Deposit Gathering Goes Remote

Patricia A. Murphy
April, 2006
American Banker, Bank Technology News, and U.S. Banker

Following are excerpts from a special supplement titled “The Checkless eVolution: Payments in Transition” that appeared in American Banker, Bank Technology News, and U.S. Banker in April, 2006.

While many financial institutions struggle with the business case for full-scale image-based check clearing, growing numbers are betting that a quick and easy payback can be realized from installing check image scanners at teller stations and other “remote” locales, such as corporate customer offices.

And for good reason.  Spiraling gasoline prices and diminished check writing have combined to make it increasingly more expensive to transport paper checks between clearing institutions. 

Unless a financial institution partners with others to pool transit work (check clearing), for example, it can spend $100 a day just to fly checks to a far off presentment point.  And that doesn’t count the cost to courier those checks to an airport, said Nancy Virkler, senior vice president for operations, Empire Corporate Credit Union, a $ 3 billion institution headquartered in Albany, NY. 

For corporate customers, the benefits are manifold, and include later deposit cut offs, improved funds availability and eliminating the need to transport checks to the bank.

Last year, Alenka Grealish, manager of banking research at Celent, a San Francisco-based research and consulting firm, wrote that she expected by spring 2006, $150 million to $200 million in commercial deposits would move between financial institutions as companies sought to take advantage of remote deposit services.

Long term, Leekley expects close to $ 6 trillion in annual deposits (as much as $24 billion in daily cash business deposits) will be up for grabs as remote check capture and electronic deposit options transform corporate cash management.

Apparently, remote deposit capture is not for every bank; at least not yet.  Today, there are fewer than 100 banks in the U.S. that have deployed remote deposit technologies, according to Christine Barry, director of research at Aite Group, Boston.  Barry expects the number to increase to over 500 by 2008.

A lot of banks are thinking long and hard about remote deposit capture – especially corporate remote deposit- because of risk concerns.

“As we take processes that banks have perfected over the past 20 years and we start pushing them out to clients, banks are coming to understand the need to reconfigure [corporate] risk profiles, said Suzette Massie, president of the consulting practice at Carreker Corp., Dallas.