Monetizing Mobile Check Deposit

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Winston-Salem, N.C.-based BB&T Corp. may be a super-regional, but the bank's acquisitive yet conservative deal-making has garnered it national notice in industry and analyst circles. BB&T has in the last 10 years more than doubled its assets to $174.8 billion, making it one of the largest regionals in the world and the 13th largest bank in the U.S.

Taking over the deposits and branches of failed Colonial BancGroup in 2009 from FDIC enabled BB&T to crack the U.S. top 10 in rankings of deposits; the bank has $124.2 billion currently. It also boosted BB&T's presence in Alabama, Georgia and Florida, while giving the institution a foothold in Texas.

And a regulatory approval-pending acquisition of BankAtlantic would vault BB&T's market share ranking to sixth place in the greater Miami area, up from 14th, as BB&T seeks to take advantage of conditions in capacity, buyer sentiment, condo-to-rental conversions and Latin American investment that seem to prime the "Magic City" for growth again.

As this once quiet Southeastern bank rises more swiftly to national prominence, it's working on its mobile offerings. BB&T released April 30 one of the most strongly desired mobile banking features - mobile check deposit - to its retail and business customers. It did so admittedly later than other banks, but with a twist that sets BB&T apart from some of them: BB&T's charging 50 cents per deposited check to use the service.

The pay-as-you-go method is not unheard of: U.S. Bank charges 50 cents per check for its service and First Tennessee Bank assesses certain customers 99 cents per item. Per-check charging could in fact become the norm if results show the amount of customers the fee scares away is de minimis to the amount that will pay to tap it for the time-saving or hassle-free convenience, especially if doing so finances the cost of adding the service, or even provides profit.

"We did look at what other banks were doing before we made the decision," says Patricia Kinney, who manages the mobile banking channel for BB&T. "Some were, and some weren't passing any costs onto their clients. Mobile check deposit doesn't really lower our branch cost, because we still have to keep the lights on and have employees there.

The research indicated the costs are born by those who use it more frequently. "Our pricing in this particular case, however, is based more on breaking even," Kinney says. "The value is our clients see it as a convenience, and hopefully they're more interested in banking with us."

BB&T is using software called Mobile Source Capture from Fiserv that enables the bank's consumer and business customers to make deposits by taking pictures of checks with their iPhones, iPod Touch or Android-based smartphones. BB&T has used scanner technology from Fiserv, called Branch Source Capture, since 2008, and Merchant Source Capture before that, so image-based check deposits can be made at the branch and at the offices of the bank's corporate customers, respectively.

For smartphone deposit capture, the first 30 days of deposits are free for BB&T retail customers. Maximum deposit limits for retail are $1,000 per day and $3,000 per month; for business clients, $2,500 per day and $5,000 per month. All users must meet certain requirements to tap the service, such as being a BB&T customer for at least 90 days. Those that are also online banking clients need only download BB&T's mobile banking app and log-in with their online ID and password to immediately deposit checks, says Sumit Deshpande, BB&T's mobile product group manager.

In the week after the service was launched, Deshpande says the bank received over $100,000 in smartphone-based deposits each day. Kinney adds the bank has "since seen an increase in the rate at which clients are signing up for mobile banking too." Fiserv was chosen because the vendor already supported branch and merchant check capture, Kinney says, and executives figured the mobile tool would play nice and quickly with BB&T's in-house built mobile banking app.

"We want to own our roadmap, so over the years we've brought the entire mobile platform in-house," Deshpande explains. "Our mobile apps, text banking, mobile Web and alert services are homegrown. Where Fiserv comes in is they had the ability to do mobile check deposit. It's easier and faster to market if you have the right people building it and supporting your in-house application. We've been able to do that."

BB&T is looking "very closely" at how it might fulfill one of the most frequent client requests for the service: Raising the max deposit limits, Deshpande says.

 

 

CASEFILE

BANK: BB&T

PROBLEM: How to quickly and practically deliver mobile check deposit?

SOLUTION: Tap incumbent vendor; charge usage fees.

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