From its start, Remote Deposit Capture (RDC) has enjoyed tremendous growth in adoption, cementing its place as one of the most successful product introductions in the history of the banking industry. And by all accounts, there’s plenty of upside growth ahead for RDC, thanks to new offerings targeted to the SMB market. The SMB market holds the key for banks to stay competitive and grow their customer base. What’s more, the millennial business owners within this segment have specific demands on how they want to bank, and RDC technology is at the forefront.
Embracing SMBs will allow financial institutions to attract new customers, protect their existing customer base, and promote self-service to reduce costs. Although new capture channels may introduce risks, there are plenty of options to manage and mitigate. Institutions will need to be prepared with tools and strategies for managing the introduction of potential risk. Internal procedures alone won’t scale and won’t be able to handle the increased volume that will come from SMB customers. Automated risk monitoring functionality will remain an essential component for financial institutions that want to maintain a homeostatic environment of compliance in light of this next projected mass-market RDC adoption.
Are financial institutions ready? It depends.
RDC systems have evolved to meet the needs of banks and their customers. Systems have moved beyond simply the mechanics of scanning checks and transmitting the data. They have become information resources, tracking the number of checks deposits, the number of re-scans required and calculating the billing at the start of a new month.
Despite ongoing innovation, legacy RDC systems beginning to show signs of wear and tear can be a detriment to banks, especially during periods of rapid growth. In the case of this bank that grew 59 percent in one year alone, a legacy RDC system’s inability to keep up caused significant pain points. Expensive and complicated, the systems came in different flavors for merchant and remittance capture. It wasn’t always clear which version best fit a particular customer’s needs. The systems had to be swapped out with new software, new scanners and training in about 25 percent of the cases. At times, it took two replacements before the third and final choice proved to be the right version. In any case, by then the bank had run out of alternatives to offer their business customers.
When it comes to experiencing the pain points caused by a worn out legacy system, a bank’s sales force typically gets a front-row seat. Complexity, extended installation timelines, and fear of the systems not functioning as promised can foster reluctance to offer solutions to prospects. Through a series of branch acquisitions, the bank was exposed to employees that were familiar with other remote deposit systems. The bank eventually concluded it was time to explore new options and look for an RDC provider.
This is just one of many examples that illustrate how outdated legacy RDC systems can be the root cause of many issues. For banks looking to go after SMBs, these issues should be proactively mitigated, sooner rather than later. The fast emergence of business mobile RDC can certainly feel overwhelming. Without doubt, financial institutions must be comfortable with offering this new technology. But there may be even more danger in allowing fears to paralyze your institution. With so much as stake, financial institutions can’t afford not to take the risk. Erring on the side of caution when doling out remote capture products to select customers only may be prudent while you’re adjusting to the newness of the channel, but being overly cautious long-term will ultimately cost you customers.
The other side of the fence
Banks shouldn’t let apprehension and unknowns about migration stop them from taking the opportunity to ask prospective providers what extra resources and services they offer and compare all options to decide what would work best for their organization. In fact, 1 in 5 banks may change RDC vendor relationships.
So what should financial institutions consider when looking for greener pastures in the realm of RDC providers? An appetite for innovation, for starters. Much like banks, providers are not exempt from keeping up with industry demands for continuous investment, especially when the greater payments landscape is always changing.
Beyond investing to enhance their platforms, the concept of providers offering additional services to help their clients succeed is becoming the new normal.
The SMB market opportunity won’t exist forever. If done correctly, RDC is a great foot in the door for banks to start capturing more than their fair share of this market’s revenue.