Small businesses eye mobile remote deposit capture

Posted by Mark Brousseau

One in four consumers and 39 percent of small businesses desire mobile remote deposit capture (mobile RDC), a technology that allows an image of a check to be deposited through a camera-equipped mobile phone. That's according to new research from Javelin Strategy & Research. A niche product in 2010, small banks and credit unions are the first to offer mobile RDC to identified trusted consumers as a way to retain customers and grow without reliance on branches.

Per the Mobile Remote Deposit Capture report, smartphones are a key factor in the adoption of Mobile RDC. Consumers need access to the mobile web and the ability to take a two-megapixel digital picture with their camera phone. “If one of the largest financial institutions in the U.S. – Bank of America, Chase, Citibank or Wells Fargo – offers mobile remote deposit capture, you will most likely see a domino effect of the other banks offering the service,” said James Van Dyke, president & founder, Javelin Strategy & Research. “With trust worsening and mobility increasing, large banks can dampen the exodus while moving closer to mobile payments with mobile remote deposit capture. Paper payments die slowly, and as RDC helps with electronification of checks for a death by a thousand cuts.'”

Because nearly three in four of business transactions are made via check, this product also has mass appeal to businesses, which – unlike consumers – could be likely to pay for this service, Javelin concludes.

Other key findings of the report:

• Mobile RDC can be an important element to stem customer attrition or attract new customers without costly infrastructure.
• Already, more than one in four consumers who have been victims of ID fraud has had their checking account number stolen. Financial institutions considering implementing mobile RDC must put tight security measures in place to prevent even more fraud.
• Financial institutions can cut costs by offering the eight in ten of consumers who walked in to a branch to make a deposit or withdraw cash in the last 90 days the alternative to use their phone to make a deposit.
• About one in five of smartphone owners use mobile banking on a daily basis – more than double the rate for consumers who do not own a smartphone.
• Many consumers are ready for RDC now, particularly selected high-income individuals
• Four out of ten tech-savvy consumers view mobile RDC technology as desirable.

“Mobile RDC captures unique attributes of mobile hardware and always-on connectivity, to expand mobile banking relationships. We forecast that by 2014, over half of the U.S. population with mobile phones will be using smartphones, a dramatic escalation from the current 18%. This will provide a solid base of growth for additional mobile RDC services,” said Javelin Strategy & Research Analyst Mark Schwanhausser.

What do you think?