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The Race is On: RDC Solution Providers Up their Games to Help Drive SMB Adoption

Thursday, December 13, 2018 ( / Patti Murphy)

RDC solution providers up their games to support SMB market expansion opportunities.
Opportunities to drive greater RDC adoption among small and mid-sized businesses loom large, with millions of SMBs still waiting on the sidelines, or using consumer RDC products that don’t really fit their business needs. Solution providers, and hardware manufacturers, too, are upping their games to help FIs in the race for market share.

“A major focus for us in 2019 is going to be on creating solutions that meet the needs of small businesses,” said Mehul Patel, Senior Director, Software Strategy and Services at Deluxe Corporation. Of paramount importance, Patel explained, will be solutions that are cost-effective for financial institutions to offer. “The sheer number of small businesses [out there] demands that the solutions financial institutions offer have a low cost of ownership,” he said.

The small business market is large and amorphous. The Small Business Administration (SBA) counts 30.2 million small businesses that span the gamut of industries operating in the U.S. The SBA’s definition of a small business varies somewhat by industry, and it can overlap with some definitions of mid-sized companies. The SBA considers manufacturing and mining companies with fewer than 500 employees and non-manufacturing firms with average yearly receipts under $7.5 million to be small businesses.

While consumer adoption of RDC has been brisk, particularly with the advent of mobile RDC, and significant inroads have been made in the large corporate market, SMB adoption has lagged. A poll of visitors, presented earlier this year as part of our Poll Central series, suggested that only about 4 in 10 SMBs would be using RDC by the end of this year. (See article here.)

It’s not for lack of a good business case. An analysis prepared earlier this year by revealed that banks and credit unions could generate an estimated $1.56 billion in new revenues by moving just 30% of SMBs to mRDC and assessing $15 monthly service fees. That’s on top of $1.25 billion in yearly operational savings from moving these deposits from branches to the mobile channel. (See article here.)

Not just any mRDC products will do. A report published in November 2017 by Aite Group identified several must-have functionalities that will drive business mRDC adoption, for example. Among them: the ability to record payment details (e.g.: invoice numbers) with deposits; the ability to capture multiple checks in a single transaction, or non-check items; and integration with accounting systems and lockbox workflows. “Small business need more capabilities from mobile capture than most banks are providing. Their needs more closely mirror those of commercial customers than they do consumers,” said Christine Barry, Research Director at Aite, and author of the report.

While many FIs offer mobile deposit to businesses, most are repackaged consumer offerings that lack the kind of capabilities SMBs would willing pay for, Barry wrote in 2017 report, Unlocking the Revenue Potential of Business Mobile Capture. Results of the 2018 Mobile Deposit Industry Study suggest this remains the case. Among FIs participating in the study, 72% offer mRDC to SMBs, but only 10% of those FIs’ mRDC applications allow users to enter additional information such as invoice numbers. (Click here to view the  2018 Mobile Deposit Industry Study webinar and download the PDF presentation.)

Addressing SMB Requirements
RDC scanner manufacturers and solution providers have long seen promise for expanding RDC adoption among SMBs.

“Ten years ago, following in-depth research on requirements and expectations, Panini designed what was meant to be the ideal unit for small and mid-sized business RDC,” said Francesco Grasso, Corporate Marketing Manager at Panini. That device, aptly named I:Deal, has since given rise to the mI:Deal, a device with onboard intelligence. The mI:Deal “adds the benefits of easier installation, minimized support requirements, and OS- and host-agnostic use, increasing flexibility and even allowing scanner use in mobility,” Grasso said.

“We feel we have a competitive advantage [in the SMB market] because our business mobile capture app is not a version of our consumer app,” said Kevin Moland, Director of Product Strategy for the Enterprise Payment Solutions Division at Jack Henry and Associates. “It’s actually a companion app for our desktop RDC product.” Jack Henry supports 2 separate RDC product lines: one under the Jack Henry moniker; the other it acquired with the purchase of Ensenta, an early entrant into the business mobile deposit space. The solutions include features like multi-check capture, real-time risk mitigation and straight-through processing, Moland explained.

Moland said Jack Henry is working on several enhancements, with an eye to improving the overall value to FIs of offering business mRDC. “We’re tweaking it to make it clearer and easier to use, and anything else we can do to expand the usefulness of the app,” he said.

Deluxe is convinced a key to driving SMB adoption of RDC will be lowering the cost to FIs of deploying RDC hardware and software solutions. Deluxe’s RDM product line includes network scanners that are easy to install and require little hand holding. They can capture single checks and batches, as well as remittance documents, and other documents and payment types. Planned enhancements include an expansion of APIs to support things like customer self-enrollment, and driverless scanners which have a proven track record for reducing support and help desk calls, Patel related.

“As financial institutions go downstream they can’t expect to get the same fees [for RDC] as they do from large corporate customers. To displace that revenue compression they need to lower the cost of ownership,” said Patel.


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