How Mobile Remote Deposit Found Its Mojo
Author: Lee Wetherington, firstname.lastname@example.org
In my line of work, it’s tempting to defer to conventional wisdom, so it’s a rare joy, a thrill even, to see that “wisdom” challenged by new realities on the ground. Given the ever shortening cycles in which disruptive technologies reach mass adoption, the ability to let go of ‘received truth’ when confronted with new facts is critical.
Over the past 12 months, mobile remote deposit capture has transformed from a marginal, niche application to a technology for the times, and here’s why:
1. The more change, the more options, the higher the premium on simplicity…a 4% premium to be exact. According to Siegel+Gale, U.S. consumers are willing to pay $2.6B for simplicity—an attractive fee income opportunity in the age of Durbin. Having access to everything all of the time everywhere we are via mobile can be overwhelming, even paralyzing, and this pervasive saturation is the defining challenge for today’s time-poor consumer. The antidote? Make it simple. Would you rather know your current balance, or the actual amount of discretionary income available after the remainder of the month’s bill obligations have been met? Would you like a list of transactions, or a graphic summary of what you’ve earned, spent, and saved month-to-date compared to previous months? And what about that one-off insurance reimbursement check you just received in the mail? Would you rather drive it to the branch or just deposit it right now using your smartphone?
2. The fewer the checks, the more important remote deposit capture (RDC). Some pundits see the accelerating decline of check volumes as sufficient reason to second guess RDC. With 96% of checks being cleared electronically via image, why invest further in the automation of a declining method of payment, right? Wrong. It’s just the opposite. The fewer the checks you receive, the more inconvenient and frustrating it is to have to deposit each of them manually. This simple fact, combined with the heightened expectations that accompany smartphones (which will overtake feature phones in the U.S. by the end of the year) is making mobile RDC one of the hottest technologies of 2011. According to Javelin Strategy & Research, one in every four consumers desires mobile RDC, and, since 87% of the 20+ billion checks out there are still deposited in person on paper at the financial institution of first deposit, this party is just getting started.
3. Mobile banking may not significantly reduce expensive branch traffic, but mobile RDC will. Recent studies by Novantas LLC and Forrester Research find that most tech-savvy, "ultraconnected" customers use in-branch services more than their less connected peers. Moreover, these same customers also tend to value their personal relationships with branch staff more than others. These findings lead some to question whether mobile can deliver the potential cost-savings promised by the $.08 mobile (vs. $4.00 branch) transaction. This skepticism makes sense in light of the history of PC-based online banking, which taught us that giving customers a new, convenient channel doesn’t mean they will stop using existing channels. Rather, customers transact more with the financial institution in total using whichever channel is most expedient in the moment for the task at hand. So, yes, mobile banking does not cannibalize branch visits one-to-one, but mobile RDC does. Unlike PC-based online banking (most versions of which today still lack an RDC option), mobile RDC specifically preempts branch visits by allowing customers to deposit checks whenever and wherever the customer encounters the check. And since the majority of branch activity still revolves around checks, mobile RDC is the catalyst not only for significant cost-efficiencies for the financial institution but significant simplicity for today’s time-poor consumers and businesses.
By 2014, according to Javelin Strategy and Research, 100 million U.S. consumers will be mobile banking, and half of these will deem mobile RDC highly desirable. Moreover, creative bundling of mobile RDC with new account offerings may drive new fee revenue opportunities post-Durbin.
In a world where many techs have yet to prove their place, mobile remote deposit has found its mojo.