Rethinking Consumer Remote Deposit Capture

Posted by Mark Brousseau

An interesting article by Diebold from the Self Service and Kiosk Association Web site:

Is consumer remote deposit capture right for every financial institution?

by Robert MacMahon
26 May 2009

Since the inception of Check 21 in October 2004, adoption of remote deposit capture has been steady among financial institutions that cater to business customers.

According to Celent, 75 percent of all U.S. FIs are expected to be remote capture-enabled by the end of 2008. With the rapid and widespread embrace of commercial RDC, many financial institutions are interested in exploring the new frontier of this capability: consumer remote deposit capture.

Technologies are now available that enable FIs to securely process checks sent via ordinary scanners, thus opening the doors to RDC for consumers and small business owners. On this front, Celent says that 7 percent of FIs report already having either a complete solution or a pilot program up and running; meanwhile, 15 percent report plans for a consumer RDC solution and 22 percent say they would consider such a solution.

For many FIs contemplating this offering, questions still abound. To determine whether a consumer RDC program is right for your institution, and to ensure a smooth execution, a few key steps should be followed.

Identify your customer base

To assess the potential for success with a consumer RDC program, it is important to first evaluate your existing customer base, as well as potential new customers. For customers acclimated to off-hour banking solutions such as online banking, or for those who live far from a branch, consumer RDC could be a welcome offering. Evaluating your customers can also help you analyze overall risk and define the ideal customer to target in your marketing efforts.

Qualify your customer base

Diligent "know your customer" policies are extremely important in consumer RDC programs. While advanced safeguards are incorporated in the software developed for these programs, mitigating risk lies largely in the hands of the FI. Take inventory of the risk management controls that are currently in place at your institution, and consider a risk strategy designed specifically for a consumer RDC program. First and foremost, you'll need to set criteria to determine a customer's eligibility for this offering. For example, prerequisites for access to a consumer RDC application could include good credit and a long and positive history with your institution.

Take inventory of your security and monitoring capabilities

As previously mentioned, consumer RDC software solutions should include security features that allow your FI to control the flow of remote deposits in real time and customize the security criteria. This ensures that any deposits submitted for processing that do not meet the set standards are flagged and held until cleared by an authorized employee.

The crucial element then becomes identifying designated and qualified staff to monitor and control the software. Smooth deployment depends on your employees' understanding of and adherence to all protocol related to your RDC program.

Deploy your consumer RDC program

The final element of a successful consumer RDC program is smooth integration of the application into your FI's existing system. The key to a seamless inclusion of a consumer RDC program is that the software is easily installed and integrated into other back-end processes. Furthermore, the application should be easy and straightforward for the end user to encourage adoption among your target customers.

As the most rapidly adopted technology in the history of the financial services industry, the potential is there for remote deposit capture to become a successful consumer application. As with any new technology, before considering a consumer RDC program for your institution, several factors must be taken into consideration. With a firm understanding of your institution's customer base, risk controls, employees and, last but certainly not least, the technologies and processes through which you plan to execute the program, a successful consumer RDC program launch is within reach.

Robert MacMahon is senior business development manager of payments and imaging solutions for Diebold ImageWay, the deposit automation and imaging division of Diebold Inc.