By Robert McGarvey
The question has to be asked: can a credit union survive if it doesn’t offer members mobile remote deposit capture (mRDC)?
And if you don’t offer it, what should you be doing right now?
Ten years ago those weren’t questions. mRDC did not yet exist. It wasn’t until 2009 that USAA, the San Antonio bank, rolled out mRDC.
RDC—remote deposit capture, typically via scanner—had started five years earlier, in 2004, after Check 21 made images roughly equivalent to an original paper check. But RDC was mainly used by businesses. It had near to zero consumer adoption.
mRDC—made possible by cameras of increasing quality on cellphones—changed everything. Suddenly a consumer could fairly easily snap a photo and, with a few clicks, deposit a check. That is a major game-changer in a time crunched world.
It triggered a stampede to offer mRDC. And now the question is: can a credit union survive if it doesn’t offer it?
Thousands already do. New data from research firm Celent said that about 6,000 financial institutions in the US offer RDC and/or mRDC. That’s up from about 1,500 in 2013, and only a handful in 2010.
CUNA numbers counted 5,906 credit unions at year-end 2016. The FDIC counted 5,913 FDIC insured institutions in Q4 2016.
That means about half the banks and credit unions now offer a flavor of RDC.
Who doesn’t offer it? Celent researcher Bob Meara said, “it’s the small and rural institutions that don’t have RDC.”
He added: “Clearly everyone will have it.”
But do you need it now?
A grumble—especially among smaller institutions, said Meara—is that RDC is expensive.
It definitely isn’t free. Most institutions use technology—Mitel is the market leader—that involves fees per deposit and often fees per user. Numbers vary from institution to institution, and also with volumes, but an amount often heard is maybe 50 cents per deposit. “Small institutions complain about the fees; bigger ones have sucked them up,” said Meara.
That compares with $4 per deposit with a teller—at least that’s the number typically thrown out.
Meara shrugs at that latter number. “Many credit unions have told us they don’t honestly know the cost of an in-brand, teller transaction.” For good reasons. Many branch costs are fixed, and it may not be accurate to parcel out some expenses on a per transaction basis.
Suffice it to say that in-branch transactions, deposits included, are pricey, much more expensive than an RDC transaction.
So why don’t small credit unions jump aboard mRDC? The biggest reason is that many still don’t offer mobile banking, and the usual way to offer members mRDC is inside the mobile banking app.
Maybe five years ago, standalone mRDC apps had some currency, but they have fallen sharply out of favor, with consumers and credit unions alike.
The other reason: thousands of credit unions remain unconvinced their members actually want mRDC or would use it. That may even be true at credit unions with an older membership who aren’t technophiles.
Meara said in that case, maybe it makes sense to put off adopting mRDC. “Why rush if members aren’t demanding it?”
Nonetheless he added: “It’s inevitable that just about all financial institutions will eventually offer mRDC.”
The Millennial generation is why. This is a demographic that uses smartphones to do just about everything—play games, write and read emails, order food, line up dates, and more. Of course they want to use their phones to make deposits, too.
Another reason is that many credit unions are pushing to add small business members and, as a group, small businesses have shown much love for mRDC. Picture a plumber at the end of a long day. Does he/she want to drive to a branch to deposit the 10 checks he has gotten that day? Or would he rather use mRDC? It’s a no-brainer. Small business loves mRDC.
Add Millennials to small business, and the case grows for offering mRDC to members.
But, suggested Meara, an institution shouldn’t rush into mRDC just to have it.
Word of advice: if you don’t have mRDC, start doing market research on consumers. Ask members who are in the branch if they want it. Ask if they use mRDC with another financial institution. That latter question could be a warning about diminishing wallet share—just maybe you are keeping the member but losing wallet share.
Know too that there are increasing mobile banking options for small credit unions with small budgets—and at least some of these tools offer easy ways to also offer mRDC . This no longer has to be a budget-breaker. Ask around. Ask peer institutions what they are doing. There are tools out there.
Just know that very probably you will eventually offer mRDC—so start preparing now.