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The Green Sheet

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Mobile RDC is catching on with small businesses, but strategic considerations are a must.

Thursday, March 16, 2017 ( / Patti Murphy)

Mobile RDC is a big hit with consumers and financial institutions. Mobile RDC adoption among businesses, however, is proving more challenging.
Available data overwhelmingly points to the fact that mobile RDC is a big hit with consumers and financial institutions. Celent estimates that nearly 70% of financial institutions (all but a few thousand of the smallest banks and credit unions) offer consumer mobile deposit products.  Mitek, the leading provider of mobile check capture technology, reports that over 5,500 FIs worldwide now license that technology to serve an estimated 70 million end users.
Mobile RDC adoption among businesses, however, is proving more challenging. A 2016 survey of small and mid-sized business by Celent found that although more than a third of the smallest firms (annual revenues under $250,000) use mobile deposit, fewer than 20% of the largest ($1 million in annual revenues and above) use the product. Also many of the smallest firms are being served consumer mobile deposit platforms, explained Bob Meara, Celent Senior Analyst
One reason for slower than expected adoption of mobile deposit by businesses has been broad adoption of desktop RDC, particularly among companies receiving a lot of check payments. Celent’s survey found 53% of those receiving 20 checks or more a day, and 35% of those with 11 to 20 checks a day, are using desktop RDC. Migrating any or all of those items to the mobile channel would require process changes.
FI risk concerns also stymie adoption. “Too often the way banks and credit unions look at risk is too black and white,” said Robb Gaynor, Chief Product Officer, Malauzai Software. For example, implementing hard and fast rules limiting mobile deposits (daily and monthly totals).
Solution providers have been addressing these and other concerns. “The ability to segment users and address risk is extremely important,” said Xan Kasprzak, Vice President, Risk Management and Client Relations at Ensenta.” Ensenta has developed a business RDC platform that works seamlessly across mobile, tablet and desktop scanning environments, and incorporates advanced tools for monitoring and mitigating risks.
Patelco Credit Union, a $5 billion asset credit union headquartered in California saw its deposit volume climb 70% and deposit values grow 51% across all channels. And it accomplished this without triggering an avalanche of fraud, increasing staff or running afoul of regulators – a feat Kasprzak and Lani Apolonio, Vice President of Operations at Patelco described in a presentation at WestPay’s 2016 Payments Symposium. Using configurable, parameter-driven risk filters, Patelco can now examine select checks from all deposit channels in real time and is only has to manually review flagged items.
4.5 Million Potential New Users
Using U.S. Census Bureau data as a baseline, Celent estimates that just over a third of SMBs with revenues over $25,000 (about 4.5 million companies) use some form of RDC. It puts the future market opportunity at 4 million SMBs with revenues over $25,000. If that projection is realized, two-thirds of companies with revenues over $25,000 eventually will be using RDC.
But it’s not going to happen overnight. “It’s going to be a while before deployment gets much farther below the top 100 banks,” said Meara
One challenge for financial institutions targeting this market is that it is very diverse, with widely varying degrees of sophistication. A recent study by Viewpost, for example, revealed that 18% of SMBs do not use accounting software and just 21% have integrated accounting software with invoicing and payment systems.
Strategic Considerations
While there is no universal feature set that can help FIs attract more mobile deposit usage by business customers, there are some basic considerations. Here’s a top 5 list, gleaned from interviews, research and insights from educational forums.
First, don’t try to be all things to all small business. Know your customers, and focus on those with strong business cases, like companies with large numbers of checks coming in from the field. “There are a significant number of small businesses in the U.S. which regardless of size aren’t all that concerned about mobile deposit attributes. Existing solutions are tolerable, especially if they’re free,” as is the case with most consumer mRDC products, Meara noted.
Second, multi-channel capture, particularly solutions with  mobile and desktop capture functionality. There are many businesses with field staff collecting checks and mailed and office collections. Being able to integrate these channels and present a unified view of collections is something corporate finance offices want.
Third, advanced functionality, such as the ability to capture multiple checks in a single mobile session. It’s one of the most important distinctions between consumer and business mobile deposit needs. Also, deposit limits that better accommodate business cash flows.
Fourth, enhanced data flow and integration support. Just capturing checks is not enough. Business RDC solutions must be able to accommodate the exchange of information associated with individual transactions and support seamless integration with online banking and cash management, and with back-office accounting systems.
Fifth, dashboards for monitoring RDC activities, managing cash positions and other cash management tasks.

Learn More, Complimentary Webinar on April 13
Register today for a complimentary webinar on April 13  “Positioning Business Mobile Deposit to Win with Small Business” sponsored by WAUSAU, a Deluxe company. Join Bob Meara of Celent and Jason Olson of WAUSAU as they share findings from in-depth research among US small businesses (SMBs).

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