When I started my career in this industry 22 years ago, banks had made the transition from ledger cards to "real" computers and the focus was on delivering technology to make the overall process faster. A few years later, check imaging was the hot topic, although most bankers seemed to believe that their customers would never adapt to an electronic image on a statement. Over time, regulatory challenges, Internet banking, and e-bill payment took center stage as the new focus in bank technology. Without question, however, one of the most significant recent events is the rise of remote deposit and merchant capture technologies.
I was doubtful when talk of merchant capture first started. The idea of "check electronification" was reasonable enough, but I couldn't imagine many small businesses and commercial customers who would want to do the capture work; after all, that's the bank's job. I couldn't have been more wrong. Many merchants were quick to see the advantages inherent in a solution that allowed them to get their deposits into the system more quickly. I've seen lots of new technology initiatives take off and grow in the past 20 years, but nothing like what the industry is seeing with merchant capture.
Financial Insights has projected that more than 50 percent of banks will be offering remote deposit capture services by the end of 2008. Additionally, the research and consulting firm projects that by 2011 virtually 100 percent of banks will be offering these services and 25 percent of all businesses will use remote deposit capture on a regular basis. Similarly, Aite Group has projected that almost 20 percent of all businesses will be using remote deposit by the end of 2010. These statistics and projections are staggering when you consider that, prior to passage of the Check 21 Act and the new NACHA rules in 2003, this service was essentially non-existent.
One of the most exciting aspects of this development is the ability it provides a bank to use the technology not only to retain existing commercial relationships, but to add new commercial deposits-sometimes outside of their traditional service area. This allows bankers to redefine target markets and territories.
Even with the large impact to date, the potential is significant for continued expansion of merchant capture. The service will become more sophisticated than capturing check images and converting them to ACH or Check 21 transactions. Merchant capture technology will soon provide the commercial customer with an opportunity to manage its own "payment gateway" to consolidate all types of payments in one spot, with one tool, giving the merchant even greater value from its banking relationship.
