San Antonio postal workers who deliver mail to USAA Federal Savings Bank are carrying lighter loads these days.
That's because the $26 billion-asset Internet bank has developed a service that, since December, has let its retail customers deposit checks online instead of by mail.
Though many banks offer remote deposit to commercial customers, USAA is believed to be the first to provide retail customers with such an option and the first to offer this convenience using typical household equipment — a personal computer and scanner — and a secure Internet connection.
USAA officials say its customers are signing up in droves — about 10,000 a week — to take advantage of the instant deposit capabilities. About 200,000 of them are using the service, the officials say.
"We're an Internet bank more or less, and don't have branches, so this was the way for our members to make deposits," said Jeff Easley, the bank's deposit products manager. The service is called Deposit@Home, "but really it's deposit anywhere," he said.
USAA serves military personnel and their families, and its customers are scattered all over the world. Since it has only one branch, customers have historically had to deposit checks by mail, and the checks could take several days to reach an account.
USAA is offering the service to anyone who is eligible to be a member of the bank and has a credit or insurance product with the bank. The system requires no specialized equipment, but customers must download a driver so that their scanners can be controlled through the Web site.
Several industry watchers said this is the first time they have heard of a bank offering a service like USAA's, though one technology consultant said it is conceivable that banks' retail customers could someday demand it.
"It's impressive, and you have to wonder in the long term, what will it do to the banking markets across the country," said Michael Wofford, a senior consultant specializing in technology with Brintech Inc., a bank consulting firm in New Smyrna Beach, Fla. "How will banks — community, regional, and national — respond to it? It blurs the lines of what we typically identify as markets for a bank."
But banks that would like to offer the service will not find it through a vendor — USAA built it in-house using existing vendors' products and a few new ones. It would not name the products or detail how the service works because it did not want to tip off competitors.
In February about 13% of the 2.5 million checks USAA processed used Deposit@Home, and bank officials expect that figure to be 25% eventually. USAA is testing a Macintosh version that it expects to roll out next month. USAA said the service is attracting new customers. In Deposit@Home's first three months, deposit accounts opened online rose 5%, largely because of the new service, officials said.
Mr. Wofford said one of his main concerns with USAA's service is the potential for fraud. The service does not use industry-standard check scanners, so customers are asked to enter the check amounts themselves.
Mr. Wofford wondered, for example, whether some customers might be entering amounts larger than the actual deposits, and how quickly the bank could spot the discrepancy.
Other possible scenarios: the customer's paper check is lost or stolen after it has been scanned and someone tries to cash it elsewhere, or the customer tries to cash it.
Mr. Easley would not specify how USAA has addressed such issues. But he said fraud has not been a concern, and he attributes that to the loyalty of USAA's customer base.
Moreover, any profits USAA makes are eventually returned to customers annually, so taking advantage of the bank could ultimately reduce their own dividends, he said.
"It is a trust service," Mr. Easley said. "You are putting in the check for us, and we are giving you money. We trust that you cancel the check or destroy it."
