Eastman Kodak Co. is entering a business where it says banking companies have been slow to fill customer demand: corporate check-image capture.
The Rochester, N.Y., company already has struck a deal with a technology company that will provide hosted image processing, and it is trying to persuade resellers to provide businesses with the imaging equipment it has developed.
If it gets a foothold in this market, it would represent a significant departure from the current business model for the service, in which banks provide both the imaging systems and the remote capture services to their business customers.
Some analysts agreed with Kodak's assertion that banks have not kept up with customer demand for remote capture, but a banking executive questioned whether Kodak would be able to deliver a compelling offering.
Andy Lawrence, the worldwide solutions business manager of document imaging in Kodak's graphic communications group, said his company's strategy is based in part on the assumption that the growth of remote capture, already a popular service, is about to accelerate, and that banks will not be able to keep up with the demand.
"There is an unmet need that is emerging," Mr. Lawrence said in an interview Tuesday. "Kodak has the presence, the brand recognition, the sales and service organization, the support that would fit nicely into that."
Remote capture lets businesses convert their customers' checks into images and send them to a bank for deposit. The service, designed to save employees a trip to a branch and settle deposits faster, has become one of the most popular uses of imaging technology to date. Nevertheless, experts say adoption has been constrained, because banks have been cautious about bringing customers on board until the banks have developed their own internal capacity to process images.
Bob Meara, a senior analyst at the Boston research and consulting firm Celent LLC, said that banks are concerned that opening a floodgate of remotely captured image deposits could increase the risk of fraud.
"There has been terrific bank adoption but pretty lackluster deployment" of remote capture, he said. As result, even though many banks are offering the service, and demand has been strong, "there is tons more pent-up demand" than the current level of activity would suggest.
John Leekley, a partner in the Atlanta consulting firm Blue Mountain Enterprises LLC, said that remote capture could be in a period of transition, and that even though it made sense for banks to be the first providers of this service, there is no reason for them to be the only providers.
"It's a natural evolution for this industry to go from a bank-centric model to a corporate empowerment model," he said.
Many businesses may want to have remote-deposit relationships with more than one bank, according to Mr. Leekley, who operates a sales lead-generating program through Blue Mountain's Web site, RemoteDepositCapture.com. For example, he said, a stock brokerage may want funds available faster on the checks written by its customers.
However, corporate demand for the service has far outstripped banks' willingness to provide it, and "the corporates are getting impatient," Mr. Leekley said. "In 2006 we saw a mass awakening to the value" of the service. "In 2007 we'll see more big companies such as Kodak get into the game."
Mr. Lawrence said Kodak announced a deal last month with CFC Technology Corp. of Minneapolis, which will host the image files companies send to their banks. Kodak is trying to strike other deals with processors and with banks, he said.
The offering uses software that Kodak licensed in May from Wausau Financial Systems Inc. of Mosinee, Wis.
Kodak also is trying to persuade resellers, such as CDW Corp. and Dell Inc., to put its imaging technology into the hands of companies that want to convert their checks. Mr. Lawrence said that his company is working with its top 25 resellers to offer check-imaging systems to their business customers, and that it plans to make a broader introduction to as many as 150 resellers at a conference this month in Nashville.
"We think 2007 is going to be a breakout year for check imaging," Mr. Lawrence said.
Richard Wanke, CFC's chief operating officer, said that it sends image files to 100 banks to process on behalf of business customers, and that it plans to offer the service in the near future to the rest of its 650 client institutions in 35 states, mostly community banks in the Midwest.
"I think the adoption rate is going to go through the roof," Mr. Wanke said. "Now we can go after Fortune 1,000 companies on down and offer a prepackaged system."
Both CFC and Kodak said that they are not trying to disrupt existing banking relationships, and that they simply want to insert themselves into the existing system.
Mr. Wanke said CFC intends to use its hosting service to help banks bring more businesses online faster. "Our role is not to displace a great relationship between a bank and its customer. That's not what we're here to do."
Mr. Lawrence said the third-party approach also could appeal to companies such as national real estate firms, which handle high-value checks drawn on numerous banks.
"One business is not going to have six different products" to send images to the individual banks, but a third party such as CFC could provide a single interface to the customer "and basically burst out the cash letters to the banks," he said.
Danne Buchanan, the chief executive of NetDeposit Inc., the unit of Zions Bancorp. of Salt Lake City that specializes in high-tech check clearing, expressed misgivings about Kodak's approach. Despite the company's expertise in document imaging, "the payment side is not that easy."
Kodak has years of experience with imaging, but its payments background is thin, Mr. Buchanan said. "There are a lot of pieces that are missing" from its offering, such as accounts receivable conversion, automated clearing house, and back-office conversion products and services.
"How do all those things get addressed?" he asked. "I've never seen a nonpayments company be able to go in and compete effectively in payments processing."
Aaron McPherson, the research manager of payments at Financial Insights, a unit of International Data Group Inc. of Boston, said that Kodak's efforts to move into the remote capture market would benefit banks, because it could enable their customers to move more quickly into imaging.
However, Kodak ultimately will "want to have some bank partnerships," he said. "People are going to want to know who's handling their checks" before agreeing to use Kodak's equipment.
