December 13, 2010

Remote deposit capture has been a treasury management product offered by financial institutions in exchange for fee revenue. But competitive pressures, growth in self-service channel preferences, and relentless cost reduction demands are vaulting RDC into the consumer mainstream, according to a new report, The Future of Consumer RDC: Going Mainstream, from Celent, a Boston-based financial research and consulting firm.

Key findings of the report include:

• Although nascent, consumer RDC using both desktop scanning and smartphone approaches is destined to grow rapidly. Beginning with USAA in 2006 and over two hundred financial institutions since, attitudes toward offering consumers RDC capability have markedly changed. In part, the highly advertised launch of Chase Mobile Deposit in August 2010 may have had a significant influence. (Read about a credit union that beat USAA to the punch with its iPhone RDC app.)
• Consecutive annual surveys conducted by Celent in August 2009 and September 2010 show a doubling in planned adoption of mobile RDC from 26 percent of surveyed financial institutions planning or considering a solution in August 2009 to 51 percent in September 2010. FIs will offer mobile RDC to both consumers and businesses. Celent expected more large bank initiatives to be announced later this year, but the bulk of activity will occur in 2011.
• Image exchange adoption continues unabated, with nearly 97 percent of U.S. financial institutions receiving electronic images. This growth in image exchange coupled with the decline in check usage has placed enormous pressure on paper-based check processing costs.
• Eighty percent of U.S. financial institutions now have branch capture solutions completed or in progress. Celent expects 95 percent of U.S. financial institutions will have implemented branch and/or teller capture solutions across some or all branches within the next three years.
• Small-business RDC client adoption remained unremarkable over the past year. For the most part, financial institutions (banks in particular) continue to offer small business RDC products requiring specialized check scanners that must be deployed by financial institutions and often purchased by users. The difficult economy, combined with rather stiff monthly fees associated with many RDC products, have squelched demand in this arena. The coming year will see a step change in the market, however, as FIs offer ultra-low-cost alternatives to small businesses using TWAIN-compatible scanners that most small businesses already have in their offices.
• Many financial institutions are turning their attention to serving customers. This is reflected in an upsurge in vendor contracts through 2010 and lengthening implementation queues for these products.

Here are some other factors that will result in mainstream use of consumer RDC over the next few years:

1. New desktop scanners produce a step change in solution cost (and resulting pricing) that will, finally, make RDC broadly viable for small business and consumer segments.
2. Consumer RDC solutions have been adequately vetted to show the technology is viable, with acceptable user experience and back-office operational results.
3. Most financial institutions have endured RDC audits and lived to tell. Sound risk management practices alongside modern vendor solutions result in acceptable risks.
4. With large bank product launches, consumer awareness of RDC is on the rise, and every indication suggests it's a winner. Retail RDC appears to be finally going mainstream.