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Failure to Launch? Consumer Remote Deposit Posts Very Slow Growth

By Jim Bruene on April 15, 2009 7:18 PM | Comments (5)

image_thumb10_thumb2Two-and-a-half years after USAA was first to offer remote deposit capture to consumers via standard scanners (post here), it appears the technology has failed to gain much of a following outside business circles (notes 1,2).

Quoted this month in Digital Transactions magazine (PDF here, pp. 58-62), John Leekley, founder of RemoteDepositCapture.com, estimates that only 75,000 consumers (and apparently 1 cat, see inset) use the service, less than 0.001% of all U.S. households.

Some other numbers from the article by Jane Adler:

  • After 14 months, EasCorp, a CUSO out of Burlington, MA, has just 24,000 registered users across its 30 credit union installations, or 800 per CU (see previous post)
  • Other EasCorp metrics:
    • Average deposited check = $900
    • Average deposits per session = $1,200
    • Total amount deposited in past 14 months = $80 million
    • At $900 per item, that amounts to about 90,000 checks processed, or about 4 per end-user
    • Cost per deposit for CU clients is $0.25 per item for "higher volume" customers
  • The initial experience at First Command Bank is more encouraging: Since launching in November, First Command Bank has registered 1,600 users for its Deposits on Command across its online customer base of 65,000, for a 2.5% penetration rate (note 3). First Command has a total of 85,000 customers online and offline, so the overall penetration rate is about 2%.
    • Total remote deposits per month are 1,200; slightly under 1 per registered user per month
    • There is no fee for the service, but you must be an estatement user or have an investment account to qualify. Daily deposit limit = $5,000

First Command Bank homepage (14 April 2009)
Remote deposit capture (Deposit on Command) is one of two items that rotate in the top banner-ad slot  image_thumb1_thumb1

1. We are referring here to CONSUMER remote deposit, not to be confused with the very successful business remote deposit.
2. In the same article, Fiserv was cited as projecting growth to 1 million users by the end of 2009, although there was no indication as to when the prediction was made or whether it included business users.
3. If Bank of America had similar usage, it would be well on its way towards 1 million registered users (625,000).
4. Photo from CheckFree/Fiserv

Comments (5)

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1. It would be interested to look out how adoption rates for remote deposit compare to utilization of direct deposit. Most consumers probably don't need to deposit more than just their paychecks.

2. The hardware requirement is a stumbling point, and, as other financial institutions have figured out, isn't necessary.

Jim- Interesting take on the Digital Transactions Article. To give the article a bit more perspective, I think it is important to note that until just recently, only USAA and a small handful of Credit Unions offered Consumer RDC. Many of the industry’s premier processors and solution providers which serve 90%+ of the FI Industry (including Fiserv, Fidelity National Information Services, NCR, Goldleaf, VSoft and others) have just introduced Consumer RDC technologies within the past year.

In addition, none of the top 20 banks actively offer a consumer RDC service. While RDC for corporates and bank branches began about 4 years ago, until recently, consumer RDC was not even on the radar screen. We estimate there are now over 100,000 locations in operation. Given the recent introduction of the technologies which enable Consumer RDC, the fact that just a year ago there were only about 10 financial institutions (almost all of them credit unions) who actively offered Consumer RDC, I think this service has demonstrated significant growth.

So what does the future hold? We’ve seen an amazing amount of interest in consumer RDC from financial institutions of all sizes. An increasing number of FIs are finally understanding that RDC can reduce expenses, accelerate clearing times, retain and grow deposits and enable a better relationship with their customers. RDC end-users (corporations, small businesses and now, consumers) increasingly understand the value of convenience, expense reduction, cash flow acceleration and data / information automation. I’m not sure we’ll see 1 Million consumer RDC users by the end of the year, but at least several hundred thousand is a good bet.

So… Failure to launch? We’ve only just begun.

I'm not surprised to see these low adoption numbers, and would consider that these customers are either: a)sole-prop home operated businesses that utilize a "consumer" account relationship with their bank, b)somebody that lives far, far from a branch, or c)somebody with mysophobia.

Banks should, and likely will focus more on leveraging the ACH rails, and not on propagating paper checks. Fraud and cost are obvious reasons to phase out paper checks.

Sorry remote capture people, this is a business play only.

I have to disagree jb...I have been using USAA's deposit@home service for about 2 years and I love it.

Perhaps the low adoption numbers could be attributed to the fact that USAA requires that you have 3 things with them: a checking account (obviously), a credit card, AND some sort of insurance product. I do not know any other USAA members personally, so I don't know how often people have all 3 of those products concurrently. If USAA were to relax those requirements to possibly 2, then I would hedge a bet that you would see those numbers rise. Reduce it to just the checking account, I would almost guarantee it would see more widespread usage.

I don't have mysophobia, but truly truly hate the brick and mortar banking experience. Not having to mail anything or drive anywhere to deposit checks INSTANTLY is a valuable tool for me.

It's not reasonable to compare the adoption numbers to the U.S. population. USAA is only available to a restricted subset of the population.

I've been hounding my primary bank and primary credit union to get consumer remote deposit for years now (ever since business remote deposit was deployed).

I only deposit 2-3 checks per month, which is probably more than the average consumer, but I would very much like to adopt consumer remote deposit. I don't want to switch institutions, though, so I need to wait until it comes to my institution.

I agree, the number of potential customers for consumer remote deposit is probably a small percentage, but it's an important step of automating the process.

I'm going to check out FirstCommand. Sounds promising.

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