Remote possibility: Remote Deposit Capture (RDC) is all the rage these days. The financial people like two things: savings and additional noninterest income. But the big opportunity for marketing lies in the ability to cross-sell other products.

• Author: Reim, Dave
• Position: New Technology

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The Federal Reserve has called it "the most important development the U.S. banking industry has seen in years." It's called "remote deposit capture" (RDC), and today it is one of the most actively adopted technologies in the industry, with two-thirds of the top 100 U.S. banks going live with capture, according to Celent.

RDC offers many benefits to banks: convenience, reduced transportation risk and cost, improved processing efficiencies, better opportunities to consolidate banking relationships and more.

Beyond the basics, some RDC systems provide additional functionality: intelligent character and document recognition, data management through business rules, the ability to feed internal systems, intelligent clearing capabilities and many others.

In this article, we will explain what remote deposit capture is; why banks are adopting this technology; what the different types of remote deposit capture are; how financial institutions market the service; and how banks can use the remote deposit to cross-sell other services.

What makes remote deposit capture special?

Remote deposit capture, in its most simple terms, is a service that allows a user to scan checks and transmit the scanned images and/or automated clearing house (ACH) data to a bank for posting and clearing. The basic requirements for RDC service currently include a personal computer, an Internet connection, a check scanner and a service provider such as your current bank.

Each bank has a different approach to RDC: Some resell the application to consumers, while others give the functionality away to maintain and solidify depository relationships. In either cam, RDC is experiencing explosive growth, and a financial institution can use it to expand its footprint without building brick-and-mortar facilities. Not only can banks expand within their region, they can pick and choose where they want to grow geographically. The industry is seeing banks not only deploy figs as an offensive weapon to gain market share, but also use it defensively to prevent corporate clients from straying.

Still in its infancy, remote deposit capture often has different names depending upon how the service is applied within a particular environment. These names include corporate capture, merchant capture, image deposits, image cash letters and so forth. In general, the term "remote deposit capture" is increasingly used as the catch-all phrase for a family of related products and services. Each of these services is related in one common way: The service allows for checks to be truncated and cleared electronically.

Recent federal legislation allows financial institutions to image checks and create image replacement documents (IRDs), or substitute checks, for clearing and settlement. Clearing these substitute checks was authorized under the 2004 Check Clearing for the 21st Century Act, from which the term "Check 21" is derived. Check 21 technologies serve as the backbone for remote deposit capture.

RDC brings new business, survival

In a Community Bank Competitiveness survey released in February 2007 by the ABA, 16 percent of community banks offered remote deposit capture of checks to business customers and nearly one-third of these say they have adopted the electronic check technology as "an essential survival strategy." The survey also revealed that 65 percent of the banks offering the service say it has helped them bring in...