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JPMorgan Chase & Co. plans to use Mitek Systems Inc.’s Mobile Deposit software in future versions of its QuickDeposit service for mobile remote deposit capture across multiple smart-phone operating platforms. The announcement furthered Mitek’s lead as the top vendor in the fast-growing mobile-capture niche.
Citing confidentiality agreements with customers, Mitek rarely talks about individual users. Chase, which a spokesperson says developed its current mobile-capture system in-house, issued a news release Monday about its pact to use Mitek software for mobile capture and other services. San Diego-based Mitek also trumpeted the licensing agreement in its earnings release for the first quarter of fiscal 2011, which came out later in the day. Chase is by far the largest bank to offer mobile remote capture in a market that includes USAA Federal Savings Bank, the industry pioneer, and a number of small institutions.
“This is a very, very big endorsement, and it’s unprecedented that Chase would give such public awareness through their p.r. announcement this morning to a vendor,” Mitek Systems president and chief executive James B. DeBello said at his quarterly earnings investor call. “But I think it does reflect the strategic importance to them to … provide an optimal consumer experience.”
Celent LLC senior analyst Bob Meara, who follows bank technology closely, suspects that Chase concluded it could get better image quality and make related improvements by using Mitek’s software rather than continuing with its current technology. “It’s clearly a big thing for Mitek,” he tells Digital Transactions News.
A Chase spokesperson says by e-mail that Chase chose Mitek “because they have innovative remote capture technology that we feel is well-suited for next-generation mobile banking. Mitek is leading-edge in the industry, and their technology will help us to provide our customers with quick and convenient mobile-banking solutions.”
Chase’s mobile-capture system, which is integrated into its mobile-banking application, currently runs on Apple Inc.’s iPhone and smart phones using Google Inc.’s Android operating system. The spokesperson refuses to say which mobile platforms Chase would support going forward, although Mobile Deposit can support all the major ones, including the BlackBerry and Windows Mobile. Further, Chase’s licensing agreement covers other Mitek products that neither company would discuss. Mitek’s next big product in development, however, is a smart-phone application for electronic bill payment called Mobile Photo Bill Pay, which DeBello expects to be live by year’s end. Mitek Systems also is developing imaging applications for non-payment documents and industries.
Mitek announced in January that 10 leading banks, including three of the nation’s top 10, had signed agreements to deploy Mobile Deposit. The company on Monday said 10 more had signed on since then. Despite the traction its software is gaining, Mitek reported an $801,000 loss for the quarter ended Dec. 31 compared with a $223,000 loss a year earlier. Most of the loss came from $712,000 in non-cash expenses, including a $384,000 conversion of long-term debt into equity, DeBello said. Sales increased 21% to $1.40 million from $1.16 million in fiscal 2010’s first quarter.
Mitek also announced that former MasterCard International president and chief executive Alex W. “Pete” Hart has been nominated to its board of directors. Hart is a director on the boards of such payments-industry firms as VeriFone Systems Inc. and Global Payments Inc. and is chairman of Silicon Valley Bank, DeBello said.
But a bit of controversy surrounds Hart’s nomination. Hart will replace director Michael Bealmear, who the board is not nominating for another term at the company’s Feb. 23 annual meeting. In a filing with the Securities and Exchange Commission, Mitek noted that Bealmear in a Feb. 7 letter said he was resigning because he disagreed with the company’s decision not to re-nominate him, a decision he described “as an act of retaliation” for his opposition to a stock-option award to DeBello in November. Bealmear, a member of the board’s Compensation Committee, also said he did not receive notice of the meeting at which the panel approved the option grant and that the board lacks “sufficient independence,” according to the filing.
“The company strongly disagrees with each of Mr. Bealmear’s assertions,” the filing says.
