February 21, 2008

As remote deposit capture (RDC) matures, more and more banks are beginning to realize its offensive potential. How can banks use RDC as a competitive differentiator, and can it actually drive growth? And what are the technology requirements for a successful RDC strategy?

Ed Bacheilder, Dove Consulting

Remote deposit capture (RDC) has quickly become one of the most important competitive differentiators in commercial banking today and can be a formidable marketing tool. It has the potential to do for business customers what ATMs and debit cards have done for retail customers through self-service and convenient 24/7 access. Savvy banks already have embraced RDC to acquire new customers, expand their service area footprint, gain low-cost deposits, and grow fee and net interest income -- all while reducing their internal check processing costs.

The keys to success with RDC include proactive marketing to the bank's largest check depositors and customers who have difficulty getting to a branch to make deposits. There are strong first-mover advantages, so getting a system deployed at your best check deposit customers' locations is a marketing imperative. RDC is a "sticky" product that adds value for customers. However, scanners must work out of the box on Day 1. Customers need to be taught how to operate the scanner, handle exceptions and deal with any downtime situations. Customer service, system uptime and equipment performance will be absolutely critical.

RDC is poised for explosive growth over the next several years as deployment ramps up from approximately 200,000 scanners operating today. Industry experts are forecasting that more than 100,000 new scanners will be deployed this year, which translates into more than 400 devices needing to be set up each business day.

Over the next two years, RDC will be targeted toward deposit and revenue growth. After that it likely will become more of a cost-saving method as paper-check deposit costs rise, availability schedules degrade and the number of paper checks cleared declines sharply. We can anticipate that banks will begin to restructure their branch operations as check volumes deposited at branches decline.

Taylor Vaughan, First Tennessee Bank
First Tennessee Bank Expands Deposits Footprint
First Tennessee Bank launched remote deposit capture in 2003 as a way to expand its deposits beyond its traditional footprint.
Bob Meara, Celent
More Banks Adopting Remote Deposit Capture Solutions
A growing number of financial institutions have embraced remote deposit capture as a viable small and midsize business solution.
Danne Buchanan, NetDeposit
Banks Will Face Competition in the RDC Space
Third parties that can decouple remote deposit capture from the deposit relationship may pose a threat to banks in the payments space.