|
August 2009
Looking Beyond the Averages when Offering RDC to Small and Home Businesses
While the economy has been putting
pressure on banks and their customers, banks still want to attract and
retain desirable customers. In tough times its more important than ever
to avoid working with averages and instead to target desirable types of
business with the right products. Remote Deposit Capture (RDC) has the
potential to be the right product for some types of small and home
businesses.
When we use averages for small businesses and home businesses we miss
important texture. These businesses tend to think of themselves first
in terms of the business they are in rather than that they are small.
When we use averages we:
1. Mix non-cash businesses in with businesses that also need to deposit cash, and hence go to the bank; and
2. Fail to recognize that the average size of deposited
check varies significantly with industry, and consequently how large
the business is in
revenue and how valuable an RDC service is to them.
A person selling a consumer product might have an average check size of
under $100 and also be receiving cash; while attorneys, consultants,
accountants, engineering firms, real estate offices, and manufacturers
can have average check sizes in the thousands of dollars and not
receive any cash. Just because a customer deposits only a few items
doesn’t make them a non-attractive customer, or a poor candidate for
RDC.
Surveys show small businesses have a strong awareness of RDC and it
benefits. They place a higher per transaction value on the benefit than
higher volume depositors, because the time go to the bank doesn’t
appreciably vary with number of items to deposit, and the deposit is
often made by someone more highly paid than a clerk.
After identifying the right customer segments, the next step is
deciding how to profitably deliver the service to those small and home
businesses that want it and are willing to pay for it. A look at how
RDC evolved my help.
RDC was largely an outgrowth of check image clearing, and was developed
by transaction professionals with a volume orientation. Check capture
devices, even the low end ones, were expensive. Banks largely started
by offering the service (the RDC name came later) to high volume
depositors. It was also offered to businesses that demanded it. Some
banks started offering RDC in order to satisfy an important customer.
"Branchless" banks, with limited existing deposit taking options,
started looking at RDC as a better way to serve existing customers and
attract new ones. They needed a low cost delivery solution in keeping
with what customers would pay or they could pay themselves from the
savings from not having a costly branch network.
Banks wanted to avoid for themselves and their customers the high cost
of a dedicated check scanner. There was also concern over the
complexity of existing PC based solutions, managing distribution and
maintenance of devices, and the need to provide customer technical
support.
The idea of using devices the customer already owned emerged.
Lighthouse Consulting Group filed in 2005 a patent application for
using fax machines and general purpose scanners for RDC. USAA started
offering a service where the customer used their flat bed scanner to
capture check images. A number of manufacturers began offering very
basic lower cost scanners for use with the customer’s PC. This was
followed by cell phone based capture.
The expectation was that since the customer owned the device, with
minimum training and support they could use the device for check image
capture. Again we need to look beyond the averages. Device availability
varies with industry and size of business. A very large percentage of
small businesses with employees of all types have a fax machine. Multi
function devices are more prevalent in home businesses and the very
smallest businesses. The perceived level of convenience of use varies
amongst alternatives based on check volume and how their use integrates
into the business. What is convenient for a single check is not for 10
or 100.
In these trying times RDC can be a tool for customer attraction and
retention, but one must look beyond the averages and look at the
characteristics of potential target segments — number of checks
deposited, average check size, types of capture devices the customer
already has, how the proposed deliver mechanism fits into their
business model, their perception of convenience, and their willingness
to pay.
|
