July 20, 2007

Despite the hype, banks are not approaching remote deposit capture (RDC) with the fervor many believed existed, two recent reports indicate. Rather than aggressively push RDC to attract new customers, banks' RDC-related strategies are largely focused on retaining existing customers, say experts.

"Relatively few banks appear to be taking the matter aggressively," says Celent senior analyst Bob Meara, author of the Boston-based research firm's study on RDC. According to Celent, 36 percent of banks offer RDC but only 2 percent of corporate clients have adopted it.

Meara argues that banks are missing an opportunity to entice customers with the value-added service of RDC. "As a group, banks have been fast to implement it. But you'd think they'd be more aggressive on the client [adoption] side," he says.

"You hear so many announcements about RDC, but there have been no significant deployments," contends Financial Insights senior research analyst Dana Gould. According to his research, about 40 percent of banks have RDC capabilities. "Small and midsize banks see RDC as a great strategy so they won't have to open new offices," says Gould, who contends that only a minority of banks see RDC as an opportunity to gain new customers.

Both Gould and Celent's Meara point to banks' defensive RDC strategies as a reason for the slow adoption of the technology among customers. "RDC is a sticky product, so it is a defensive play," says Meara.

Another factor slowing client adoption is the fact that many large banks market RDC only to their big customers, Meara notes. "But there are millions of smaller customers that haven't been shown this technology yet," he says. It is in that segment that banks will see greater volumes in adoption, Meara asserts.

A further impediment to adoption of RDC involves the rapidly changing technology itself, Meara adds. "Early adopter banks were acquiring first-generation solutions for their clients," he explains. "If you're a large bank and want to move to the new generation of RDC technology [which is largely Web-based], ripping out the existing architecture isn't attractive. So you'll still see a lot of thick-client solutions out there."

Still, "Banks should see RDC as an opportunity and take it seriously," Meara says, "because the competition is coming."

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