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:

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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.
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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.
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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.

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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.