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The Green Sheet

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Key Benefits of Remote Deposit Capture for Banks

Banks can benefit in numerous ways from deploying a Remote Deposit Capture solution. Below is a detailed list of key benefits. Be sure to also read about the additional issues a bank should consider when providing an RDC Solution. RDC Calculator Use the RDC Calculator to determine the value RDC can create for your financial institution.

Reduced Transportation Costs

Banks can substantially reduce their transportation costs both for bringing checks from their branches & ATMs to their processing facilities, as well as their forward clearing costs. A few examples include:

  • ATM Deposit Pickups: If your bank has an ATM network with ATMs which accept deposits, the courier costs to pickup those daily deposits can be very costly. Often, attempts are made to justify those costs based upon the need for cash replenishment. Most of the time, cash supplies are sufficient to last more than a single day. Remote Deposit Capture at the ATM allows the bank the opportunity to reduce the daily trips to the ATM from, for example, 5 times per week to, let's say, 3 times per week. Assuming each trip to the ATM costs the bank $80, Annual savings per year per ATM could be $8,320. If this bank has just 120 deposit-taking ATMs which require courier pickups, annual savings would be over $1 Million!
  • Branch Transportation: The complete elimination of branch transportation is debatable. Until all documents within a branch can be captured (Imaged), the need for daily branch pickups will continue. However, the day of the fully image-enabled branch is quickly approaching. Until then, what is possible is reducing the number of pickups per day. Bank branches often have multiple pickups throughout the day in order to be able to balance their operational workflows better. If the branches could capture the images of the checks and associated control documents and transmit (instead of transport) these items to central operations, there is a clear opportunity for cost savings. Branches with 3 daily pickups may be able to reduce the number of pickups to just one end-of-day run. Assuming 1 branch pickup per day could be eliminated and each pickup costs $100, a bank with 100 branches could see annual savings of over $2.5 Million!
  • Incoming Customer Cash Letter Deposits: Many banks, especially those with international clients who need to clear checks drawn on the USA, pay for the transportation of those items to the bank's processing facility, and into the check clearing networks in the USA. These banks spend tens of millions of dollars per year on couriers who pickup checks at the client location and bring them to the bank for processing and clearing. Offering an RDC service to these clients can substantially reduce these costs.

New Revenue Streams

Remote Deposit Capture can open the doors to a whole new set of revenue streams for banks. Here are a few examples:

  • New Clients: As with any new service, An RDC product can attract new clients who otherwise would not have banked with your institution.
  • Larger Wallet Share with existing clients: An RDC service can enable your clients to consolidate their deposits with your bank, regardless of geographic coverage.
  • Additional Products: New and Existing clients will be more likely to utilize additional products from their RDC service provider. A couple examples:
  • ACH & Checks: Remote Deposit Capture can clear items either as dictated by the Check 21 regulations, or as ACH transactions (given certain parameters). Corporations have sometimes separated which banks receive the ACH files and which ones receive the physical checks. With the right RDC platform, this separation no longer needs to occur.
  • Liquidity Services: If a corporation is able to consolidate their depository accounts with your banks, it is likely they would be interested in, and have a need for, enhanced liquidity services. Larger volumes of checks often results in larger balances left in the account.
  • Elimination of Geographic Boundaries: Banks which offer a Remote Deposit Capture service can now accept deposits from customers outside their physical footprint. For example, a corporation with locations in 5 states may receive 100 checks per day at each location. If your bank was located in only one of those states, you'd likely only receive deposits from the one corporate branch in your state. With an RDC service, that corporation can now make deposits with your bank from all 5 of their locations. In addition, an RDC program is a much less expensive way for a bank to grow their deposit base when compared to building or buying additional bank branches.

Reduced Processing & Clearing Costs

  • Forward Clearing Transportation cost reductions: Check couriers used for forward clearings often charge a standard pickup fee plus applicable weight charges. According to our research, this cost averages about 1.5 cents per item. Clearing checks as images can clearly reduce these fees. For every 100,000 items your bank sends for forward clearing per day, the savings could be over $378,000 per year!
  • Image Processing Cost Saves: The Federal Reserve charges less to clear items as images vs. as paper or IRDs. Per the Fed's pricing schedule, Image-based clearing costs about 5 cents per item less than IRD-based clearing. For every 100,000 items your bank sends for forward clearing per day, the savings could be over $1.2 Million per year!

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