© 2013 EastPay. All Rights Reserved What’s New with Remote Deposit Capture? Industry Update &...

© 2013 EastPay. All Rights Reserved

What’s New with Remote Deposit Capture?

Industry Update & Recap from the RDC Summit

Steven Vaglio, AAPSVP, EastPay Payments

Advisory Services & Marketing

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EASTPAY Not-for-profit Regional Payments Association Educational Programs Member benefits

– Voice & Representation in National Rule Making and Regulatory Process

– Toll free operational assistance and – Discounts on seminars, publications, conferences

Online purchasing and registration 8 ACH Accredited Professionals (AAP) on staff

2© 2013 EastPay. All Rights

Reserved

Disclaimer

This presentation and applicable materials are intended for general education purposes and nothing in this presentation should be considered to be legal, accounting or tax advice.

You should contact your own attorney, accountant or tax professional with any specific questions you might have related to this presentation that are of a legal, accounting or tax nature.

Image source: Thinkstock


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Discussion Objectives

Level Set for RDC– RDC’s Evolving Capabilities– The Value of RDC– Business Model Options

Highlights from the RDC Summit– Mobile RDC– Corporate RDC (American Red Cross)– Risk Management– Small Business Opportunities– The Future of RDC

Q&A / Discussion


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RDC: A Spectrum of Opportunity

The total value a FI or corporation may realize depends upon: Company Demographics: Volumes, Values & Locations RDC System Characteristics: Functionality, Process & Price Data & Workflows: Reporting, Integration & Automation

Operational & Deposit AutomationConvenience / Transportation Reduction

Remote Deposit Capture Spectrum of Value Opportunity

Base Value

Maximized Value

FunctionalityBasic High


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RDC is a Payments PlatformRDC Applies to a family of related products & services most often differentiated by location of check capture.

Remote Deposit Capture

Lockb

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Teller

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ATM

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RDC is becoming an integrated technology platform increasingly used to process different types of payments and data with the

ability to feed that data to systems both internal and external to the organization.

Mob

ile

The term “Remote Deposit Capture” refers to the process of electronically capturing Payments and data, and transmitting that information for deposit and clearing. This definition is evolving to include additional all payment types, including card, ACH and Cash payments.


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RDC’s Evolving Capabilities

Check Processing Capture Check Data & Images Remittance Processing (Coupons, etc.) A/R Systems Data Upload Consolidate Distributed Processing Consolidate Depository Relationships Risk Management Evolving Capabilities:

– Various Payment Types– Risk Management

RDC is about the Payment – Not just the check


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The “Value” of RDC is better understood…

Base Value Cost Savings Time Savings Account

ConsolidationEnhanced Value Data Automation Data Integration Risk Management Payments Platform Cash Flow

Acceleration


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Business Model Options

Businesses have a growing number of RDC Options: FI – Provided Solutions

– The Great Deposit War Has Begun– Greatest Pricing Flexibility

Third-Party Service Providers– Merchant Acquirers / ISOs – In-House RDC

Value Added Resellers– Industry-Specific Accounting Packages


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The RDC Summit 2012

The RDC Summit 2012 is the industry’s premier conference on Payments and Remote Deposit Capture, featuring hundreds of attendees from leading Banks, Credit Unions, Corporations, RDC Solution Providers, Regulatory Agencies and more.

Highlights:• 95% of the RDC Industry in Attendance• 3 tracks: Corporate, Credit Unions & Community Banks, Retail & Commercial

Banks• Over 24 total Sessions• Expert Speakers (American Red Cross, JPMC, Sysco Foods, Mitek Mobile and

more• Over 30 Sponsors & Exhibitors

http://www.rdcsummit.com/


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Bob HedgesManaging DirectorAlixPartners LLP

David RathkeSVP, Treasury Product Management

Frost Bank

Darcy SamsonVP, Small Business Deposits

U.S. Bank

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Go Large or Go Home:Mobile & Consumer

Capture Case Studies




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Mobile Is Playing an Increasingly Important Role

in Consumer Decisions to Switch Primary Banks

Question: How would you describe the role mobile banking services played in your decision to change primary banks?Note: Number may not add due to rounding. Q2 2010 through Q 2 2011, based on 6 months switching; Q4 2011 through Q2 2012 based on one year switching.Source: AlixPartners Mobile Financial Services Tracking Study, Q2 2010 (N=14), Q4 2010 (N=31), Q2 2011 (N=44), Q4 2011 (N=99), Q2 2012 (N=193)

Role of Mobile Banking in Primary Bank Switching Decision Among Smartphone/Tablet Owners Who Switched Primary Banks, Q2 2010 -

Q2 2012

Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 20120%

10%

20%

30%

40%

50%

60%

7%13%

7%

15%18%

7%

23%

36%

41%

48%

10%

30%

26%

30%

ImportantExtremely important

http://www.alixpartners.com/en/Home.aspx


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Mobile Remote Deposit Capture Adoption Is Now Taking Off

Mobile Remote Deposit Capture AdoptionQ4 2010 - Q2 2012

Question: Some banks now offer a secure way to deposit a paper check by taking a picture of the check using a camera-equipped mobile device and sending the picture to your bank using your mobile device. This technology is referred to as remote deposit capture. Are you aware of this service?; Have you ever used the remote deposit capture service at your bank to deposit a check with your cameSource: AlixPartners Mobile Financial Services Tracking Study Q4 2010 (N = 2,942 respondents, N = 711 smartphone/tablet owners),

Q2 2011 (N = 3,024, N = 811 smartphone/tablet owners), Q4 2011 (N = 5,594, N = 2,802 smartphone/tablet owners), Q2 2012 (N = 4,554, N = 1,876 smartphone/tablet owners)

Q4 2010 Q2 2011 Q4 2011 Q2 20120%

3%

6%

9%

12%

1%2%

2%

6%

2%

4%5%

12%Among All Respondents

Among Smartphone/Tablet Owners




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Mobile Remote Deposit Capture Is a CriticalFeature in Consumers’ Banking Decisions

Question: What are the most important features of mobile banking that would cause you to switch primary banks? Please choose your top three featuresSource: AlixPartners Mobile Financial Services Tracking Study, Q2 2012 (N = 815)

Mobile Banking Features That Would Cause People to Switch Primary Banks

Among Smartphone/Tablet Owners at Least Slightly Likely to Switch Primary Banks for Mobile Banking, Q2 2012

Changing PINs

Access to loan accounts

Peer to peer payments

Find location of nearest ATM along with maps and directions

Access to investment accounts

Monitoring of term deposits

Due date of payment

Access to card statements

Status of check, stop payment on check

Recent transactions

Transfer funds

Check balances on savings, checking or credit cards

Statements of account history

Alerts on account activity or passing of set thresholds

Pay bills wherever you are

Check account balance

Take pictures of bills to pay them

Take pictures of checks for deposit

Make a deposit

0% 5% 10% 15% 20% 25% 30% 35%

3%4%

4%

4%

5%

5%

5%

7%

8%

11%

13%

13%

14%

14%

15%

17%

17%

33%

33%


Mobile RDC for CorporatesReality & Revelations


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Brook BallardSenior Manager, Treasury Operations

Sysco(President, Houston TMA)

Kurt MatisPresident & CEO

FTNI

0




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It May Be Too Early for Corporate mRDC…

For Corporates, Mobile RDC will be the next frontier

Current limitations include application of funds Association of detail of payment to check imaged


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Evolution of Corporate RDCPhase I – Check to the Bank

Phase II – Coupon/Remittance Scanning & Posting

Phase III – MICR Matching/Intelligence Lookup

Phase IV – Single Platform/Real-time Updating

Ø CheckØ ACHØ CCØ CashØ Web


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Mobile RDC TodayPhase I – Check to the Bank

Phase II – Coupon/Remittance Scanning & Posting

Phase III – MICR Matching/Intelligence Lookup

Phase IV – Single Platform/Real-time Updating

Ø CheckØ ACHØ CCØ CashØ Web


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Evolution of Corporate Mobile RDC

Step 1: Integrated Mobile RDC with Batch or Real-Time Updating

Step 2: Integrated Mobile Receivables with Batch or Real-Time Updating


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Making Corporate RDC a Reality

Phase I benefited the banks & businesses– Eliminate Trip to Bank– Quicker access to funds

Phase II-IV benefited the businesses– Reduced data keying– Reduced data processing costs– Streamline A/R – Quicker reporting & follow-up

Conclusion: Mobile RDC needs to advance to the point that businesses benefit not increase A/R costs through manual matching & posting of receivables.


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RDC to the Rescue

Steve CaseyCorporate TreasurerAmerican Red Cross

0




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One Red Cross One Red Cross – an enterprise

vision for maximum effectiveness and efficiency in all systems, processes, and procedures.

One Red Cross Banking – We must be able to…. – Establish visibility and immediate access to Red

Cross funds.– Accept and deposit coins, currency, checks and

credit cards with standard processes.– Enable chapters to procure goods and services

within the community to deliver needed services.– Be prepared to provide financial support to

clients in response to emergencies. – Maintain and build community-based

relationships and partnerships with banks.

“One Red Cross Bank Account”

symbolizes the result of aligning a network

of banks providing modern cash management

services with centers of expertise

providing accounting and donor

management operations.


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Red Cross RDCIntegrated capture &

digitization of all donation types &

related documents

• Checks• Cash/Coin

• Credit/Debit• Gift Letters

• ID Cards

Payments Gateway to process all

transactions and documents

Common, easy-to-use application

for field office

collection of donations

Integration with back-

office systems

• Finance• Accounting• Donor DB

Flexible Payment

Processing• ACH• ICL

• Acquirer


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Red Cross RDC – Results!

An efficient and effective back office allows the Red Cross to continue to maximize the use of each donor’s contribution to help those in need.

We now have ONE:– System to capture, digitize, and transmit donations– Gateway to process all donations– Integration of donation transaction info to back-end

systems Business impact:

– RDC has allowed Red Cross Finance team to begin consolidation of COE's into a Shared Service Center

– Consolidation is occurring about a year earlier than originally planned


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RDC Impacts @ the American Red Cross

DDA Accounts:– Pre-RDC: 4,200+– Post-RDC: ~60

Banking Relationships:– Pre-RDC: 300+– Post-RDC: ~13

Time it takes to “apply” donations / funds:

– Pre-RDC: 3 – 5 Days– Post-RDC: 1 day, on average

Other Valuable Benefits– Elimination of trips to the bank, increased volunteer productivity,

data automation, single point of control, better cash management & investing visibility / capability, better application of funds, and more.


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RDC Risk Management

All Bark, No Bite– Actual losses uniquely attributable to RDC have been

minimal.

Compliance & Perceived “Fear” = #1 Issue for FIs

#1 Risk: Duplicate Presentment / Physical Items after deposit.


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Corporate RDC Risk Management “Top Ten”

1. Setup Automated Reports & Alerts

2. Separation of Duties

3. Have a Backup Plan

4. Restrictively Endorse All Items

5. Safekeep all items

6. Destroy all items

7. Implement Positive Pay

8. Choose the “Right” Solution

9. Understand the “Cons”

10.Utilize Duplicate Detection


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The Greenfield OpportunitySmall Business RDC

Christine BarryResearch Director

Aite Group

0




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RDC is a natural fit for small businesses, yet product adoption is below bank expectations

RDC helps small businesses save time, increase convenience, and operate more efficiently

More than 50% of U.S. banks have deployed RDC

Less than 5% of small businesses have adopted it

For most institutions, adoption is below expectations

Source: Aite Group survey of top 50 U.S. Banks, September-October 2011


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Low small-business adoption is not reflective of interest in the product

Source: Aite Group small-business survey, August 2011


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In fact, interest in RDC has grown over the last two years

Source: Aite Group small-business surveys July 2009 and August 2011


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…Small businesses may go elsewhere

Source: Aite Group Small-Business Survey, August 2011


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Small Business: The “Greenfield” Opportunity

There are over 29 Million Small Business Locations in the USA Today. Fewer than 1 Million use RDC Today Mobile RDC will play an increasing Role

– Low Volume, Convenience Play Desktop Integrated RDC will be increasingly

attractive.– Account Reconciliation / Data Application

The ability to accept multiple payment types is increasingly important– A Single Payments & Data processing platform.


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We’ve only just begun…

Fewer than 2 million locations in operation today on Traditional RDC

Checks remain a primary payment method. 2/3 of all $$$ received by businesses are by Check (AFP). Over $32 Trillion was paid by check in 2009 vs. less than $5

Trillion via Cards (Fed Study). There are over 29 Million Small Business locations (Less

than 1 million in operation today) Undeniable business case for both end-users as well as FIs. Over 1 Million Mobile & Consumer RDC Users Integration of Card, ACH, Cash. Document & Data Automation


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The Road Ahead

Remote Deposit Capture is increasingly being used by businesses and corporations as an integrated, value-added technology platform to process all payments and related data, resulting in cashflow acceleration and automated data application.

Mass Adoption Mobile Capture– FIs, Third-Parties & Consumers

Increasing Role of 3rd-Party Solutions– PayPal, Intuit, ISOs, ISVs, AFS (Alternative

Financial Services), etc. RDC as a Payments Platform

– Checks, Cards, ACH, Cash Data Automation, Integration & Risk Management

Questions?


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Contact The Presenter

Steven Vaglio, AAP SVP, EastPay Payments Advisory Services & Marketing

[email protected]

mailto:[email protected]

www.EastPay.org800-681-4224

General Information [email protected] Audit and Risk [email protected] Education [email protected]




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© 2013 EastPay. All Rights Reserved What’s New with Remote Deposit Capture? Industry Update &...

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