Creative Payment Solutions (CPS), a subsidiary of BB&T Corporation (Winston-Salem, N.C., $101 billion in assets) today rolled out OnSite Deposit, the latest entrant in the burgeoning field of remote deposit capture.
The key design point for CPS has been to make the product foolproof for the end customer. "A lot of the controls that we have put in place as an industry over the years, particularly in the item processing world, are being pushed out to the local convenience store or the small mom-and-pop," says Harold Williams, senior vice president and chief administrative officer, Creative Payment Solutions. "While they're great at running a convenience store or some other type of business, item processing, checks, MICR [Magnetic Ink Character Recognition] and code lines are all foreign to them."
Accordingly, CPS has incorporated several validation routines into its client-side software, using technology from Carreker Corporation (Dallas). "Carreker's application provides image inspection, code-line validation [checking for a valid bank routing transit number] and [debit-to-credit] balancing at the desktop," says Williams. "Others in the industry are performing those same functions, but they're performing them in the back office."
By performing these validation routines at two discrete stages in the process, CPS hopes to encourage adoption among customers that may still harbor a mistrust of the new technology. "The client does have the opportunity to inspect the images up front, so that they have a comfort level that they are passing a quality image to us," explains Sidney Lee Leslie, vice president, commercial deposit product management, BB&T Treasury Services. "Then, we can obviously verify that on the back end as well."
The scanner software interprets the MICR line and verifies that there's a signature on the check. Furthermore, the software includes courtesy amount recognition (CAR) and legal amount recognition (LAR), which translates the handwritten check amount into a digital value. So far, CPS has achieved a 68 percent "read rate" in a production environment.
Also, the software can detect whether a check already has been scanned in a prior pass, without having to rely upon an error message from the bank's back office. "If a client accidentally picked up a check and put it back through the transport, they would be notified immediately," says Leslie.
For many businesses, the ability to perform remote item capture will have a transforming effect. But remote item capture does have its limitations. "It really is a product that's targeted to clients who deal mainly in a paper environment, that are not operating with a large amount of cash," says Leslie. "Professional services and wholesale-type environments -- be they construction companies or otherwise -- are very excited about this type of opportunity."
Another consideration is the comfort level that the bank has with its client, considering the potential for abuse. "You'd want to have a comfort level with the creditworthiness of the client," adds Leslie. "There are obviously concerns about the appropriate use of the device."
Cash and Carry
Moving up the scale to grocery stores and big-box retailers, CPS and BB&T intend to roll out a new service over the next several weeks called AllSite Deposit. The product is geared towards retailers that deal with both large numbers of checks and a steady inflow of cash. "Using two strategic partners, we will be able to pick up cash and check deposits, and take those virtually anywhere in the U.S.," says Leslie. "This allows us to expand into larger environments and to fully bank some of our larger clients today."
Within BB&T's 11-state footprint, armored carriers will bring the checks to a BB&T branch for processing. Outside of its footprint, the bank will contract with a separate partner to perform third-party item processing. As usual, the armored carriers will count and prepare the cash in both cases.
The innovative combination of imaging technology and third-party partnerships promise to reshape the once-sleepy business of taking bank deposits. "The deposit world has seemed somewhat of a commodity product for a number of years," remarks Leslie. "With some of the new legislation, it has been really exciting with all of the innovations that we're going to be able to take advantage of."
Such opportunities formed the impetus for the creation of BB&T's CPS subsidiary in March 2003, led by knowledgeable BB&T bankers. "Everything in the post-Check 21 world is really a core competency of banks, and of BB&T in particular," says CPS's Williams. "The management staff we've got at CPS has about 14 years tenure on average, with some of us having 23 to 24 years worth of item processing background."
CPS began to bring new products to market in the middle of 2004 and has been able to use BB&T Bank as a test bed and an initial customer. Foregoing a direct sales force of its own, CPS has partnered with MoneyGram International (Minneapolis) to bring CPS's products to the broader marketplace. All of its products are offered using an ASP (Application Service Provider), pay-as-you-go model, white-labeled with the brand of the financial institution customer. CPS's current product line also includes return deposit item processing, telephone initiation of checks and online bill payment aggregation.