Many Financial Institutions Still Testing the Waters With Mobile Remote Deposit Capture

Technology enabling consumers to deposit checks by snapping pictures of them on their smart phones and uploading the images through their mobile-banking apps has been around for more than five years, but mobile remote deposit capture very much remains a new product for many banks. An April-May survey by Alpharetta, Ga.-based RemoteDepositCapture.com of executives from 255 banks and 67 credit unions found that 22% were implementing mobile capture and 32% had offered it for only a year or less.

Some 27% of financial institutions had been in market with mobile capture for one to two years. Another 8% had offered it for two to three years, and only 8% had offered it for three or more years. Only 3% of the financial institutions said they had no plans to offer mobile capture.

Based on such numbers, RemoteDepositCapture.com founder and chief executive John Leekley believes mobile capture has plenty of uptake left. “The majority of financial institutions are less than a year into offering RDC, or it’s in development,” Leekley tells Digital Transactions News. “There truly is a tidal wave of financial institutions that are coming to market with mobile RDC.”

Leekley’s firm, which tracks the remote deposit capture market and sponsors an annual conference about it—the 2015 conference is underway this week in Orlando, Fla.—says his respondent base is representative of the industry. Some 59% of respondents came from institutions with $1 billion or less in assets, 5% were from institutions with more than $50 billion in assets, with the rest were in between.

Remote deposit capture, which originated as a scanner-based service but now is dominated by smart phones, has been controversial from the start because the depositor retains the check after depositing it and thus could try to deposit it again. Twenty-four percent of 234 executives answered yes to the question “Has your financial institution incurred any losses directly attributable to mobile RDC?” But Leekley believes that number in reality is somewhat lower. That’s because some respondents answered yes after customers deposited fraudulent checks—checks that would have produced losses to the bank no matter how they had been deposited.

“I believe that [24%] is overstated,” he says. “What is uniquely attributable is this issue of duplicate deposits.”

RemoteDepositCapture.com and imaging software producer Mitek Systems Inc. have scheduled a webinar for later this month in which they plan to present data on the volume of duplicates in remote capture, says Leekley.

Some 53% of respondents that had sustained mRDC losses reported making adjustments to their risk-management polices and capabilities, but 47% did not. The reason nearly half the group did not was that losses were very small or were within expected ranges, according to Leekley.

Deposit value limits are the most common risk-management tool, used by 89% of respondents, followed by image quality analysis at 79%. Risk controls also include various duplicate-detection systems, volume limits, geo-location, and others.

In another finding, 77% of respondents reported not charging for mobile capture. Among financial institutions that do, most fees are assessed to small-business and corporate users.