The window is closing for banks to use mobile phone deposits as a competitive differentiator.

A growing number of institutions plan to offer the service, and if the results of banks like Conestoga Bank are any indication, using smartphones to deposit checks will soon be mainstream and commoditized.

The Chester Springs, Pa.-based Conestoga was an early adopter of mobile remote deposit capture, which allows customers to use the cameras on their smartphones to capture images of checks for deposits. The results of its first year of mobile RDC are in. Account openings rose 10% and the bank credits mobile RDC for the jump. Twenty percent of customers now use mobile RDC. Also, average monthly deposits via mobile RDC have reached $1.5 million, at a bank with $622 million in assets.

The bank's early returns on mobile RDC are strong signal that the app is widely popular among users and can boost business for banks of all sizes, not just top-tier institutions.

"Customers of all ages like mobile deposit capture. Check volume is falling off, but people still do get checks. If you get a rebate check or something like that, you can deposit that check at any time, wherever you are," says Lori Adamski, executive vice president and chief operating officer for Conestoga, which was one of the first community banks in the nation to offer mobile remote deposit capture and the first in the Philadelphia area to do so.

Conestoga is an early adopter of new tech on a number of fronts, such as its embrace of new branch automation techniques like video and remote access to streamline store designs as usage patterns change.

Mobile RDC can also serve changing usage patterns.

"People will leave their house without a wallet, but won't leave without their phone. Mobile RDC allows them to save a trip to the bank, or to make fewer trips to the bank," Adamski says. "We have a lot of customers that are small entrepreneurs, such as landscapers and people who are in the service industry. Remote RDC is a way to allow these contractors to make deposits quickly after getting paid on the spot."

The bank, which uses Mitek Systems (MITK) Mobile Deposit to power the mobile RDC application, makes the service available to users of iPhone (3G, 3GS and 4G), Blackberry (version 5.0) and Android (OS 2.1.1 or higher).

Images are available for up to five days from the date of deposit via the app, and deposits can be made to checking, savings and money market transfers.

Security is provided via 128-bit encryption to transmit the image and data, deposit confirmation messages, and access to images stored at a server operated by the bank. Images aren't stored on the phone.

Lacking the resources to produce a national campaign like those used by larger institutions to sell mobile RDC, Conestoga has used a traveling billboard to market its service around the Philadelphia area, via truck.

Adamski says the bank's smaller size makes it more agile and thus faster to market with mobile RDC.

The buzz and success that have followed mobile RDC should put other banks on notice. Javelin Strategy & Research reports that nearly two thirds of banks plan to offer mobile RDC over the next year — joining a still relatively small group of adopters that includes mostly larger banks such as JPMorgan Chase (JPM), USAA, and U.S. Bank (USB). Twelve of the largest 19 banks still don't offer mobile RDC. The research group reports a number of use trends that contribute to the success of mobile RDC, including the near-ubiquitous use of mobile phones to take photos.

While Conestoga doesn't charge for mobile RDC, Javelin executive vice president and research director Mary Monahan says the opportunity is there to use the technology to drive fee income. U.S. Bank and BB&T (BBT), for example, plan to charge fees for mobile RDC.

Mobile RDC also costs less for banks — about four cents per check, as opposed to the 75 cents per check for other deposit methods.