The Benefits of Remote Deposit Capture for Regional Banks

Regional banks are to national and multinational banks as small businesses are to national and global corporations. Although the latter aren’t out to eradicate the former, there is traditionally a sizable gap between big banks and small ones in terms of revenue streams. Large banks have been able to acquire more customers because they have locations almost everywhere. Customer acquisition for regional banks, on the other hand, has been constrained by geographical boundaries.

In the past, a regional bank in West Virginia could only dream of attracting customers in Washington, where it had no branches, but the passage of Check 21 legislation in 2003 changed all that. Check 21 allows banks to exchange electronic images of checks and other documents in place of physical documents. This means that a business in Seattle can use a check scanner to deposit checks in a bank located in Huntington. Known as Remote Deposit Capture (RDC), this process allows regional banks to acquire revenue streams that were once off limits.

It Takes Two to Tango

The biggest benefit of remote deposit capture for banks is the elimination of geographic boundaries, but just because a financial institution has an RDC program doesn’t mean a business can start depositing checks there – the business needs an RDC program, too. After the initiative to implement the program passes, getting it up and running requires eight basic steps:

– Developing an image strategy

– Image enabling check processing

– Make workflow changes to accommodate RDC

- Choosing the optimal transmission channel

- Define exchange procedures with partners

– Selecting check scanning equipment

– Training workers to perform RDC

– Testing the program with exchange partners

When they implement remote deposit capture, businesses and financial institutions often hire an image exchange consultant, or appoint an internal, cross-functional project team to oversee the implementation the program. Regardless of how implementation is approached, the key is act quickly once the initiative passes, while the benefits of RDC remain fresh in the minds of decision makers.

Impressive Numbers

The cost of implementing remote deposit capture for banks is nothing if not feasible. The FDIC reports that implementing an image exchange program costs roughly $10,000 – about $290,000 less than it costs to open a new branch location. Once the program is in place, the revenue it generates can swell the bottom line, to say the least. For example, in 2008, Utah-based Zions Bancorporation and its affiliates posted RDC deposits of over $400 million daily. At the time, Zions was adding nearly 50 new RDC customers each week.

If you manage a regional bank that needs a reliable strategy for adding customers and revenue streams, implementing remote deposit capture for banks – a program that has inherent incentives for businesses large and small – should be seriously considered. Remote deposit capture has quickly gone from being a futuristic trend to defining how businesses deposit checks in the present. For more information about RDC and the hardware that supports it, contact a provider of RDC solutions for financial institutions today.