The Mobile Revolution: Remote Deposit Capture

The tablet revolution. The post-PC era. The smartphone explosion. No matter what label resonates the most with you personally, the idea is the same: personal computing is changing. People are spending more time with smaller devices, such as tablets and smartphones, and less time on desktops and laptops.

Recent data from Forrester Research, Digital Insight and Bain & Company point to this mobile revolution:

  • Approximately 90 percent of adults own a mobile device, of which smartphones are rapidly approaching half of all mobile devices in the marketplace.
  • Approximately 96 percent of U.S. households have at least one wireless subscription.
  • Roughly over 1/3 of online bankers are actively using their mobile device to engage with their financial institution, and mobile bankers are accessing their financial information 59 percent more often than non-mobile online bankers.
  • Roughly three-quarters of branch interactions are routine (deposits, withdrawals and account balance inquiries), driving up costs and diverting resources from more important interactions.

The new online and mobile lifestyle requires digital banking as a new way of delivering a connected lifestyle.  Customers would like to bank anytime, anywhere and on any device. Giving your customers the ability to deposit checks anytime and anywhere using a mobile banking app is the next revolution in that connected state.

I recently had the opportunity to analyze the behavior of customers who utilized mobile remote deposit, which was offered by a financial institution who uses Digital Insight for their online and mobile banking platforms. The analysis solely focused on customers who had an open checking account and made at least one deposit into the financial institution in each month of the analyzed time period.

Although the financial institution was less than six months into the product lifecycle, the results were extremely encouraging:

  • Does mobile remote deposit cause customers to frequent the branch/ATM less for their deposit needs?

Digital Insight research indicates the answer is YES. Mobile remote deposit is changing consumer behavior and transferring more of those routine, costly “human” touch points to a less costly channel. Customers which ultimately used mobile remote deposit were using the branch for 29 percent of their deposits prior to using mobile remote deposit. Once the consumer starting using the service, their deposit behavior at the branch decreased to 19 percent – mobile remote deposit diverted 10 percent of all deposits away from the branch. Customers who never used mobile remote deposit did not experience a shift in their branch behavior. Usage of the ATM for deposits also declined for mobile remote deposit customers – 9.2 percent in the “before” period vs. 6.5 percent in the “after” period.

With the cost of gasoline over $3.50/gallon in most places, from the consumer perspective, think how much it costs (including time inefficiency) to drive to your local branch and make a deposit. Mobile remote deposit saves consumers money and is a more efficient alternative that savvy customers will demand.

What will this shift in behavior – from in-branch to mobile remote deposit – mean for the brick and mortar business model? In the short-term, it doesn’t appear financial institutions are in a hurry to reduce customer service headcount or slow the pace of new branch openings. The digital banking channel has created a more efficient operation; however, should not be viewed as an alternative channel. Rather, digital banking is moving towards more of an extension of the branch and with the reduction of “routine” transactions, in-branch representatives can invest more of their time cross-selling products rather than depositing a check.

  • Does mobile remote deposit cause customers to increase their deposit activity?

Study results from Digital Insight indicate the answer is YES. Customers who used mobile remote deposit increased their monthly number of deposits by two percent, while those customers who didn’t use the service actually experienced a decline in their number of monthly deposits by three percent. Did the customer using mobile remote deposit magically begin receiving more checks once they started using the service? Likely not, but rather, instead of depositing a check into another financial institution, (perhaps for a savings or retirement account) they now deposited these funds into the financial institution which offered mobile remote deposit, which means the financial institution has further positioned themselves as the customers’ preferred financial institution.

  • Does mobile remote deposit lead to higher consumer acquisition and/or lower consumer attrition?

To be determined. When I measured the results of mobile remote deposit, the financial institution was less than six months into the product offering with its customers The hypothesis is that mobile remote deposit will strengthen the consumer relationship and thus extend the consumer lifecycle. Additionally, now that the financial institution is offering this value-added service, the belief is that this product will attract new customers to the financial institution and win business from the competition. This could be especially true for the Gen Y and Gen X segments. The comment “attracting a younger demographic” is posed as a strategic initiative in my conversations with financial institutions. Over 75 percent of mobile bankers are Gen X and Gen Y, so these demographics will be the most likely to utilize mobile remote deposit.

The customers most likely to adopt the mobile remote deposit feature are cost‐effective bankers. They monitor their finances through the Web or their mobile phone at a higher propensity than all other customers, which lowers operational costs for the financial institution. In short, customers who desire mobile remote deposit utilize technology that is beneficial for the financial institution and the consumer.

About Jason Weinick: Jason is a Senior Analyst with Digital Insight and leads the initiative on client profitability analyses, providing banks and credit unions a valuable in-depth look into the value of the online channel. Jason’s background includes 15 years experience within the financial services sector, focusing on consumer behavior, risk modeling, reporting, and financial analysis. Jason holds a Bachelor of Science degree in Finance from Clemson University.

Sources: Forrester Research, May 2011; Digital Insight Profitability Study, April 2012; Bain & Company Customer Loyalty in Retail Banking Americas, 2011

 

Big Data: The Link From Dinosaurs to Batman to Small Business

It’s hard to escape the hype around big data these days. From magazines to newspapers to TV, discussions of big data are everywhere. But for the average business or software developer, what does big data mean? What is its promise or potential? The answer depends on the business.

For Google, Facebook and others, big data is intelligence and revenue rolled into one. In cases like the British Museum, it’s about preserving and making freely available a corpus of better than 150 million assets, from maps to musical scores. But even the smallest businesses can begin to use data in new and creative ways.

Consider the case of seasonal retail businesses, such as hardware stores. In years past, store owners manually managed inventory, attempting to anticipate demand for their wares. Today, forward-looking businesses incorporate big data into that decision-making process.

Some turn to predictive algorithms, which are primed with years of inventory data to render better, more accurate projections of demand. Others factor freely available weather data into their inventory predictions. When long-term drought conditions are forecast, as they were prior to this spring, intelligent hardware store owners could lower their inventory of garden hoses and sprinklers and stock the parts necessary for deeper wells that may be dug.

And it goes far beyond internal or general sources, such as weather data. Two years ago the New York Times examined Netflix data to determine which movies were being rented, by neighborhood, in a dozen cities. If you were an entrepreneur looking to open a comic book store, knowing where the fans lived for movies like “Batman Begins,” “Captain America” or “Thor” would be invaluable. Or if you were opening a cooking supply store, planning your location and marketing around which boroughs were consumed by Julie and Julia could be a real competitive advantage.

The nonprofit sector can also benefit from big data. U.S. government census data, made available via the open API at www.census.gov, offers insights on poverty and homelessness. The Cornell Program on Applied Demographics, for example, uses the API to layer poverty statistics onto a map. From there, a savvy nonprofit could turn to the ProgrammableWeb’s collection of nonprofit APIs to tap into databases of potential volunteers.

Whatever the business and whatever the industry, there are datasets – some of them very large indeed – that can help make better decisions faster. The key to effectively using big data is to think creatively about how it can be leveraged. Consultants or contractors won’t necessarily see the same possibilities that you will. But keep an open mind, and big data will more than justify its hype.

*This post originally appeared on the Intuit Network.

About Stephen O’Grady: Stephen is an industry analyst and cofounder of RedMonk. He is based in Maine, a frequent traveler, ardent RedSox fan and focused on helping companies understand developers better and, in general, helping developers do what they do best. He is a paid contributor to the Intuit Network.

From Fiction to Reality: Streamlining the Financial Information Flow

Novels often look to the future to correct the problems of today. Cory Doctorow’s Makers explores how future generations could handle the mass flow of information we receive every day by automatically prioritizing alerts, emails and feeds.

Jim Bruene of NetBanker relates this ideal outlook to how companies like Google are prioritizing information via the Priority Inbox, visually directing the user to the most relevant and important emails and items. With the constant influx of financial account data and information it can be hard to find the pertinent information that you want. Bruene takes a cue from Doctorow’s novel by saying,

“I’m looking forward to the time when my bank, card issuer and/or third-party aggregator does the same for my finances: alerting me to odd transactions, excessive charges, and potential savings. And more importantly, helps me take action to resolve the issue.”

You can read Bruene’s full article here.

How are you trying to show the most relevant financial information to customers?  What do you see as the biggest problems, and which tools are trying to solve them? Let us know in the comments below.