4 Remote Deposit Capture Trends to Watch
About one-third of the U.S. population will use mobile remote deposit capture by 2016, according to a new study by technology research and consulting firm Celent, which found that four trends are shaping the future of the technology.
Celent surveyed 10 RDC vendors and 78 U.S. financial institutions – 13% of which were credit unions – in April for its “State of Remote Deposit Capture 2015: Mobile Is the New Scanner” report. More than 70% said they have either implemented or have plans to implement RDC in the next year.
Celent reported four trends in the RDC market space:
1. Product launches are exploding. Carefully controlled pilots have given way to now-available products and special focus on new sectors, Celent found. Today it is largely a consumer and small business product, but many vendors launched commercial mobile RDC solutions in the past six months, it said.
“Microbusinesses, those with revenues of US$1 million and less, remain underserved,” the report added. “Lacking a well-designed product to meet their needs, many microbusinesses are using consumer desktop and (mobile) RDC products. As a result, the small business segment remains the least developed.”
Just 11% to 15% of were using RDC over the past three years, but that’s expected that to rise to about 25% within a few years, according to Celent, as marketing efforts rise, prices fall, eligibility expands and deposit limits rise.
2. Risk and compliance fears are settling. They once dominated the agenda, but because RDC-related losses are at or below established thresholds, “a significant and growing number of banks are actually behaving as if they want customers to deposit digitally,” the report said.
Until 2013, nearly 90% of surveyed institutions reported suffering no losses from RDC; that number is now just 67%. Institutions with more than $50 billion in assets had the highest incident of loss, the report said. Still, two-thirds of financial institutions surveyed said their losses were less than established thresholds, according to the report. Fewer losses are due to duplicate presentments; fraudulent or altered items are now on the rise, the study said.
Deposit limits are a common way to mitigate the risk, Celent said, but the technology is quickly moving toward better detection of duplicates and deposit analysis.
3. Multiple-image capture is the new black. RDC offerings are moving from separate solutions to common platforms that support scanning multiple checks.
“This development will spawn a renaissance in small business RDC previously hampered by complexity, high product cost and resulting pricing,” Celent said. “Mobile is the new scanner. Reflecting both the explosion in preference for all things mobile as well as the extraordinary convenience of mobile RDC, mobile check image capture users now outnumber those using specialized desktop devices by more than 40 to one, despite the roughly 10-year head start enjoyed by desktop applications.”
4. RDC will become a way to reload debit cards. This will require third-party check guarantee services and could involve use of real-time funds as a source of incremental revenue.
There will be casualties as mobile RDC rises, Celent warned. Financial institutions will likely begin shunning investments in image ATMs as a result of the growth in mobile RDC, for example. And the fragmented vendor landscape is ripe for consolidation as more financial institutions consolidate their applications, making one-stop-shop vendors the ones most likely to survive, Celent said.
The percentage of surveyed financial institutions considering changing vendors increased from 9% in 2012 to 21% in 2015, Celent found, and the number of institutions with specific plans to do so in the next one to three years rose sharply from 8% in 2012 to 9% in 2015.
But branches could be big beneficiaries, according to Celent.
“In the consumer mass market, mobile RDC’s potential is far from realized,” Celent said. “Beyond a mobile banking feature, mobile RDC, if done well, can become a mass market deposit-gathering channel. This is exactly what most retail banks need, because in so doing, they can migrate branch-based transactions to digital channels, freeing the branch channel to transform into the sales and service platform it must become.”