Remote Capture May Get a Boost From Intuit’s Digital Insight Deal

Software maker Intuit Inc.'s pending acquisition of online-banking services provider Digital Insight Corp. is mostly a story about Intuit expanding its services and finding new markets for its popular QuickBooks, TurboTax, and Quicken financial-software programs. But, according to one analyst, remote deposit capture?and a processor that offers the service?could get a big lift from the $1.35 billion cash deal announced Thursday. A big reason for that, according to Robert Meara, senior analyst for banking at Boston-based research and consulting firm Celent LLC, is the unique business model of a small but fast-growing payment processor, BServ Inc., better known as BankServ. San Francisco-based BankServ integrates a version of its DepositNow! online remote deposit capture service into QuickBooks, the leading financial-management and accounting program for small businesses. Remote deposit capture allows retailers and corporate offices to scan checks and transmit the images electronically to their banks instead of transporting paper for conventional depositing at the bank. Because of the efficiencies of reduced float and transit costs, remote capture has emerged as a booming segment of the image-exchange market created by the Check Clearing Act for the 21st Century (Check 21), which went into effect in October, 2004 (Digital Transactions News, Feb 17). DepositNow!'s Accounts Receivable version allows a small business to not only deposit checks using BankServ's online system, but also automatically track and update the corresponding invoices and related financial records in QuickBooks. Checks must be scanned, but to address what it believes is small businesses' price resistance to existing hardware, BankServ earlier this year introduced its SB1000 scanner that lists for $225, about half or less the price of competing scanners. With Intuit buying Calabasas, Calif.-based Digital Insight, BankServ may be able to get access to tens of thousands of businesses served through Digital Insight's 1,700 financial-institution clients as well as benefit from the push Intuit gives its software products in the wake of the acquisition. Remote deposit capture was not Intuit's primary objective in buying Digital Insight, but the acquisition nonetheless “could redefine the remote deposit capture landscape,” says Meara. “This is a landscape that's changing at lightning speed any way. I would speculate that BankServ is in a very good place right now.” With 7 million users, Mountain View, Calif.-based Intuit claims QuickBooks has 89% of the small-business financial-management software market. Several million other small businesses use Quicken, Meara adds. QuickBooks' main rivals are Microsoft Corp.'s SBA and The Sage Group plc's Peachtree programs. BankServ plans to introduce editions of DepositNow! for those programs soon. QuickBooks is far more established than remote deposit capture. Meara predicts the nation will have 100,000 users by year's end. No one bank currently has more than 10,000 remote deposit capture business clients, he estimates.