Remote deposit capture, long tied to the PC and desktop scanner, has arrived at its ultimate destination – anywhere, anytime check deposits through popular mobile banking capabilities and smartphones.
Mobile deposit is attractive to consumers and millions of small businesses, a longtime staple of credit union membership. By combining powerful technology trends and strong consumer demand with a traditional banking process, mobile deposit empowers credit unions with another way to retain members, prevent the fragmentation of members’ banking relationships and, ultimately, forever change the credit union’s relationship with its members.
Mobile Deposit Combines Traditional and Mobile Banking
For generations, the paper check was by far the most commonly used non-cash payment method for businesses and consumers alike. In recent years, most of the conversation around checks has been about their impending demise as consumers embraced cards, online banking and, more recently, smartphones and tablet apps for their banking needs.
Despite the rush to mobile banking, checks are not going away. Fiserv research shows that four out of five financial institutions offer RDC services and more than 40% of banking customers would change their financial institution to get mobile RDC. This mobile imaging technology is tied directly to a venerable symbol of traditional financial transactions, the paper check.
Even though credit, debit and prepaid cards receive most of the attention, checks are still an essential part of our payment system, representing about one-fifth of all non-cash payments and nearly half the total value of non-cash payments. This amounted to more than $30 trillion in payments in 2010, according to the Federal Reserve. This high level of check-writing activity can be attributed mostly to business-to-business transactions.
Powerful Technology Trends to Improve Service
In every area of their business, credit unions must find ways to provide more and better service while reducing operating costs. New technologies have always been the answer to that challenge, and during the last few years, mobile RDC has been in the spotlight.
A 2012 Javelin report found that mobile check deposits can cost the credit union as little as four cents per check, while traditional branch-based deposits cost between 75 cents and three dollars per deposit. Credit unions will soon be able to monetize mobile RDC capabilities, especially for small business customers, and may even be equipped to provide value-added reporting to determine mobile deposit’s true return on investment.
For credit unions looking to provide valuable customer service that simultaneously improves operational efficiencies, mobile deposit is a game changer.
For many years, RDC has enabled merchants, corporations and consumers to capture check images and make deposits using scanners and PCs, but advances in smartphone development and the advent of tablet banking have introduced millions of new banking devices to the marketplace. These devices are smaller and more portable, enabling credit union members to maintain their banking relationships anytime, anywhere –with just a pocket-sized device.
Representing the intersection of two very powerful banking trends – mobile banking and remote deposit capture – mobile deposit offers a cutting-edge way to manage a very traditional banking process.
Credit Unions Are Poised to Lead in Mobile Deposit Adoption
Small businesses still write and receive millions of checks each year, making this market a significant and lucrative opportunity in which to expand mobile deposit services. Many businesses do not yet use RDC services of any kind but the near-universal presence of smartphones, and their proficiency as a deposit device, suggests that credit unions should move quickly to take advantage of this opening to pursue more widespread mobile deposit adoption.
Credit unions leading the way in mobile deposit typically deliver their services to on-the-go service businesses, such as home repair providers, babysitters, landscapers and catering companies. Many receptive members also have needs tied to microbusinesses or small nonprofit venture, such as a sports team, church group or garage sale.
Optimizing Mobile Deposit Security
It’s only natural for credit unions to be concerned about fraud potential when considering new technology. Credit unions must carefully consider any possible risks and strategically implement all necessary precautions.
The good news is that fraud losses related to remote deposit are remarkably low, with more than 90% of institutions suffering no losses attributable to merchant, consumer and mobile remote deposit. Careful risk mitigation will include several key common-sense practices, including:
- Eligibility restrictions: Many credit unions restrict mobile deposit eligibility to established customers with an existing six- to 12-month relationship with the credit union.
- Impose deposit limits: Restrict access by limiting daily mobile deposits, many credit unions limit deposits to $5,000.
- Monitor members’ behavior: Carefully track changes in deposit behavior, flag atypical amounts and monitor discrepancies in trends.
- Detect duplicate deposits: Robust systems can identify a duplicate across capture channels, including mobile and branch.
Any comprehensive mobile banking portfolio must include mobile deposit capabilities because mobile deposit offers a high degree of “stickiness” – the capabilities help build member loyalty and boost retention. To serve its members and small businesses alike, credit unions must offer mobile RDC now, because other unregulated, non-financial firms already do.
Although large banks have generated much of the buzz around this new technology, there are no barriers to adoption by credit unions. A credit union that takes advantage of its unique market position to increase mobile deposit integration will reap the rewards of increased member retention, continued deposit growth and transformed relationships with its members.
No longer content to use mobile banking to simply get information, consumers and small businesses are now looking to complete the same tasks and transactions they once performed only at a branch or online. Credit unions that deliver these capabilities, including mobile deposit integration, will gain a clear advantage.