Tuesday, June 2, 2009

Remote Deposit Capture Still Has Legs

By Mark Brousseau

With the stratospheric growth of remote deposit capture (RemoteDepositCapture.com says it has reached over 50 percent penetration among financial institutions in less than half the time it took online banking), you might assume that interest in the technology is dying down. You’d be wrong.

At last week’s Windy City Summit in Chicago, a session on remote deposit capture drew a standing room-only crowd (some attendees even sat on the floor), and many corporate practitioners admitted that they still haven’t implemented technology, reports Leilani Doyle, product manager at US Dataworks, Inc. (ldoyle@usdataworks.com).

“While remote deposit capture is no longer new, and the market is saturated with product offerings, the technology is still growing steadily among corporations,” Doyle explains. “Corporate practitioners recognize that truncating paper as soon as possible in the process is always better.”

Doyle believes that there is more growth ahead for remote deposit capture, particularly with ISOs now selling the solution to billers who previously were an untapped audience, and with the introduction of new check scanners especially designed for billers for low transaction volumes (think: small businesses). US Dataworks plans to make product announcements in this area.

Remote deposit capture holdouts (and early adopters of the technology) also are looking for remote deposit capture solutions that allow for the centralized processing and repair of checks captured at the point of presentment. Anticipating this trend, US Dataworks designed its remote deposit capture offering to allow billers to capture items anywhere, correct them anywhere, and clear them anywhere.

Doyle said there also was a lot of talk among treasurers at the Windy City Summit about the need to reduce any excess balances in their demand deposit accounts (DDA). “Using balances to pay for services is too expensive,” Doyle explains, adding that many treasury managers were looking for a place to park their excess funds. “Not only are corporations receiving an ECR of 1 percent or less, but they also are incurring FDIC fees based on the risk category of their financial institution.”

“The macro-economic pressures of banks not willing to lend, and the Federal Reserve fund rates being at an all-time low, have put a unique spin on the treasury management professional’s job,” Doyle says. “Treasurers are spooked by high FDIC rates, the unknown risk of FDIC rate hikes to cover losses, and the fact that they can no longer use DDA balances to pay for non-credit services.”

The challenge for most treasurers is that they can’t move their banking relationship if they have a credit facility with their bank – regardless of the fees the bank changing for its cash management services: “Companies need to have access to that line or another longer term credit facility.”

In addition, some banks are changing their availability schedules, Doyle says. This is another area where Doyle thinks US Dataworks’ technology can help. With a centralized payments hub, like the one offered by US Dataworks, corporations are better prepared to choose the bank with the best availability schedule, or to dynamically change the way payments are collected based on the paying bank. “Better management of the collections side of the treasury function will provide more accurate collected balance forecasting and reduces the amount of collected balances subject to the FDIC assessment,” Doyle says. “Corporations can augment this strategy with a sweep to pay off loans if they are a net borrower, or a sweep to an investment product, if they are a net depositor.”

What do you think? Post your comments below.

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