Academic journal article ABA Banking Journal

After the Buzz, Banks Fine-Tune RDC: Actually, There Is Still Plenty of Buzz about Remote Deposit Capture. but the Devil Is in the Details of Pricing, Selling, and Security

Academic journal article ABA Banking Journal

After the Buzz, Banks Fine-Tune RDC: Actually, There Is Still Plenty of Buzz about Remote Deposit Capture. but the Devil Is in the Details of Pricing, Selling, and Security

Article excerpt

Platte Valley Livestock, an auction market in Gering, Neb., sits 450 miles from the nearest branch of its bank, First Dakota National Bank. It would mean a seven- or eight-hour drive to make the regular deposit of checks from the auctions, not something anyone would want to do, even if gas didn't cost what it does these days.

And, of course, owners Jerry and Sally Weekes didn't do any such thing. Instead, "they had been overnighting checks by UPS," says banker Shelly Eilers, senior deposit officer at $650.1 million-assets First Dakota. "This was costing them more than $80 a week, and it was also delaying getting their funds into the bank and available for their use."

Note that Eilers said, "had been."

In March 2006 First Dakota launched remote deposit capture service, and Platte Valley Livestock was one of its beta sites. Now the firm is saving courier costs and getting its hands on its proceeds far more quickly.

Not every one of the 20 or so remote deposit capture signups that First Dakota has seen in its first year are situated quite so far from the Yankton, S.D., bank.

But in farm country "down the road" means something different from the same words in cities and suburbs. Hence First Dakota, which uses the Jack Henry ProfitStars RDC package, has found other banks offering competing remote capture products too. One strong competitor is another community bank, while another is Wells Fargo.

And remote capture may take First Dakota further, itself, than it has gone before for deposit relationships. The bank has served South Dakota, northeast Nebraska, northwest Iowa, and southwest Minnesota for many years, but now its influence could grow.

"I see a whole lot more opportunity," says Eilers, "because this gives us the ability to bank somebody out of our area--like in California."

This ambition is not unreasonable at all in a time when a bank's "branch" can be as close as a scanner on a desktop.

Complete customer review is done

For a taste of remote capture in a more suburban market, take the experience of First Bank of Baldwin, a $120 million-assets institution about 30 minutes away from Minneapolis-Saint Paul, Minn.

The bank launched its remote capture effort in late 2005, using Goldleaf Technologies' web-based approach to the service. The bank has a significant number of business customers whose operations include out-of-area and out-of-state satellite offices. Many have banking relationships in their locales--relationships that remote capture suddenly puts into play. Such firms include interstate trucking and commercial construction firms.

Like many community banks that have adopted remote capture technology for their business customers, First Bank went about things conservatively, according to Robert Wurtzel, assistant vice-president and chief operations officer.

"The complete relationship of the customer is reviewed," says Wurtzel. "The customer needs to be creditworthy and have enough deposits to cover any returns."

Initially, thinking that time spent on driving to the bank was a major savings to promote, Wurtzel says the bank aimed at customers who were 15 miles or more away from headquarters.

In time, however, the bank realized that even closer customers were potential candidates for remote capture, and pulled in its "circle" to a one-mile distance from the bank. Furthermore, while originally only check-intensive customers were targeted, the bank found interest strong even among cash-intensive customers.

So now it reaches out to key prospects among them, while finding various solutions for the need to get cash taken care of.

The bank has 22 customers currently on board for remote capture and hopes to double that in 2007.

The only dark spot on the horizon with remote capture is that other institutions have definitely caught on, notably larger banks. …

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