Remote capture was declared one of imaging's first big success stories, but more than a year after the initial flurry of announcements, many banks are still tiptoeing into the market.
And many of the ones that were quick to start offering the service last year have yet to take full advantage of the technology, which lets corporate customers convert checks into digital images and make deposits by transmitting the files to the bank.
But many observers expect demand to pick up for at least the next year or two, and bankers have high expectations for the technology, which can speed up settlement.
Steve M. Ellis, an executive vice president at Wells Fargo & Co. and the head of its wholesale services, is bullish on remote capture.
"It is a very rapidly adopted service," he said. "We expect to have a very high percentage of our customers using it by the end of next year. It's almost as big as the Internet."
He said faster settlement is especially useful to West Coast banks that must work against time zones to clear checks with trading partners in the East.
For example, Wells' daily deposit cutoff was previously 2 p.m. eastern standard time. Now it offers remote-capture customers a 10 p.m. deadline, which "is a big deal," Mr. Ellis said. "I'm not sure everybody gets that yet."
Last year, as bankers geared up for the Oct. 28 implementation of the Check Clearing for the 21st Century Act, banks ranging from giants like Bank of America Corp. and HSBC Holdings PLC to regional or niche players including NetBank Inc. and First Horizon National Corp., rolled out remote-capture services.
But processing check images has been tougher than a lot of bankers expected, and some of the anticipated cost savings have been delayed. Many banks are now taking a more careful approach.
These include National City Corp., which has a handful of customers in pilot programs. Jeffrey Hildebrand, who manages the Cleveland company's check image program, said that instead of being an early adopter - which he said offers little advantage to speak of - Nat City has developed a coordinated approach to image processing.
Banks that came out with the service early "went after the land grab," Mr. Hildebrand said. "We are in a process of identifying the best way of doing remote corporate capture, branch capture, and ATM capture at the bank. The approach is to build our back office out so we don't have to process" image replacement documents, or IRDs - paper printouts of images that are processed the same way as paper checks.
Dennis Dean, the executive managing partner of cash management services at Harris Nesbitt Corp. of Chicago, the U.S. investment and corporate banking arm of Bank of Montreal, said three or four Harris Nesbitt customers are using its remote-capture system.
"We are taking a more measured approach to bringing clients on," Mr. Dean said. It is offering the service mostly because that is what customers want, he said.
"It is an expectation of our client base to provide them with this capability," he said. "They may not need it today, but they see a need for it a year from now."
Still others say they wish they could have afforded to hold back. LaSalle Bank Corp. of Chicago, the U.S. subsidiary of one of the world's largest cash management banks, ABN Amro Holding NV of Amsterdam, unveiled its remote-capture service in March.
Cindy Murray, an executive vice president at LaSalle and the director of its treasury management group, said she would have preferred to delay remote capture until LaSalle's back office was ready to accept the images and then forward them to image exchange networks. "But there was such a market demand we could not wait," she said.
Instead, LaSalle has had to print out the images as image replacement documents and process them along with its paper checks, which means less cost savings from remote capture. LaSalle has more than 50 clients sending image files, and "we are printing every item," Ms. Murray said.
LaSalle is preparing to begin image exchange with the Federal Reserve and with the SVPCO Image Payments Network operated by The Clearing House Payments Co. LLC of New York. But it is still working on its back-office systems, and the project has been delayed twice, Ms. Murray said. "It is very difficult to implement an image exchange infrastructure," she said.
Banks that began remote capture early say the benefits outweigh the hassles and expense of producing substitute checks.
U.S. Bancorp of Minneapolis began a pilot program for its U.S. Bank On-Site Electronic Deposit service in June 2004. Stephanie Schmidt, a vice president in the treasury management group at U.S. Bank, said it now has more than 150 customers sending it check images from more than 200 locations. It announced this month that its customers had processed more than 1 million remote deposit transactions.
U.S. Bank is also turning images into IRDs. "The majority of the industry is doing it that way," Ms. Schmidt said.
Remote capture is "one of the core products that we are marketing to our customers," she said. "We are seeing tremendous growth for the product."
Robert Hunt, a senior analyst at the market research firm TowerGroup, a MasterCard International unit, said that remote capture was a good strategic first step for the banks that took it, and that the business opportunity should continue to grow.
"The low-hanging fruit was there," Mr. Hunt said. The early adopters tended to be corporations trying to do collection on checks faster or get cash from a bunch of retail locations on a single account, he said.
"I think there's a whole second wave," Mr. Hunt said. The newcomers are motivated not by float or cash concentration, he said, but by convenience. "We don't want to take the administrative assistant out of the law office or the dentist's office. "Now it's become a product for small business."
Danne Buchanan, the chief executive of Zions Bancorp.'s NetDeposit Inc., said demand is rising for banks and their business customers. "We have a lot of customers who are just getting started," he said.
"Some banks are aggressively going after it" while others are integrating remote capture with their back-office processing step by step, Mr. Buchanan said. "Even for a midsize regional bank, there's a lot of time and effort involved."
NetDeposit said in October that its customer banks were installing more than 100 remote-capture systems a week at corporate offices. Mr. Buchanan said adoption rates continue to improve. "We would expect thousands next year," he said. "I would be disappointed if it was less than 10,000."
