Independence Bank, a single-branch outfit in East Greenwich, plans to expand nationwide without laying another brick.
Ask bank CEO Robert S. Catanzaro Sr. how this is possible and his answer is simple: Cool Deposit, the bank’s proprietary technology that allows businesses to deposit checks from their desktops.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
“Now we can expand our national footprint, and pick up accounts electronically,” Catanzaro said.
Cool Deposit consists of a telephone-sized check scanner and corresponding computer software. Actual checks go through the scanner, which makes a digital image of them that can be deposited via the Internet.
Independence recently began recruiting a sales force to market the system in Rhode Island and Massachusetts, where the bank plans to introduce the product before taking it nationwide.
Catanzaro said the bank’s target market is organizations with $5 million to $20 million in annual revenue that process thousands of checks per year. Examples are law offices, accounting firms and municipalities.
Cool Deposit costs $11,400 (for which Independence offers financing), but the bank says the system will help save thousands of dollars in labor, transportation and liability costs. Basically, the system eliminates the need for clerks to go to the bank, rack up reimbursable gas mileage and risk a car crash or injury for which their employer may be liable.
According to Independence, the remote deposit machine has other features businesses will find palatable. Checks are encoded as they pass through the scanner, rendering them incapable of redeposit. The software also stores front and back images of each check, as well as a record of each deposit.
In addition, deposits are credited to accounts immediately, and an e-mail confirmation is sent from the bank within 15 minutes. The deposited funds are available the next day, reducing the “float” period during which banks earn interest on customers’ money.
Catanzaro said bringing Cool Deposit to the market has been years in the making at Independence, which was founded in 2002.
Backed by banking interests that happened after 9/11, the Check Clearing for the 21st Century Act or “Check 21” was signed into law by President Bush in October 2003. The act, which took effect a year ago, allows banks to accept digital images of checks.
“We piggybacked on that, and said, ‘How can we use this to establish a national footprint without bricks and mortar,’” Catanzaro recalled.
In January, Independence made an agreement with Vsoft Corp., of India, to develop the remote deposit software used with Cool Deposit. The bank hired Carson, Calif.-based MagTek Inc. to manufacture the scanner component, which, unlike the software, is not unique to Cool Deposit.
Catanzaro now believes that no other product on the market matches his bank’s Cool Deposit system.
Still, financial giants such as Bank of America have offered remote deposit services since Check 21 became law last October.
Aileen Gleason, director of receipts product management for Bank of America, said the bank had processed more than $2 billion in remote deposits from October 2004 to September. Then in September alone, remote deposits were $1.6 billion, and she anticipated the bank would process $2 billion this month.
“This really suggests that the dollars deposited with this technology is really ramping,” Gleason said, adding that the bank has about 180 business clients using remote deposit nationwide.
However, banking executives say remote deposits account for less than 5 percent of deposits made in the U.S. Yet they all agree that the technology is already transforming the industry.
“Geographic footprint is no longer a constraint or an advantage when in comes to remote deposit capture,” said John T. Leekley, who owns and operates RemoteDepositCapture.com, which he calls the leading source of information about the banking innovation.
“I can see a point were remote deposit capture is a standard offering of almost every bank in the U.S.” he added.
And though Independence may be behind the largest U.S. banks in developing a remote-deposit product, Leekley said, the East Greenwich bank is definitely ahead of most mid- to small-sized banks.
Catanzaro acknowledged that Independence will face substantial competition, but he added that his bank will continue to update its remote-deposit technology to stay ahead of the competition.
“We have to do it better, we have to do is faster, and we have to do it cheaper.”
