This October, Frankfurt-based Deutsche Bank (US$1.3 trillion in assets) became the latest bank to join NetDeposit's (Salt Lake City) roster of remote deposit capture (RDC) clients. The bank will use the technology for U.S. dollar clearing for its financial institution customers throughout the world, according to a release.
RDC technology enables the electronification of check items, eliminating their physical transport to banks. According to George Stein, head of check services, global transaction banking - cash management, with Deutsche Bank, embracing RDC not only will help the bank's clients, it also is an extension of the bank's efforts to eliminate as much paper handling as possible. "Our clients were looking to take advantage of new functionality, such as faster transportation of cash letters, while we were looking for opportunities to be more efficient in the way that we process these items," he explains.
"Checks will not magically disappear, so we have to optimize how we process them," Stein continues. With this in mind, he relates, Deutsche Bank approached NetDeposit, with which it had maintained a dialogue for some years. "We did our due diligence and felt that NetDeposit was the best match for our needs," Stein states. "We also were impressed by its track record."
But since Deutsche Bank operates differently than many U.S. banks do, Stein notes, NetDeposit must tailor its product to the financial institution's needs. "We are a wholesale bank with an international client base. While we do not have the sheer check volume of some U.S. banks, the value of the items we handle is very significant," Stein says. "As a result, NetDeposit has had to approach our check processing requirements in a slightly different way." The bulk of the bank's check-clearing operations is from U.S. dollar items that come in from its correspondent bank clients globally, says Stein, making RDC an integral part of Deutsche Bank's U.S. dollar correspondent banking franchise.
In addition, RDC, as many banks have discovered, potentially offers opportunities beyond the technology's intended use. "[RDC] is keeping paper away from check-processing facilities," Stein says. "But we can also move certain aspects of our services closer to the clients, and that gives us the potential to become even more competitive."
Checks, Checks Everywhere
Although worldwide check volume is declining, the check processing space still is important, especially since banks' corporate clients still largely rely on paper to make their payments, Stein points out. "In Germany, for example, Deutsche Bank is one of the few banks with a robust check-processing service," he says. "In a market where volume is declining, our volumes are increasing. This is in line with our strategy to be a consolidator. Our approach is to commit the necessary investment to sustain our leadership and support other institutions who are considering exiting this business."
Corporates are likely to keep banks such as Deutsche Bank in the check processing business for years to come due to their attachment to checks, and they should not be forced to change the way they do things, emphasizes NetDeposit CEO Danne Buchanan. "Let them continue to use checks, but make it more efficient for them," he says. "You can't force corporates away from checks. ... So our job is to electronify the process."
Stein agrees. "The solution," he says, "is to make these payment processes easier." **