SAN FRANCISCO–It's as simple as snapping a picture.
And that’s why mobile remote deposit capture is one of the reasons consumers understand the value of mobile banking, Mary Monahan, an executive vice president and research director at Javelin Research, said while speaking here at the Mobile Banking and Commerce Summit. PaymentsSource publisher SourceMedia sponsors the annual event.
Mobile remote deposit capture, in which consumers use the smartphone's camera to capture an image of a check to commence a deposit–is becoming so popular banks eventually may be able to charge for the product while also saving on overhead costs, Monahan suggested.
Banks typically have avoided charging fees for new mobile and Web-based financial services, choosing to position them as a value-add that drives use of other services. But U.S. Bancorp has decided to charge 50 cents per check deposited via mobile, and other banks such as BB&T Corp. have similar plans.
This demonstrates how mobile remote deposit capture has driven mobile banking growth over the past year, Monahan said. "Consumers are actually amenable to [paying for the service]," she said.
The fees also are matched by overhead reductions, Monahan says. Mobile remote capture check deposits cost as little as 4 cents per check, she said, citing a study Javelin did with USAA. At the same time, it costs between 75 cents to more than $3 across the banking industry to process check deposits via traditional means.
There also are other efficiencies, as mobile remote deposit capture users tend to use lower cost venues for transfers, such as online banking and Web-enabled transfers, instead of channels such as wire funds transfers via Western Union. Users also visit branches less often and use online and mobile banking far more than branches and call centers.
That value argument is making mobile remote deposit capture a key part of mobile financial services strategy, touching all points on the market chain from corporate mobile banking to the underbanked.
"Businesses can take inspiration from the consumer side," said Will Decker, mobile services manager for Wells Fargo. In a panel discussion on corporate mobile banking, he discussed recent enhancements to the bank's CEO mobile product to include mobile deposit, adding "people already know how to capture and process checks" from using the technology as consumers.
The window to use mobile remote deposit capture as a differentiator may be closing, however. Javelin says 58% of financial institutions plan to deploy the technology over the next year, joining financial institutions that already offer the service, such as USAA, JPMorgan Chase & Co., U.S. Bank, PayPal Inc., Charles Schwab and the West Virginia Federal Credit Union.
While 12 of the 19 largest banks do not offer mobile remote deposit capture, that's likely to change soon given consumer trends, Monahan said.
Javelin reports more than one in four consumers find mobile deposit desirable or very desirable. And about 80% of consumers who desire the technology actively use their mobile phones to take photos.
Mobile remote deposit capture also is driving services to the underbanked.
Patrice Peyret, president and CEO of Plastyc, a prepaid card service, said his firm plans to offer mobile the service by the end of the year following the development of anti-fraud measures such as geographic restrictions (people likely won't be able to execute remote remote deposit capture near check-cashing businesses to avoid fast "double" check-cashing) and deposit limits.
Peyret expects most of his competitors to soon also offer mobile remote deposit capture. To him, the argument's clear: the penetration of smartphones is high among the underbanked, particularly since the cost of smartphones is coming down. Moreover, Plastyc's prepaid cards are routable through the automated clearinghouse system and are FDIC-insured, he said.
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