Celent: Non-Bank RDC Services A Growing Threat to Banks

Does a remote deposit capture upgrade to a church-management firm’s software spell Armageddon for the banking industry’s own RDC services?

In a late July, Servant PC Resources added remote deposit features to its widely used Servant Keeper software, allowing churches to deposit check images scanned directly from off-the-shelf printer/scanners.

The upgrade, made through adding check management technology from Heartland Payment Systems, does not require churches to obtain a bank RDC hardware or services agreement.

The Heartland-Servant agreement, says Celent Senior Analyst Bob Meara, “trumpets” the kind of new alternatives for small businesses to obtain RDC capabilities without needing their bank’s permission or assistance to sign up—which in many cases requires commercial credit approval and risk-assessment training. Not only are the services easier to obtain, but work better than existing bank offerings in areas like automated exceptions handling and check reconciliation with the general ledger, he adds.

Those features are not part of the standard “standalone, deposit-only RDC solution offered by virtually all banks,” wrote Meara. “Heartland performs deposit review and item correction, virtually eliminating the need for users to manually correct poorly captured check amounts, saving them time and improving the user experience.”

One of the early drivers behind remote-deposit capture technology growth was the industry’s belief it could strengthen bonds with commercial customers. By using bank-provided specialty scanners, merchants and high-volume check recipients like utility companies could electronically deposit check images online for faster clearing and avoiding time-consuming branch visits.

But small business use of RDC banks has floundered—just 5%, in statistics cited by Meara.  Adoption has been slowed by cautious banks worried about the risks of remote capture—such as the problem of double deposit of checks and the client’s mishandling of customer data.

Despite these issues, the competition from non-bank RDC players is one banks don’t seem to take seriously. A Celent poll last August found only 25% of bank professionals considered bank-neutral offerings a threat—fewer than those who dismissed them outright (27%), or were more concerned about fellow banks as RDC competitors (38%).