As the employee who handles the customer checks at Fielding Manufacturing in Cranston, Lynne Acquaro felt like she was at the bank all the time making deposits.
It was a productivity killer. Driving there, waiting in line, driving back. Although the bank branch is just a few miles away, it often took a half hour or more.
Now the trip is a rarity.
For the last few weeks, Acquaro has been spending a few minutes each week scanning about 40 or so checks in her computer and depositing them electronically at The Washington Trust Co., without even leaving the building.
“It’s like when I got my cell phone – I can’t imagine not having this service,” said Acquaro, chief of accounting and human resources at the 45-employee miniature-parts maker. “Now I wonder how I ever did without it.”
Fielding Manufacturing is one of a growing number of companies that are relying on the ability to transmit checks electronically into their bank accounts, a feature otherwise known as remote-deposit capture that banking officials say has exploded in popularity as more banks offer the service.
Bank Rhode Island, for instance, has offered a remote service called Express Deposit for 10 months. Chief lending officer Mark Mieklejohn said it has surpassed projections, although he wouldn’t release customer figures.
Providence-based Citizens Financial Group Inc., which started E-Z Deposit in 2006, said it is processing three times as many checks as it did a year ago. “It’s quite rapid growth,” said William K. Wray, the bank’s vice chairman and chief information officer. “It’s not 5- or 6-percent growth a year. It’s multiple factors of that as this thing gets broadly adopted.”
Nationwide, remote deposit is still relatively new – a federal law enacted in 2003 allowed banks to accept scanned images of checks instead of the real thing. The Check Clearing for the 21st Century Act – also known as Check 21 – was intended to avoid a situation similar to one in the aftermath of the Sept. 11, 2001, terrorist attacks, when the grounding of all planes prevented the processing of checks.
Since Check 21 was enacted, remote depositing has spread at lightning speed, according to John Leekley, founder of Remotedepositcapture.com, which tracks the market.
While it took 10 years for half the banks nationwide to offer online banking, it has taken remote deposit just four years to reach that same mark.
In Rhode Island, most banks started offering a Web-based service in 2006 and 2007, hiring a third party to assist in the processing.
Leekley said industry forecasts say anywhere between 2 million to 3 million businesses will be using remote deposit by 2010, up from the 300,000 that use it now.
What’s the attraction?
For businesses, it’s the convenience and speed, which translate to cost savings.
“It takes time out of the loop,” said Wray. “It takes transportation risk and irritation out of the loop; it takes the weather out of the loop.”
And most banks typically set a later cutoff time for deposits to be processed.
For the banks, it’s another way to strengthen a relationship with a business customer, or it could be the impetus for a new relationship.
A newly released survey of banks conducted by the American Bankers Association Banking Journal found that 71 percent that offered remote deposit said it has helped retain business clients. And 60 percent of the banks said they attracted new clients because of the service.
Another benefit: The additional income for banks, many of which charge monthly fees, as well as fees per check processed.
Remote deposit also allows banks to expand far beyond brick-and-mortar branches.
B. Michael Rauh Jr., executive vice president at Westerly-based Washington Trust, said its remote service, Freedom Deposit Now, has been available for six to eight months, and 75 percent of its users are new customers to Washington Trust.
“One of the reasons we like it is it allows us to go outside our traditional footprint – into places like Smithfield or Newport,” Rauh said.
Independence Bank, in East Greenwich, which has only one office, has customers using about 70 scanners in 10 states, according to John Charette, vice president of financing and business technology.
All of this means competition is heating up.
Boston consulting firm Celent said nearly two-third of the banks it surveyed already had remote deposit or had a pilot program by the end of 2007. Another 13 percent were planning to launch it.
“It’s spurring unprecedented competition,” said Leekley.
Some banks are shifting focus to smaller businesses, offering different pricing so that remote deposit makes more financial sense for low check-volume clients.
That’s what Philadelphia-based Sovereign Bank has planned.
“We’re trying this year to focus more on small business, to be more mass market with a lot of volume,” said Florence Lenoel, senior vice president of Sovereign’s cash-management group. “There are only a few banks really focused on that, and we’re hoping Sovereign will come up with a nice offering.”
Right now, most banks require customers to purchase a scanner, which can range between $500 and $1,500, although many institutions offer a lease option.
Most banks charge a monthly maintenance fee, generally ranging between $35 and $100. There might also be a separate monthly charge for every scanner used by a customer, and then a 10 to 15 cent charge for each check processed.
Independence Bank is different. There’s a high cost up front – between $4,500 and $15,000 for the scanner and software – but there’s only an annual maintenance fee. Charette said the service is less expensive in the long run. He noted that there is also no third party involved in the transaction.
Looking to the future, Leekley said use of remote deposit will only spread. USAA Federal Savings Bank, based in San Antonio, Texas, already offers consumers the ability to deposit checks from home.
And he foresees some banks adding the scanning technology to their automated tellers in the branches, so business customers can still take advantage of the later cutoff time even when the bank is closed.
Acquaro, at Fielding Manufacturing, is sold on remote deposit.
She said it took only a few minutes to learn how to do it, and the immediate deposit allows the money to collect interest instead of sitting on a desk. “I can’t see anyone wanting to go back when they start using it,” Acquaro said. •
