Article

Check 21 expands remote deposit options for consumers, manufacturers

But will the technology, which manufacturers thought would boost ATM functionality, actually create a way to bypass the ATM?

May 25, 2009 by Tracy Kitten — Editor, AMC

Since the advent of check imaging and automated deposits — made possible by the October 2004 passage of the Check Clearing for the 21st Century Act — ATM manufacturers have been banking on investments in new deposit technology.

While some financial institutions, such as Wells Fargo and JP Morgan Chase & Co., in the United States have been quick to jump on the check-imaging bandwagon, others have been more reserved — even going as far as saying they still are not convinced of the return on investment.

Check-imaging ATMs are expensive and more complex to maintain and service. The economic recession has only complicated the investment question for FIs, now that the spending of every penny must be closely gauged.

During PULSE's annual customer conference in early May, some credit unions and community banks expressed a cool attitude toward automated deposits at ATMs, saying they see investments in remote-deposit capture paying higher rewards with less upfront expense.

RDC, for retailers and consumers

The passage of Check 21 brought about some unexpected advantages. Because the legislation allows check images to carry the same value as paper checks, retailers were the first to reap benefits. By capturing their check deposits remotely with check scanners, retailers and banks were quickly able to send and accept check deposits — thereby eliminating the need to make physical deposits at banks. Now some retailers also are taking advantage of cash-imaged deposits, though the technology is not yet so widespread.

"You're definitely going to see continued growth on the merchant side," said Robert MacMahon, senior business development manager of payments and imaging solutions for Diebold Inc.'s deposit automation and imaging division. "We will see a focus on RDC technology throughout 2009 and, I assume, throughout 2010."

MacMahon says a big push for RDC for merchants will come from the regional and community banks, as many are anxious to acquire business from merchants located outside their home markets.

On the consumer front, some FIs are now allowing their customers and members to remotely deposit checks by scanning the checks at home and sending them to the bank or credit union through the FI's Web site. And the advent of mobile check imaging could take the technology a step further, allowing users to capture images of their checks with mobile-phone cameras and e-mail them directly from their PDAs, Blackberries or iPhones, for instance, to the bank.

"On the consumer side, I think you'll see the bigger banks and credit unions adopt this first," MacMahon said. "With consumer capture, the adoption rate will be slower for community banks, because their focus is going to continue to be on the commercial, merchant side."

But the focus on the consumer will likely span out across all FIs quickly, he said, as more strive to move basic transactions like deposits away from the teller window.

"More banks are trying to keep consumers away from the teller window, and if you have a customer who gets one check a month, and if it's for a small amount, it's just an added convenience to allow them to scan it at home with a scanner and get it deposited. It's a win-win for the consumer and the bank."

But where does that leave the ATM? The need to visit the ATM for a check deposit may be overshadowed by this remote technology, despite the fact that manufacturers say they see a need for imaging across the board.

Adoption of RDC for the mobile phone thus far has been low, because most banks are still in a pilot mode, said Dennis Bergeron, director of product management for payments for NCR Corp. Adoption of mobile RDC, in Bergeron's view, is likely a couple of years out.

"There are minimum standards for this, so not every mobile phone can do it," he said. "A 2-megapixel camera is required, and the initial interest in this seems to be more on the business side. From our perspective, this will just be another self-serve channel for the banks' clients. It won't replace the ATM; it will just be another avenue for deposits."

Bergeron says he does not see mobile RDC or RDC with home scanners replacing ATM imaging. He says mobile and at-home options merely offer consumers more options.

Wes Dunn, director of business development for Tranax Technologies, says the advent of RDC is creating opportunities for ATM deployers, since it offers opportunity to leverage existing relationships "to find new sources for income," which will be important for independent sales organizations as well as FIs.

For Tranax, RDC technology will be a focus.

"We were purchased by Eltna in October. Eltna owns Hantle in Korea, which is a very heavy player in check scanners/imagers in Asia-Pacific," Dunn said. "We are currently working with Jack Henry/ProfitStars and Valid Systems to certify our check scanners for RDC and check cashing, and expect this to be big part of our product push in the coming years.  We expect that our current distributor base, with their relationships, coupled with the existing processes in place with Tranax will help speed the rise in RDC."

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