challenge.jpgThe nation’s 27 million small-business owners are busy people, dealing with countless tasks every day to make a go of it. That’s why many consider their trek each business day to the bank to deposit checks and other customer payments to be a hassle. That time adds up. A technology solution, remote deposit capture (RDC), exists that lets businesses transmit checks electronically to the bank for posting and clearing. It saves them time and money.

Here’s the rub: While a majority of banks provide such technology, just 5 percent of small businesses are using it, even though nearly half of them say they would prefer using the remote route (Aite Group report, Nov. 3, 2011).  

This offers large and small financial institutions alike an opportunity. By executing remote-deposit strategies expertly, they can reap some of the estimated $700 million in revenues being lost now because businesses with less than $10 million in annual revenues aren’t employing these services, according to Aite Group

Banks realize they have an opportunity they haven’t tapped. Fifty-one percent of banks surveyed acknowledge they haven’t been effective in educating their business about remote deposit.  Further, one-third of surveyed SMBs say such a service is important/very important to them (Aite Group, August 2011)

What’s sparking the disconnect?  Banks cite:

  • A lack of resources to enroll and support all interested customers, primarily because they’re using manual systems for such enrollment. Banks say it’s expensive to roll out remote deposit for SMBs.
  • Inadequate training resources to educate potential SMB customers about remote deposit as well as training required to educate internal associates allowing them to sell the solution.  According to Aite, nearly three-quarters of all small business either have not heard of RDC or have heard of it, but aren’t familiar with the details.
  • Poor marketing as the technology isn’t often packaged for SMB needs, which means small businesses aren’t even aware of it. Insufficient understanding and evaluation of the risk associated with the SMB market and difficulty managing risk and monitoring an account once an SMB has enrolled.  

One other obstacle exists. Providing technology that allows small businesses to just automate checks only addresses a segment of their needs. They need a turnkey solution that lets them process checks as well as electronic forms of payment, including one-time and recurring ACH, debit and credit transactions.

As for the SMB community, not all of them are prime candidates for remote capture. Five segments, though, comprise half of the SMB deposit opportunity: professional-services firms, construction, property management, medical and education services.  

For banks and SMBs, help has arrived. Recent turnkey solution offerings promise to remedy many of the headaches for banks with remote capture. They include quick, easy online enrollment forms for banks to use that automatically set up new SMB customers. Also, such turnkey solutions are available that provide marketing materials, return-on-investment calculators, automated setup, hands-off training for users, scanner sales, delivery and support.  These systems accept checks and ACH, and the captured payments can be viewed via a single online portal. 

Risk-monitoring capabilities also are available to allow financial institutions to set up queues to manage and monitor deposit behaviors. Automated setup based on underwriting results speeds up the onboarding process.  In addition, systems now can help to handle changes to existing customer profiles, eliminating the need to manually modify a customer and reducing costs. 

Such turnkey solutions will do much to clear up the problems plaguing banks from enlisting customers and small businesses from using remote deposit capture. And just how lucrative could this prove for banks?  One major financial institution is actively pursuing the SMB market.  It figures that its more than 1,000 branches can add thousands of new small-business customers in total each year for the next three years. 

Financial institutions recognize the demand for remote check deposit among small businesses, but limited resources and management tools have kept them at bay.  With the new turn-key solutions available, financial institutions can capitalize on the significant growth opportunities this huge market segment presents. 

Samuel Golbach