Remote Deposit Capture Paves Wide Path to Greater Adoption
In place at 624 credit unions is some form of remote deposit capture that allows members to deposit checks from any location using a desktop scanner, high-speed scanner or mobile smartphone camera.
According to Callahan & Associates Inc., that figure, as of March 31, is a small but growing slice of RDC adoption as more CUs realize the need to become tech savvy, provide convenience and successfully compete with other financial institutions, experts say.
Larry Middleman, president/CEO of the Portland, Ore.-based business services CUSO CU Business Group LLC, said he believes RDC will one day be just as much of a necessity as debit cards are today.
“This product will be a standard way of banking, and I’m convinced of that,” Middleman said. “It’s a simple, easy option, both for consumers and business owners.”
Last year, CUBG formed an alliance with NetDeposit LLC, making the company’s NDPro processing services available to the CUSO’s 366 CU members. NetDeposit provides payment technology solutions. In August 2010, its assets were acquired by BankServ, a banking and payment technology company. According to NetDeposit, a wholly owned subsidiary of Zions Bancorp., it would continue to operate under its brand this year.
Middleman said based on a recent CUBG survey, 90% of the CUs served by the CUSO either have RDC now or plan to implement it in the near future.
Andrew Tilbury, chief marketing officer for the Vista, Calif.-based Bluepoint Solutions Inc., a provider of RDC, item processing and document management services, said the remote tool will become a necessity for those who want to keep up with their competition.
“As larger financial institutions add RDC to their portfolios, it will put pressure on those that are not,” Tilbury said.
One CU on top of this growing trend is the $99 million Torrance Community Credit Union in Torrance, Calif., which launched DeposZip RDC in 2009 and DeposZip Mobile in 2010, both through the Vertifi Software subsidiary of Burlington, Mass.-based Eastern Corporate Federal Credit Union.
DeposZip RDC allows check depositing via desktop scanners while DeposZip Mobile, allows members to make deposits straight from an iPhone or Android application.
Torrance Community CU Operations Manager Tillie Broadstone said RDC benefits members who deposit checks frequently or do not live close to a branch. Of its 6,500 members, 250 are signed up for RDC, and in a recent one-month period, they made 180 RDC deposits totaling $100,000.
“We’re small, and only through technology can we seem big,” Broadstone said.
The $499 million Freedom Credit Union adopted CO-OP Financial Services’ My Deposit Mobile in May giving members iPhone check deposit access.
As of June, 118 of the 56,000 members served by the Warminster, Pa.-based Freedom CU used the service depositing a total of $84,000. The addition of an RDC service for use with desktop and high-speed scanners next year is also being considered.
“My Deposit Mobile furthers our goal of providing fast, helpful service to our members,” Freedom CU CEO Lee MacMinn said.
RDC members fall into two categories: consumers, who tend to like mobile deposit services for their convenience and “cool factor,” and business owners, who receive numerous checks each day, according to Middleman.
“There’s clearly more interest and potential on the business side, and that’s because of the nature of how a business does deposit transactions,” Middleman said. “They have a high volume and frequency of business check deposits.”
But Tilbury pointed out that as a whole, CUs don’t serve a whole lot of business owners. He views marketing RDC to business owner members as part of a larger initiative to draw business owners to CUs in the first place.
“There isn’t as much comfort among CUs in marketing to business owners,” Tilbury said. “Marketing RDC to consumers is a natural fit in their profile.”
In looking for a provider, Middleman said CUs should seek out one that offers good software in addition to operational and technical support and superb risk management controls. RDC does comes with its own set of risks including the possibility of duplicate deposits, check read errors and fraud. “Credit unions underestimate the level of expertise that’s needed to implement this,” Middleman said.
Middleman said integrating RDC services into a hosted online banking system, as opposed to accessing them through vendor-provided software that funnels funds into accounts via ACH, is too costly for some CUs. Infrequent check usage or the fear that the service isn’t secure may also be obstacles.
“It’s a big project, and for a lot of them, it just doesn’t fit onto their plate right now,” Middleman said.