Louisiana businesses are no stranger to remote-deposit capture technology—the ability to scan a check and electronically deposit its image without making a stop at the bank—that has become available in the past three years.
But what if a customer could take a picture of a check with a camera phone and deposit it electronically into their account? How about scanning a check while stopping at the corner ATM?
Both scenarios now are options based on remote-deposit technology available to consumers. One of the first financial institutions in the country to offer remote deposit for consumers, USAA Bank, released a remote-capture iPhone product in August that allows an image of a check to be sent electronically to the bank for deposit from a camera phone.
USAA spokesman Paul Berry says the application has seen $75 million in deposits since its debut. With only one physical location in San Antonio, Texas, and an extensive online presence, USAA had a competitive disadvantage before 2006 because customers sent in deposits through the mail. That’s when remote deposit entered the picture.
“Now it’s a competitive advantage because of the convenience,” Berry says. “It takes about two minutes to scan a check and make a deposit.”
In order to qualify for a USAA checking account, Berry says customers have to be able to purchase one of the many insurance or credit products that the bank offers. Once they join as a checking customer, he says, remote deposit is free. The basic process involves scanning an endorsed check, which transmits the image to USAA, depositing the check into the customer’s account.
Other banks believe that while the market is indeed shifting to mobile and online banking, remote deposit—complete with bulky scanner—is not necessarily the only way to go.
Regions Bank began offering commercial remote deposit in 2006 and has seen about 20% of clients embrace the service in the past year, spokesperson Joanie Netterville says. A later cutoff time and the fact that businesses no longer have to send an employee to make a physical deposit are more efficient and appealing.
“There’s not a commercial client we have that could not benefit from remote deposit,” she says. “It doesn’t matter if you’re a large client or a small business that takes in a couple of checks a week. It’s just more convenient.”
Netterville says Regions has no plans to implement remote deposit for consumers at this time. Upgrades to online and mobile-banking products, including a concierge service to help new customers set up online accounts that have recently debuted, have been more effective in the consumer market. A Smart ATM pilot program, which includes a check-image-capture feature, also is currently under way in New Orleans.
“Our strategy for the future is heavily invested in technology,” Netterville. “If technology evolves into a better way to do things, we’ll look at it. We’ve certainly made technology a big part of the game.”
Capital One Bank, which also launched remote deposit for commercial and business clients in 2006, saw its adoption rate climb in part because of hurricanes Katrina and Rita, Senior Vice President David Luke says. Because remote deposit can be done from anywhere, it lessens dependence on a brick-and-mortar location in case of an emergency.
Luke envisions most corporate and business clients using remote deposit for day-to-day operations in the long term because of the positive reaction to the bank’s current product. Capital One currently does not offer a consumer version, but Luke doesn’t completely rule it out.
“As the technology evolves, we add products and services,” he says. “We’re consistently looking at new technology to determine whether it’s appropriate for our client base.”
Barry Landry has another theory. Landry, the executive vice president of C&A Associates, a Denham Springs-based company that works with manufacturers to design and market remote-deposit technology, says part of the reason banks have focused on online banking as an alternative for consumers lies in cost.
“You can go to a business and say, ‘It’s costing you $250 a month to send someone to the bank to make deposits when we offer a service that will save you $190 a month.’ That’s an easy sell,” he says. “Why would a consumer want to pay a service charge in order to scan the odd check from home when they could pass through the drive-thru for free?”
That doesn’t mean remote-deposit technology isn’t here to stay. The Check 21 Act, which took effect in 2004, made it possible for banks to accept scanned images of checks just as if they were accepting the physical copy. Any financial institution that offers the service must make its routine deposits electronically with the Federal Reserve.
“There’s a huge untapped market out there,” Landry says. “This is a new area that is still in its infant stages. Once institutions get a taste of good success and figure out the regulatory implications, we’ll see huge adoption rates.”
Regina Hamilton, an attorney with Jones Walker, specializes in remote deposit. She says the technology is a way for banks to meet the needs of commercial clients and keep costs down while forms of payment shift from paper checks and deposit slips to debit cards and online banking.
“Eventually there will be no more checks,” she says. “But as long as we have people where paper checks are still a form of payment, you have to have some way to transition that over.”
Berry says the move to the iPhone was logical because that’s how USAA sees the market developing.
“This is the future of banking,” he says. “Your smart phone will be your wallet, and we are in a very good position to take advantage of that while making life easier for our customers.”
