Why RDC: Aren’t Checks Dead?
A new white paper examines the increasing adoption of remote deposit capture.
Remote deposit capture (RDC) will be an in-demand service for the foreseeable future, according to a white paper from the CUNA Technology Council. RDC allows check holders to scan and use the front and back images of checks as “substitute checks” for electronic clearing—eliminating the need for banks to present paper checks to each other.
As long as people write checks to include with birthday cards or as an alternative to credit cards for large purchases, RDC will be a convenient way for check recipients to make deposits quickly and have speedy access to the funds, according to "Remote Deposit Capture: Thinking Outside the Branch to Better Serve Members."
While check use has declined significantly with the increased use of debit cards, direct deposit, and online bill pay, people still prefer to use checks for some purposes. Checks are safer than large amounts of cash in a wallet or stashed inside the house. And checks allow easy tracking of random payments when a card reader or electronic payment method isn’t available.
RDC, notes the white paper, is a valuable tool for credit union members who:
- Reside far from a branch;
- Frequently travel or are stationed in other countries;
- Have college-age children who live far from a branch;
- Wish or need to make deposits during nonbusiness hours; or
- Operate businesses that must make frequent check deposits.
Convenience is a key factor in increasing RDC adoption, according to the white paper. RDC can be marketed to a broad target group, and promises convenience and freedom for members under time pressures. Rather than hanging on to checks until they can get to a branch or an ATM, they can make deposits right away and have access to the funds.
Evidence of RDC adoption using home-based scanners is starting to emerge. In the first month of the release of USAA’s Deposit@Home application, more than 125,000 were downloaded from the iTunes App Store, resulting in more than 10,000 new users, according to Celent.
Next: Implementation essentials
If your credit union decides to implement RDC, basic essentials are:
- Hardware: Members must have either mobile applications or scanners that will allow for RDC; most manufactured after 1992 are compatible.
- Software: Credit unions can opt for either a vendor-developed image capture application or create one in-house or through partnership with vendor resources. The key requirements for RDC software, notes the white paper, are processing integration, channel harmonization, image correction, and usage reports.
- Education: Credit unions that implement RDC must educate members on how to use it and avoid common mistakes in check placement and entry. Downloadable user documents and system prompts can help with this effort.
- Fraud reduction: A good vendor-based solution should be able to detect and eliminate duplicate/multiple images of the same check. Often this is due to a simple mistake by the end-user as opposed to a criminal’s bilking the system through duplicate presentment. But fraud and risk management controls are critical to any RDC initiative, notes the white paper.
Next: Implementation costs
The cost of RDC implementation has dropped as more members with mobile applications and compatible scanners take advantage of the service. Often RDC is integrated into other delivery channels, such as online banking or mobile banking, so members can access banking services without needing to visit a branch.
RDC reduces teller check deposit processing, which translates into lower operational costs and greater productivity. Staff can redirect their time and energy toward cross-selling products and services. In addition, RDC deposit processing costs run lower than deposits processed through shared branching or deposit ATMs.
The council white paper also covers:
- The business rationale for offering RDC;
- Eligibility criteria and deposit limits; and
- Vendor partnerships.
In addition, four case studies examine how RDC functions in credit unions, and its chief challenges and advantages.
RDC is a great addition to the products and services credit unions offer to members, says Jennifer Weiss, Sandia Laboratory Federal Credit Union’s vice-president of information technology. “Ease of use for our members and customizable parameters are key to the success of this service, so it’s critical to choose a vendor that offers a solution that meets your individual credit union’s needs.
“Choose a solution that’s simple and easy to use for the average computer user," she says, "while offering a secure application that gives you flexibility to customize the parameters and screening guidelines that your credit union is comfortable with.”
For more information or to access the white paper, visit cunatechnologycouncil.org; select “tools and resources” and “whitepapers.”