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The Power of Mobile Remote Deposit Capture

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It's as simple as snapping a picture.

"Mobile remote deposit capture is one of the reasons people understand the value of mobile banking," says Mary Monahan, an executive vice president and research director at Javelin Research.

While speaking at the Mobile Banking and Commerce Summit in San Francisco, Monahan suggested mobile remote deposit capture — in which people use the smartphone's camera to take a picture of a check to commence a deposit — is becoming so popular, banks may actually be able to charge for the product while saving overhead costs at the same time.

Banks have typically avoided charging fees for new mobile and web financial services, choosing to position them as a value-add that drives use of other services. But U.S. Bank (USB) has decided to charge 50 cents per check deposited via mobile, and other banks such as BB&T (BBT) have similar plans. Monahan says this demonstrates how mobile RDC has driven mobile banking growth over the past year. "Consumers are actually amenable to [paying for mobile RDC]," she said.

Monahan says the fees are also matched by overhead reductions. She said mobile RDC check deposits cost as little as four cents per check, according to a study Javelin did with USAA. At the same time, it costs between 75 cents to more than three dollars across the banking industry to process check deposits via traditional means. There are also other efficiencies; mobile RDC users tend to use lower cost venues for transfers, such as online banking and web-enabled transfers, rather than channels such as wire transfers via money services such as 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 RDC 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 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 RDC as a differentiator may be closing, however. Javelin says 58% of financial institutions plan to deploy mobile RDC over the next year, joining financial institutions that already offer the service, such as USAA, Chase, US Bank, PayPal, Charles Schwab and the West Virginia Federal Credit Union. While 12 of the 19 largest banks do not offer mobile RDC, Monahan says that's likely to change soon given consumer trends.

Javelin reports more than one in four consumers find mobile deposit desirable or very desirable. And about 80% of consumers who desire mobile RDC actively use their mobile phones to take photos. Smartphones are quite popular for photos; Javelin says photos are the second-most-used mobile phone feature by people who wish to deposit checks via their phone, ranking just behind text messaging and ahead of playing games, GPS or accessing social networking sites. "Mobile RDC will soon be a must-have," Monahan says.

Mobile RDC is also driving services to the underbanked. Patrice Peyret, president and CEO of Plastyc, a prepaid card service, said his firm plans to offer mobile RDC 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 RDC near check-cashing businesses to avoid fast "double" check-cashing) and deposit limits. He expects most of his competitors will also soon offer mobile RDC. The argument's clear to Peyret: the penetration of smartphones is high among the underbanked, he said, particularly since the cost of smartphones is coming down, and added his firm's prepaid cards are ACH route-able and FDIC-insured.

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