The era of the virtual bank appears to have taken a major step toward reality with the unveiling of Remote Deposit Capture from CheckFree.
The Atlanta-based company’s new technology could ultimately mean consumers can avoid a trip to the bank to deposit checks by simply making such transactions online.
The technology from CheckFree, an online banking firm recently acquired by Brookfield, Wis.-based business information management and services firm Fiserv for US$4.4 billion, is a major breakthrough in the banking business, said Mike Ringuette, executive vice president of Fiserv Global Payments.
“Consumer capture will fundamentally change the way consumers interact with their financial institution, brokerage firm, utility or other payment processor when depositing checks,” he noted. “This new solution allows banks, credit unions, other financial institutions and payments processors to offer expanded deposit windows due to the immediate receipt of an electronic image and all associated electronic data, with the potential to reduce costs and environmental resources associated with personnel, transportation and processing in the branch or back office.”
The system is user-friendly, Ringuette added. All a customer needs to use the system is a scanner, a computer and Internet access. The customer can go to a bank’s Web site, enter the amount of the check, scan both sides, do a quick review and submit it.
Banks can add their own fraud protection to make sure bad checks aren’t being cashed, and checks will be processed within a standard time frame.
Indeed, if this technology is taken to its extreme, neighborhood bank branches could disappear, Emmett Higdon, an online banking analyst with Forrester Research, told the E-Commerce Times.
“This really is one of the last pieces of the puzzle to be able to operate the banking experience remotely,” he commented. “This type of notion has long been one that’s been problematic to solve.”
Some Hurdles Ahead
The system does have hurdles to clear, however, even though in the long run the technology will be a boon to consumers, Ed Kountz, a senior analyst with JupiterResearch, told the E-Commerce Times.
“Remote Deposit Capture is certainly an interesting product,” he said. “Over the short term, of course, it allows the consumer to basically deposit a check, as long as you have a scanner, a PC and an Internet connection, and that’s certainly a positive. It’s a way to compete both offensively and defensively for banks that hasn’t been done before.”
Attracting consumers is perhaps the biggest obstacle to the system’s success, Kountz noted. “Visibility and just consumer awareness are the early hurdles,” he said. “But from the banking perspective, the opportunity for consumers to have a relatively inexpensive and uncomplicated way to remotely record check deposits is advanced and will be worth watching.”
Online banking customers will have to check with their banks to make sure the service is available through those institutions, CheckFree said. The service is already up and running in 150 banks across the U.S.
Frequent Depositors Gain the Most
The service likely will prove popular, particularly among customers who have to make frequent trips to the bank, Higdon noted.
“It’s bigger for small business customers, and that’s where you’re going to see the uptake of this product,” Higdon said. “That’s somebody who has a need to make deposits on a frequent basis but finds that getting to a branch is inconvenient.”
The banking industry has been headed in this direction for some time, he added.
“I think it means more initially for the banking industry than consumers,” Higdon said. “We’ve been waiting for this step for quite a while. The technology has been there for quite some time — the ability to convert paper checks to electronic files. That kind of set the stage for this. There hasn’t been any customer demand for this kind of functionality, but it’s something we’ve been slowly moving down the road toward. It’s one of the last major pieces we need to fully complete the notion of branchless banking.”
Look for the technology to spread, Anne Thomas Manes, an analyst with the Burton Group, told the E-Commerce Times. “More and more people are using online banking, and I think this is a trend that will help consumers down the line.”
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