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June 2008
Oil Prices, Credit Crises - Alternate Routes to Remote Deposit Capture Growth
Today's challenging environment of
increasing oil prices and stressed financial institutions is impacting
remote deposit capture (RDC) especially in the small business market.
On the one hand, RDC is becoming more attractive to businesses and
consumers as rising gas prices make a trip to the bank more costly. On
the other hand economic uncertainty is making businesses less willing
to invest in a dedicated check scanner costing from $500 to $1,500 and
to enter into long term service commitments.
Many banks, who in the past might have provided the equipment free to
good customers/prospects, are facing a crises of their own, with
growing loan losses, declining capital, declining earnings, falling
stock prices, laying off employees and closing branches. Not the kind
of environment conducive to making large investments, and $500 to
$1,500 for a large number of customers is a big investment for any size
institution.
There are however some emerging solutions that can put RDC in the hands
of small businesses and consumers without the need for large capital
expenditures by either small businesses or banks. These solutions
involve using equipment small businesses and consumers already own —
fax machines, and general purpose scanners. While not as elegant as
solutions based on dedicated scanners, and requiring somewhat more
human intervention; they are not investment intensive and are cost
effective for all parties. Before the current economic crunch,
solutions using a customers existing equipment made sense. In today's
environment they are even more attractive.
A consumer RDC solution using a PC and flat bed canner was introduced
by USAA over a year ago. Earlier this year Fiserv announced a similar
solution available to its bank customers. Other service providers have
similar offerings in the works. A number of patents have been filed for
using fax machines as the image capture device, including one by
Lighthouse Consulting Group, and development efforts are underway.
As customers often only have a fax or a flat bed scanner, but not both,
it is likely over time that in order to reach all its target markets
banks will need to offer RDC solutions that accept fax, flat bed
scanner, as well as dedicated check scanner input. The current economic
environment may encourage banks who want to grow RDC to embrace these
alternative input devices. This would create a win-win situation for
the financial institutions and their customers.
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