One area of scrutiny has been finding ways to keep transportation costs low. The $90 million Chaffey Federal Credit Union is helping school districts in the Inland Empire and San Gabriel areas by offering its new merchant remote-deposit capture program. Where school employees once had to make the rounds to dozens of schools to pick up deposits for processing, the program has streamlined the trips to one central location, said Catherine Randazzo, president/CEO of the Ontario, Calif.-based credit union. The savings work nearly the same for Chaffey, with staffers no longer having to travel to pick up those deposits for processing.
"Banks are in dire straits, and they are fee-heavy anyway," Randazzo said. "Because they know us, the teachers have a level of trust with the credit union. That tends to put us over the top."
Credit unions and other financial institutions are slowly bringing remote-deposit capture services into their product lineups in an effort to court small business owners who prefer to conduct transactions outside of branches. According to a July Aite Group LLC survey, approximately 47% of small businesses still do not know what remote deposit is. Still, respondents revealed a strong relationship between their level of knowledge of remote deposit and their willingness to pay for it. Aite estimated that poor strategy execution is costing the financial services industry more than $700 million per year in lost revenue from the product.
Meanwhile, Randazzo is hoping remote-deposit capture will mark Chaffey's entry into the small business market. The credit union has started making inroads through contracts with several school districts. Competing against larger credit unions and banks, Chaffey was able to outbid them to secure arrangements with two districts that serve nearly 30 schools. Another remote-deposit capture contract is in the final stages for a district with roughly a dozen schools. Randazzo has her fingers crossed that a proposal for a fairly large district will be approved next month.
"We started with a school district before the end of the school year in May. We wanted to see how they were working with their current bank and then try to duplicate it," Randazzo said. "The conversion process went well. The staff was very knowledgeable."
Randazzo said in the bidding process with other banks, Chaffey was able to offer more cost savings. In one case, the credit union's remote-deposit service program would save one school district $1,000 a month.
The Miramar, Fla.-based CU Business Capital LLC partnered with Chaffey to offer its remote-deposit capture program. The CUSO had to work quickly to help get a request for proposal to the school districts, said Murray Halperin, senior vice president of institutional sales at CUBC. WesCorp does the item clearance for the CUSO.
"We had them from soup to nuts in 30 days," Halperin said of Chaffey's program launch.
Eleven of CUBC's credit union clients are now using remote-deposit capture. Halperin said its alliances with RDM and WesCorp allow for a turnkey setup because there is no core data interface processor. The CUSO provides legal forms, checklists and other support services. After conducting a system test, the credit union runs a beta test and is then able to move forward.
Randazzo said the credit union is not looking at the remote system as a money maker.
"We certainly have to cover our costs. But we're looking to strengthen our relationships. We're all looking for ways to differentiate ourselves."
Chaffey now has a commercial lending policy in place. Because the credit union serves select employee groups in addition to school districts, Randazzo said the remote-deposit capture system will help build Chaffey's small business services.