Remote deposit capture is not a new technology. In fact, as a practice, it first became legal in the United States in 2004 — the same year Facebook launched and three years before the first iPhone.
In 2004, RDC was used on desktops as a way to deposit checks to financial institutions without visiting a branch. In 2016, the purpose of remote deposit is much the same; however, better technology and higher degree of customization have led to a much superior, almost indispensable product for credit unions.
Plus, remote deposit is now a mobile-first product. In fact, it never gained serious traction as a desktop option for credit union members, only in the back office at credit unions themselves and to a limited extent, businesses serviced by credit unions.
“Now, it’s a must-have,” says Robb Gaynor, chief product officer for Malauzai Software, an Austin-based software developer which offers remote deposit in its mobile banking application. “You can’t offer mobile without it.”
What Can Remote Deposit Do For You?
According to Gaynor, at his company’s roughly 275 community bank and credit union partners that offer RDC as a part of mobile banking, transactions totaled approximately 160,000 for all institutions in August.
That may sound small, until one considers the cost savings that RDC can have for an institution.
Though the degree to which depends institution to institution, mobile transactions are cheaper than those processed in branch. That’s common sense. Moving more business onto digital channels requires less investment in people and buildings, and a reduction in these costs can be reallocated in other areas of the credit union.
However, says Gaynor, just because that’s common sense doesn’t make it reality. For most institutions, these cost savings are still theoretical because they are not prepared to make reductions in staffing or brick-and-mortar.
“How many financial institutions are going to close a branch or take out employees to save cost? Who knows?” he says.
Beyond the potential for cost savings, credit unions don’t have to limit remote deposit simply to deposits. Today, technology exists that allows credit union members to take pictures of bills that can then be paid through the mobile app. A credit union can partner check deposit with bill pay to create and market an “integrated mobile strategy,” as Gaynor says.
As far as best practices go, Gaynor offers three:
Look for the best technology.
Market, market, market.
In most remote deposit transactions, a member manually snaps a picture of a check. That works, but there’s still friction. Poor image resolution results in a low rate of acceptance for deposited checks. To improve resolution and increase rate of acceptance, try a picture technology that allows members to simply use the phones to hover over the check until the right resolution is reached and the picture is automatically taken.
As for marketing, Gaynor says, just because you have this great technology doesn’t mean members will find it. Institutions must find the time and real estate to market.
“When institutions update their apps, launch new features, they often come back and say, ‘Why isn’t anyone using it?’” he says. “Well, you didn’t tell them.”
Who Actually Uses Remote Deposit?
The average member uses remote deposit 2.2 times per month, according to Malauzai data from approximately 800,000 active users (or 25% of all potential users), and the average deposit is $430. Credit unions with best-in-class daily active user penetration typically see 50% usage per month, Gaynor says.
But those are averages. Usage will swing member to member, and certain groups will use the technology significantly more often than others.
“When we looked at the data at first we were like who are these people?” Gaynor says.
Turns out, they are small business owners. So while average monthly user transactions sit slightly higher than two, average transactions for small business owners can range from seven to 15 times per month, says Gaynor, but consistently above 10. In addition, in August, the average deposit for small business owners was $1,100.
The insight can be valuable to credit unions. Odds are, small businesses using their phones for remote deposit have low enough revenues and purchase volumes that the need for the traditional desktop scanner doesn’t exist.
And if that’s the case, Gaynor says, they probably don’t have relationships with larger banks because of their size. Credit unions are then well-positioned to extend this relationship with other services like ACH or wire transfers, or products like loans and credit cards. But it all stems from awareness.
“If we find them we can do different things for them,” Gaynor says.