Mobile remote deposit capture (RDC) technology is now a mainstay for many fully banked consumers. The ease and convenience of simply taking a picture of a paper check to deposit it into a bank account has gained traction by saving individuals a trip to the bank. According to the Federal Reserve, consumer adoption of remote deposit capture technology was a measly 2 percent in December 2011 and spiked to 11 percent just two years later, with adoption continuing to rise.
Large corporations, too, have grown fond of the technology, according to WAUSAU Financial Systems and Celent. The two have released a new research report on remote deposit capture technology and the gaps that exist in its adoption. The biggest potential in this space, researchers said, is with small and medium-sized business.
In a survey of 400 SMEs across the U.S., WAUSAU, which offers RDC technology solutions, found that paper checks continue to be a common way businesses receive payment. The report supports earlier findings released in the 2016 AFP Electronic Payments Survey last month, which found that, in B2B payments, check use actually increased over the last three years.
While checks may be a familiar payment method for both businesses and consumers, opponents of the tool say paper checks are expensive and time-intensive, forcing payers to fill out the check and physically stick it in the mail. For the accounts receivable department, paper checks force a company to manually input data and reconcile a payment against invoices, again, leading to an expensive, cost-intensive process.
Remote deposit capture, say some proponents of the technology, can offer a faster way for companies to digitize their paper checks.
But for SMEs, implementing RDC technology isn’t always easy.
“Currently, desktop remote deposit capture solutions are the norm for mid-sized to large businesses,” WAUSAU said in its announcement of the research report. “Desktop RDC works best for companies that receive and process numerous checks a day, saving on the cost of daily trips to their local bank branch. Yet, for many small businesses, this solution isn’t cost-effective.”
Mobile RDC solutions, the company concluded, can meet the demands of small businesses that receive several checks a day in a more cost-effective manner.
Not everyone is on board with mRDC, however. In 2014, the Pew Charitable Trusts released a report that highlighted the need for greater transparency in mobile RDC solutions, especially when banks offer such a tool to their customers.
But a more convenient way for SMEs to deposit checks could have a significant impact on their bottom lines. Last month, Barclays Business Banking found that a fifth of SMEs forget to deposit a check at least once a week. On average, SMEs miss out on a payment of $1,000 when they forget to deposit a check. About $740 million is lost every year among SMEs in the U.K., the bank said, because the companies forget to bring their checks to the bank.
WAUSAU Financial Systems President Gary Cawthorne highlighted how SMEs present a major growth opportunity for providers of mobile RDC technology.
“Small business owners utilize their smartphones for personal deposits, so this is a natural area of growth for our business,” the executive said. The company added that capabilities in RDC solutions for businesses — like the ability to integrate into ERP and accounting systems and to deposit multiple checks at once — can also help to heighten traction within the small business community.
Celent’s lead researcher for the report, Bob Meara, said this technology could also be a potential growth point for banks.
“Offering small business customers a convenient way to migrate time-consuming branch transactions to self-service opportunities contributes to cementing profitable relationships,” Meara said, adding that WAUSAU’s own offering, Business Mobile Deposit, “can be another tool for banks in providing value-added products for the small businesses in their community.”
But, according to Cawthorne, banks have yet to take advantage of potential market gains.
“The root of the problem is that most financial institutions do not offer an RDC solution tailored to the unique requirements of small businesses,” he said.
Considering the latest research from the Association of Financial Professionals, check use, though once on the decline, remains a prominent payment method. And while SME FinServ companies have worked to wean businesses off the paper check, those efforts still have a long way to go to make a dent in the check’s popularity.
Until paper checks wane from the market, ways to digitize the paper check could prove useful for SMEs plagued with manual data entry, the expense of writing and accepting checks, the time it takes the funds to clear and the hassle of visiting the bank branch.