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The Green Sheet

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Remote Deposit Capture Issues to Consider for Banks

Competitive Advantages


Many experts in the industry view a Remote Deposit Capture service offering as a "must-have" for any commercial bank. Those banks who offer an RDC service will have a distinct competitive advantage over those who do not when competing for corporate depository relationships.

At some point in the future RDC will be as ubiquitous as online banking is today. When developing and enhancing your RDC service offering, it is important to align RDC product functionality and efficiency with your bank's operational capabilities, client base and strategic goals. Below is the RDC Matrix, developed by RemoteDepositCapture.com, which can be used to help understand the interaction of strategies, product functionality & efficiency.


The RDC Matrix - What is your bank's quadrant?

The RDC Matrix - What is your Bank's Quadrant


The RDC Matrix depicts:

  • How external and internal business drivers can influence a banks' competitive (offensive) strategy or (defensive) reaction.
  • How offensive or defensive competitive strategic positioning is likely to influence the tactics (product functionality) used in the marketplace
  • How the specific tactics used to compete in the marketplace can impact operational efficiency and product functionality.

It is critically important to ensure that whichever quadrant you bank falls into, you'll still be able to meet the needs of your core client base. In general, Large Corporations look for a solution which has "rich" functionality, yet is competitively priced. At the other extreme, most small business clients look for a simple solution, and generally pay more on a per item basis. Therefore, if the core corporate clients of your bank are middle-market clients & above, you'll want to ensure your RDC solution has better than average functionality, can help your bank achieve economies of scale, and provide competitive pricing to your clients.


 

Strategic vs. "Convenient" Client Relationships


One of the benefits a corporation can enjoy as a result of using an RDC solution is the ability to consolidate their banking relationships. From a bank's perspective, this presents both opportunities and risks; opportunities in the form of winning new business or increasing business with current corporate clients, risks in the form of possibly losing current clients to other banks who provide an RDC Solution.

If a corporation is going to consolidate their depository banking relationships, they will likely carefully consider which relationships are strategic vs. convenient. Most depository relationships are born of convenience - the bank around the corner. This relationship minimizes the time it takes (and therefore also the transportation cost and risk) to make that trip to the bank. With RDC, however, making an electronic deposit takes the exact same effort whether the depository bank is around the corner or across the country.

According to our own experience, as well as research performed by the AFP, Treasury & Risk Magazine and others, the vast majority of most large corporations select their core cash management banks based upon the credit relationship they have with those banks. Traditionally, the only exception to this rule has been the localized depositary relationships - which have existed primarily out of necessity / convenience.

Which banks would a corporation then consider to be strategic? -Relationships where the corporation can get the best pricing, availability, information reporting, can impact other cash management services such as ACH, funds transfer, payroll and liquidity products and can help solidify relationships with core credit-providing banks.

Additional Sections currently in development will include:

  • Deployment
  • Service & Support
  • Beyond the silo..... and more.

 



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