Remote Mobile Capture Is Ready for Prime Time, Researcher Argues

Remote deposit capture by mobile phone, a recent technology still considered experimental by many bankers, has proven itself in deployments so far, a banking researcher said on Monday. “The technology is demonstrably ready for broad adoption,” Robert Meara, a senior analyst at Celent LLC, told attendees at a banking conference. While most banks and processing vendors have at most examined or piloted the technology, USAA, a banking and insurance company that introduced an iPhone-based service in August, is enjoying great success, Meara said. He pointed to Celent research indicating that in the first month after its launch USAA's service signed up more than 10,000 users and attracted 65,651 deposits worth $36 million. The figures show that users are making on average more than five deposits a month with an average value of almost $550. “The aren't Girl-Scout-cookie checks,” Meara noted. USAA in January said its service had attracted $300 million in deposits at that point. Meara told Digital Transactions News that while he's bullish on mobile remote capture, he can't yet make projections for usage or adoption, arguing there is insufficient data so far. He hopes to release more figures, including projections for the technology, later this summer. With mobile remote capture, a consumer or small business can use a camera phone to snap front and back images of a check. Special software on the phone transmits the images to the user's bank for processing through Check 21 rules. Fueling the service are banks' search for ways to cut costs, especially branch costs, and consumers' increasing fascination with smart phones, Meara told the audience attending the Bank Administration Institute's PaymentsConnect Conference and Expo in Orlando, Fla. Many banks now view their branch networks, once considered a competitive advantage, as too costly to build and staff, with too protracted a return on investment, he said. “What we're hearing for the first time [from bankers] is that this branch infrastructure is becoming an increasingly expensive albatross around [their] necks,” he said. An attractive alternative, he said, is to gather deposits via mobile phones. Customers are only too happy to buy their own devices and are eager to download new financial applications for them, he said. He conceded the problem of so-called image analytics, in which software on the phone renders images of checks and sends them to the bank, can be significant, but added most applications so far are overcoming the challenge. “A meaningful number of checks are being processed in this environment,” he said. He pointed out that many consumers have figured out for themselves how to maximize signal strength, which speeds up transmission times, as well as lighting conditions. They are sitting at the kitchen table by a window, he said. Holding back many banks are fears of compliance risk and a perception of low demand, Meara said. While not discounting the first factor, he noted that “frankly it's a sad state of affairs that the risk of regulator retribution would be driving the goods and services we bring to market.” As for low demand, he argued this is no different from the early stages of other new technologies, which required time to catch on. “A year from now it won't be low demand,” he projected. He also argued that while USAA's experience is in some respects unique?the financial-services firm has only one office and serves a geographically scattered customer base made up of retired and active-duty military personnel?he said the company has more in common with other banks than many might think. “USAA's uniqueness in my opinion has been exaggerated,” he noted. Meara's research joins other studies indicating mobile remote capture could be on the verge of becoming a mainstream payments product. Some 59% of consumers who use mobile banking would be likely to use the technology, according to a survey by Mercatus LLC, Boston (Digital Transactions News, Feb. 17).