Remote deposit capture aimed at consumers has become more common, and though banks and vendors consider it a niche service, they say it has become increasingly vital in the niche.
Businesses have embraced remote deposit, which lets them convert checks into electronic images that can be transmitted to banks, but it is still uncommon with consumers, for reasons such as cost and security concerns.
Some banks, however, have found that the service is a competitive necessity for certain consumer segments, such as military service people who are often deployed far from their banks' branches.
First Command Bank in Fort Worth has signed up 950 users since introducing a consumer remote capture service in October and says it is getting about 40 new users and 50 deposits per day.
The retail banking unit of First Command Financial Services Inc. has targeted the military since it was created in 1997. Shirley Sitton, the executive vice president for operations at First Command Bank, said in an interview last week that it decided to offer a consumer remote capture service after seeing the success of a similar service introduced in 2006 by USAA Federal Savings Bank, which also serves military customers.
"The driving force behind this effort was really competition, and our major competitor is USAA in San Antonio," Ms. Sitton said.
She said that lacking a comparable service meant that it "might have been a little more difficult to" woo customers "away from USAA.
First Command is using software from the Jacksonville, Fla., vendor Fidelity National Information Services Inc., and Ms. Sitton said her company has gotten several calls from other banks and credit unions that are considering offering a similar service.
Those financial companies view consumer remote capture as a way to earn fees from wealthy clients, she said. "They're looking at it possibly to offer to their premium clients," she said.
Goldleaf Financial Solutions Inc. is taking a similar approach with a consumer remote deposit capture product it plans to introduce early next year to banks.
Todd Shiver, Goldleaf's executive vice president of sales and marketing, said last week that, though no bank has signed on for the product, "we feel like casting a broader net for remote deposit so that we can find those micro-businesses, if you will, or those consumer depositors that provide a large funding source for the banks individually."
These "micro" businesses are too small to qualify for the business remote deposit capture product but too wealthy for banks to ignore, he said. Goldleaf's product, Sierra Xpedite Retail Remote Deposit, will probably be offered to "high-net-worth, high-income individuals that do have large deposits," he said.
Goldleaf, a Brentwood, Tenn., company, gave its imaging business a boost in January when it bought the Alpharetta, Ga., imaging technology vendor Alogent Corp. for $42.5 million.
First Command offers its service only to some customers. People must have a checking or money market savings account, as well as a credit card, loan, insurance, or investment account, to qualify for remote deposit capture.
They must also be enrolled in online banking, and switch off paper statements.
About 85% of her bank's 90,000 customers meet the product requirements, Ms. Sitton said, and though a smaller share uses online banking or e-statements, this is a small hurdle to overcome.
Robert Hunt, a senior research director at TowerGroup Inc., the independent research firm owned by MasterCard Inc., said consumer remote deposit capture "is a valuable product [but] it's a niche product. It provides high value to relatively few people."
This is why it is being offered today only as a premium service or for certain demographic groups, he said.
"USAA was the pioneer, as I recall, and it makes perfect sense for First Command," he said.
Risk considerations hold back more widespread deployment, he said, but other factors have caused consumer remote deposit capture projects to go slowly. For one, the economic crisis has made many banks reluctant to adopt new projects. Another issue is that the hardware consumers use is not as reliable as the scanners banks offer to business clients, Mr. Hunt said — home scanners can have a 20% reject rate for check images.
In March Mr. Hunt predicted that 25% of banks would offer consumer capture by 2010, but he said budget concerns have pushed this adoption rate further away.
"I don't see that happening next year for the large banks at all," he said. Large banks have enough branches to serve customers.
Because there is more need among smaller banks and credit unions that have sparser branch networks, "I think it's going to come from the credit unions, from some of the regional banks and community banks" first, he said, though there would still be restrictions on which customers could have it.
Corrected December 2, 2008 at 7:05PM: An earlier version of this story misnamed the executive vice president for operations at First Command Bank. She is Sherry Sitton.