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SURVEY: Community bankers adopt e-check tech
February 18, 2007
PALM DESERT, Calif. - By the end of 2008, business customers of nearly six out of 10 community banks may be saying goodbye to couriers and routine trips to the branch. A new survey from the American Bankers Association's Banking Journal and Community Bankers Council indicates that 2008 will mark widespread community-bank adoption of remote deposit capture services.
According to the latest Community Bank Competitiveness Survey, 16 percent of the 590 banks that responded now offer remote capture. Another 33 percent of the sample said they planned to offer remote capture sometime this year; and 9 percent said they expect to implement the technology in 2008 or later.
The survey found the following to be the leading reasons why banks offering remote deposit capture had:
- "We saw it as an essential survival strategy" - 30 percent
- "We like to be on technology's leading edge" - 24 percent
- "We saw it as a way to cut processing costs" - 16 percent
- "Competitors started offering it" - 13 percent
Among those banks reporting that they had not adopted the technology, which was made practical by Check 21, the reasons cited include:
- "Our market is small, so getting to the bank isn't an issue" - 53 percent
- "No demand from customers" - 44 percent
- "We don't want to discourage visiting the bank" - 12 percent
- "We're concerned about potential fraud" - 12 percent
Community bankers surveyed indicate that remote capture service draws strong interest from many types of businesses. Leading the field are professionals (74 percent); service firms (55 percent); contractors (38 percent); retailers (25 percent); and municipal governments (25 percent).
While only 8 percent of banks offering remote capture reported having lost business because they didn't offer it before, 65 percent reported that they have attracted new business since adopting the technology. Six out of 10 also said remote capture is a strong customer retention tool.
"The big question mark remains whether remote capture service is going to affect community banks' branching," said Steve Cocheo, executive editor of ABA Banking Journal and survey director. "The jury's still out on that matter."
Other highlights:
- Although only 5 percent had a security breach, 34 percent had been affected by a third-party's data breach. To protect data, 66.5 percent of the banks surveyed say they ban taking laptops off bank premises. Of those that allow it, 76 percent use encryption, followed by physical locking devices (30 percent), software that turns the laptop into a dumb terminal (20 percent), and software that shuts down and locates the computer (6.7 percent).
- More than half (53 percent) have implemented Check 21 technology, which allows for the electronic processing of checks. An additional 23 percent plan to implement the technology this year, followed by 10 percent in 2008 and 5 percent later than 2008; 10 percent said they were not sure.
A complete report on the survey will be available electronically on the ABA Banking Journal's Web sitein March.
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