channels from a customer perspective is a key, yet often neglected, path to good customer service.

A channel trend that continues to gather strong momentum is remote deposit capture. While check use continues to decline, interest in facilitating much quicker and efficient services is going in the opposite direction, and for good reason. Banks can reduce costs associated with processing common deposit transactions, while also introducing a new service that appeals greatly to consumers.

Remote Deposit Capture at the Business

According to Celent, remote deposit capture is expected to triple to nearly 25 percent of small businesses over the next few years. The technology will be driven by access to low-cost desktop solutions and the desire to speed cash flow management processes.

Jaguar Software, a provider of remote capture solutions focused on the community bank and credit union markets, has deep roots in helping smaller banks adopt leading-edge capabilities. Based in Illinois, Jaguar Software provides an array of imaging solutions aimed at speeding up deposit-related transactions, including POD and remittance/lockbox solutions.

Richard Leirer, vice president of sales and marketing at Jaguar, advises community banks to “stop thinking about remote deposit as a cost and compliance problem and view it instead as an extension of your customer service offerings that goes right into your customer’s office or store. Community banks know their customers so don’t select a program of ‘one size fits all.’” Leirer goes on to state that one of the biggest mistakes observed with community banks developing their RDC programs is “trying to make a profit from the customer who signs up for RDC. If done properly, a well-designed RDC program should reduce back-room operational cost, thereby allowing you to offer it at a lower cost than the big banks.”

Mobile Capture

According to Tower Group, there will be a 50 percent increase in mobile banking users by 2013. In support of this trend, Mercatus identified that mobile check deposit was the number one feature cited in consumer decisions to switch banks.

Solutions providers such as BluePoint Solutions and Mitek Systems have extended their RDC capabilities to include mobile image capture and deposit. This new offering is based on increasingly capable cameras available in smartphones coupled with the ability to drive sophisticated mobile applications. The trend is to provide a comprehensive multi-channel transaction offering that includes ATM, merchant, branch and mobile solutions that can be offered as a seamless way for customers to manage their transactions.

Intelligent Deposit ATMs

Even though this channel is not as new or thought of as true remote deposit capture the capabilities and impact to a bank are similar. And ATMs are viewed as an important part of a bank’s delivery channel, says ATM Marketplace’s 2011 ATM Software Trends and Analysis. According to that study, 79 percent of respondents stated that the ATM is important or becoming important as a customer touch point.

ATMs with image recognition capabilities allow customers to quickly and simply deposit cash and checks without having to use envelopes, wait in line or adhere to a branch’s normal operating hours. Because these machines can recognize amounts, they also handle the addition and verification of totals and can provide the customer with a receipt at the terminal or via his registered email address.

According to Retail Banking Research, the market for these “intelligent deposit” ATMs, is predicted to grow two times faster than the installed base of traditional ATMs.

Familiar names in the financial services solutions arena, such as NCR and Fiserv, offer software that drives these new multi-function terminals. These solutions providers are supporting banks’ increased interest in expanding the capabilities of these terminals to do even more. According to an ATM Marketplace study, 41 percent of respondents stated that the primary driver for upgrading ATM software was to add new functionality, such as advertising or supporting new types of transactions.

Other Considerations

There is a threat that comes with the adoption of these new services. Some caution that existing channels might be adversely impacted or feel fragmented to customers. Do not lose sight of the personal aspect of these transactions, which could be lost if banks fail to examine the impact on customer services processes and workflows of these new channels. A March Independent Banker article drew attention to this aspect, noting that, “growth in today’s newest self-service check depositing technologies — image ATMs and remote deposit capture — is taking a big bite out of branch foot traffic, presenting both opportunities and challenges.”

The good news is that all of these solutions offer banks the opportunity to create a more holistic multi-channel relationship with customers through integration of new and traditional points of contact.

Ultimately, new technologies enabling richer remote deposit services without being overly costly provide community banks with an exciting way to better-serve existing customers and to attract new ones. Even so, remote deposit options should be viewed as complementary services to existing channel alternatives. Selecting and providing the right mix of services for a bank’s customers is essential to providing a complete, end-to-end customer experience.

Greg Council is with Parascript, a company that employs patented digital image analysis and pattern recognition technologies that automate business processes by reading handwriting. Parascript is online at

Copyright (c) December 2011 by BankNews Media.