What a great question! Doug Hartsema, SVP of JPMorgan Chase & Co. asked this question to a panel of distinguished guest at the recent TAWPI Conference in Orlando Florida this past weekend. All the answers save one pointed to the bankers who wanted to provide the service for free!
It has been proven throughout history that the market determines price, profits and success. No matter how wonderful your product or how determined you are to sell it, in the end the market will set the bar.
In response to a question I asked about “Is this (RDC) a business solution or a banking solution?” the panel correctly pointed out that historically RDC grew out of Check 21 which was intended as a banking solution. However, only one member of the panel said their company focused on the end user. She made it clear that the solution must be business focused.
Obviously we agree. In fact, the banks that only want to capture deposits will have to give it away for free. You don’t even need to think about it to know that when the bank asks you to send your deposits electronically your first inclination is to ask why? The standard answer is to save a trip to the bank and get your money there faster. While there may be some advantage to not having to go to the bank it is hard to quantify because many businesses have cash or plan trips to the bank around other errands. Add to this the fact that even the most robust bank sponsored RDC seems to be bank focused with little in the way of business solutions. Banks are just now incorporating features in RDC that update bookkeeping systems.
We charging for the solutions we offer and our customers are willing to pay. The question is why? And the answer is simple – “Because the customer is making money”. When the customer makes money everyone can make money!
In fact, many businesses are hearing about RDC not from their bank but from their professional associations and from companies like DCS. Here is why:
Software like ACHeck21 not only saves trips to the bank and gets the available funds into a business account as fast (or faster) than a banks RDC solution but it also provides business solutions that create value for a business. Not only will ACHeck21 process back office conversion, remittance processing, remote deposit, check 21 and the other forms of check processing but it offers enhancements. For example ACHeck21 offers a secure gateway that manages a whole host of services and it updates bookkeeping systems including Quickbooks, Archives images of checks (and stubs) and verifies checks. From the Gateway a business can see and represent returns or process an echeck or upload ACH files. Reporting is robust and flexible. Enrollment takes minutes not days or hours. When a business makes money they are willing to share – that means we all make money!
Friday, August 29, 2008
Saturday, August 23, 2008
TAWPI - The Association for Work Process Improvement
This coming week many people form the check processing industry will be at the TAWPI (The Association for Work Process Improvement) trade show in Orlando. In preparation for this event I have been looking back at this year and wondering about the next 12 months. It seems the industry of processing paper checks and paper in general is going through huge technological changes.
In the past year we have seen the industry explode into Back Office Conversion. In addition Remote Deposit Capture continues to grow. While on the sidelines my company Diversified Check Solutions has been working with on line mail delivery, data mining of consumer information from their checks, BOC verification, check recovery technology, electronic checks and more.
It is certainly an exciting time in for Electronic Check Processing and it is being driven by the work process improvements (spelled – Efficiencies) it affords businesses. In other words by creating a more efficient work place we have something businesses are willing to pay for – provided the costs do not exceed the value of the improved efficiencies we have created.
In fact, as we automate and “electronify” the issuance of checks and acceptance of checks the question I have is: “Will checks start to compete with Credit Cards??” I don’t know the answer but can offer some interesting thoughts.
The efficiency offered by plastic payments drives the credit card industry in large part. As a consumer I am more efficient and realize better use of my time because I don’t have to save up for a purchase. I can go out and buy what I need. Businesses realize efficiencies because the purchase runs smoother and faster with plastic compared to cash or checks plus they are guaranteed payment if they follow the rules.
Today checks are following the same path as credit cards. Companies are guaranteeing payment if the merchant follows the rules; checks are being settled electronically and business are enjoying the efficiencies mentioned above. Plus checks are less expensive for both the customer and the merchant. What is missing? The issuance of checks electronically is the missing ingredient and the networks to make electronic issuance of checks feasible. When that problem is solved there will be no difference between electronic checks and plastic – except one thing. Checks will be less expensive.
As we attend the Work Process Improvement Conference in Orlando Florida to promote our check processing engine we are excited at the possibilities that exist within this industry. Automated Work Flow Improvement is a huge field with more impact than we know. Many of the processes that are being developed for automation of work flow take us closer to the full electronification of checks.
In the past year we have seen the industry explode into Back Office Conversion. In addition Remote Deposit Capture continues to grow. While on the sidelines my company Diversified Check Solutions has been working with on line mail delivery, data mining of consumer information from their checks, BOC verification, check recovery technology, electronic checks and more.
It is certainly an exciting time in for Electronic Check Processing and it is being driven by the work process improvements (spelled – Efficiencies) it affords businesses. In other words by creating a more efficient work place we have something businesses are willing to pay for – provided the costs do not exceed the value of the improved efficiencies we have created.
In fact, as we automate and “electronify” the issuance of checks and acceptance of checks the question I have is: “Will checks start to compete with Credit Cards??” I don’t know the answer but can offer some interesting thoughts.
The efficiency offered by plastic payments drives the credit card industry in large part. As a consumer I am more efficient and realize better use of my time because I don’t have to save up for a purchase. I can go out and buy what I need. Businesses realize efficiencies because the purchase runs smoother and faster with plastic compared to cash or checks plus they are guaranteed payment if they follow the rules.
Today checks are following the same path as credit cards. Companies are guaranteeing payment if the merchant follows the rules; checks are being settled electronically and business are enjoying the efficiencies mentioned above. Plus checks are less expensive for both the customer and the merchant. What is missing? The issuance of checks electronically is the missing ingredient and the networks to make electronic issuance of checks feasible. When that problem is solved there will be no difference between electronic checks and plastic – except one thing. Checks will be less expensive.
As we attend the Work Process Improvement Conference in Orlando Florida to promote our check processing engine we are excited at the possibilities that exist within this industry. Automated Work Flow Improvement is a huge field with more impact than we know. Many of the processes that are being developed for automation of work flow take us closer to the full electronification of checks.
Tuesday, August 12, 2008
Separating the forrest from the trees - Remote Deposit Capture
There are many great companies offering Remote Deposit Capture. So many it is hard to distinguish one from the other. It is especially hard for those that are not immersed in the technology. However, whether you are seeking a Remote Deposit Capture solution for your company or for a bank who wants to offer it as a service the stakes can be high. Here are some things to consider…….
Both companies and banks are confronted with the fact that paper checks are being replaced by a variety of electronic transactions. How much time and resources do you invest to convert paper checks to electronic transactions when customers are moving to the internet, debit cards, IVR systems, credit cards and mobile banking? ON the other hand a wrong decision will most likely mean that your company or bank will spend more than needed, be at a competitive disadvantage and be forced to use work arounds in the short term.
Here are some marketing statements along with simple questions to ask and the ideal answers:
___________________________________________________________________
Marketing Statement:
Our Check Scanning software works with ABC Hardware.
Question:
Is this the only hardware it will work with?
Ideal Answer:
No it will work with any major reputable brand of equipment.
Pitfalls:
This check scanning software is designed around one piece of equipment. This puts your company or bank at double risk. Not only are you investing your future in the Software Company but also in the hardware company. You may be subject to problems at both companies and there may be times when the companies no longer like each other. You will end up the victim.
____________________________________________________________________
Marketing Statement:
Our product can be deployed in a centralized or distributed work environment.
Question:
How is your Check Scanning Software installed in both the centralized and distributed environment?
Ideal Answer:
Our Check Scanning Software gives you options depending on your needs. It may be installed on your servers and distributed through your network OR installed on each client in a distributed fashion. In both cases the cost is the same and the services are the same. You will not be required to buy dedicated computes at each location. Your existing servers or clients can be used.
Pitfalls:
Some software requires that you purchase stand alone clients or servers because it is unstable in an environment with other software. Make sure the imaging software you use is reliable and stable in any environment. After all most businesses do not want to buy equipment to solve someone else’s software problems nor do you want a significant capital outlay up front.
____________________________________________________________________
Marketing Statement:
Our product reduces processing costs.
Question:
What are you counting as processing costs?
Ideal Answer:
We count cost savings as the savings in banking, personnel and overhead costs after deducting our software fees, equipment costs and clearing (bank) fees.
Pitfalls:
Many vendors count only soft savings of time and motion. They do not deduct their fees or allow for banking costs. Many vendors play on the belief by some that the customer has no banking costs associated with processing checks - but this is a myth. Either the bank is charging per check or the bank is holding funds (compensating balances) to offset costs with earned overnight interest. In either case some provision should be made for banking costs. The reason most vendors do not count banking fees is they want to be able to separate themselves from the bank thus making their costs seem less. However, since most customers are buying this technology to convert paper checks to electronic transactions banking fees will come into play.
____________________________________________________________________
Marketing Statement:
We send your deposits to the bank of your choice.
Question:
Do you send them direct or through a clearing account? Have the costs associated with a clearing account been identified in your pricing or are these costs separate? If you send them direct to our bank, do you also integrate your technology to our banks technology or do you leave that up to us?
Ideal Answer:
We can and do send either direct to your bank or to your bank through our clearing account. Costs associated with our clearing account have been identified and are included in the pricing quoted. If you send them direct to your bank we will handle the integration but since we do not know your bank we cannot price this before talking to your bank.
Pitfalls:
Sending deposits can mean many things in the RDC world. There are two basic file types being “sent to the bank” – Check 21 and ACH. Remote Deposit offered by most banks relies on the Check 21 file format. Remote Deposit offered by vendors may use either. They both have advantages and disadvantages. Further sending a file to a bank may or may not result in a deposit depending on whether or not the bank can take the file and use it. Accordingly, representations of sending your deposit to the bank of your choice must be clarified. In many cases the deposit is sent to a clearing account where it is “collected” and then sent to the bank of your choice. However, there are costs associated with the clearing account that must be factored into any costs savings claimed. Further there is the question of whether the funds are co-mingled or set up under separated sub accounts and thereby insured. Finally, if your bank cannot readily accept a Check 21 file (and most can’t) then there must be some form of integration – usually these are minor adjustments to fields in the file. There is normally a cost associated with the integration which should be identified at the beginning.
Both companies and banks are confronted with the fact that paper checks are being replaced by a variety of electronic transactions. How much time and resources do you invest to convert paper checks to electronic transactions when customers are moving to the internet, debit cards, IVR systems, credit cards and mobile banking? ON the other hand a wrong decision will most likely mean that your company or bank will spend more than needed, be at a competitive disadvantage and be forced to use work arounds in the short term.
Here are some marketing statements along with simple questions to ask and the ideal answers:
___________________________________________________________________
Marketing Statement:
Our Check Scanning software works with ABC Hardware.
Question:
Is this the only hardware it will work with?
Ideal Answer:
No it will work with any major reputable brand of equipment.
Pitfalls:
This check scanning software is designed around one piece of equipment. This puts your company or bank at double risk. Not only are you investing your future in the Software Company but also in the hardware company. You may be subject to problems at both companies and there may be times when the companies no longer like each other. You will end up the victim.
____________________________________________________________________
Marketing Statement:
Our product can be deployed in a centralized or distributed work environment.
Question:
How is your Check Scanning Software installed in both the centralized and distributed environment?
Ideal Answer:
Our Check Scanning Software gives you options depending on your needs. It may be installed on your servers and distributed through your network OR installed on each client in a distributed fashion. In both cases the cost is the same and the services are the same. You will not be required to buy dedicated computes at each location. Your existing servers or clients can be used.
Pitfalls:
Some software requires that you purchase stand alone clients or servers because it is unstable in an environment with other software. Make sure the imaging software you use is reliable and stable in any environment. After all most businesses do not want to buy equipment to solve someone else’s software problems nor do you want a significant capital outlay up front.
____________________________________________________________________
Marketing Statement:
Our product reduces processing costs.
Question:
What are you counting as processing costs?
Ideal Answer:
We count cost savings as the savings in banking, personnel and overhead costs after deducting our software fees, equipment costs and clearing (bank) fees.
Pitfalls:
Many vendors count only soft savings of time and motion. They do not deduct their fees or allow for banking costs. Many vendors play on the belief by some that the customer has no banking costs associated with processing checks - but this is a myth. Either the bank is charging per check or the bank is holding funds (compensating balances) to offset costs with earned overnight interest. In either case some provision should be made for banking costs. The reason most vendors do not count banking fees is they want to be able to separate themselves from the bank thus making their costs seem less. However, since most customers are buying this technology to convert paper checks to electronic transactions banking fees will come into play.
____________________________________________________________________
Marketing Statement:
We send your deposits to the bank of your choice.
Question:
Do you send them direct or through a clearing account? Have the costs associated with a clearing account been identified in your pricing or are these costs separate? If you send them direct to our bank, do you also integrate your technology to our banks technology or do you leave that up to us?
Ideal Answer:
We can and do send either direct to your bank or to your bank through our clearing account. Costs associated with our clearing account have been identified and are included in the pricing quoted. If you send them direct to your bank we will handle the integration but since we do not know your bank we cannot price this before talking to your bank.
Pitfalls:
Sending deposits can mean many things in the RDC world. There are two basic file types being “sent to the bank” – Check 21 and ACH. Remote Deposit offered by most banks relies on the Check 21 file format. Remote Deposit offered by vendors may use either. They both have advantages and disadvantages. Further sending a file to a bank may or may not result in a deposit depending on whether or not the bank can take the file and use it. Accordingly, representations of sending your deposit to the bank of your choice must be clarified. In many cases the deposit is sent to a clearing account where it is “collected” and then sent to the bank of your choice. However, there are costs associated with the clearing account that must be factored into any costs savings claimed. Further there is the question of whether the funds are co-mingled or set up under separated sub accounts and thereby insured. Finally, if your bank cannot readily accept a Check 21 file (and most can’t) then there must be some form of integration – usually these are minor adjustments to fields in the file. There is normally a cost associated with the integration which should be identified at the beginning.
Subscribe to:
Posts (Atom)
