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© 2013 EastPay. All Rights Reserved What’s New with Remote Deposit Capture? Industry Update & Recap from the RDC Summit Steven Vaglio, AAP SVP, EastPay.

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Presentation on theme: "© 2013 EastPay. All Rights Reserved What’s New with Remote Deposit Capture? Industry Update & Recap from the RDC Summit Steven Vaglio, AAP SVP, EastPay."— Presentation transcript:

1 © 2013 EastPay. All Rights Reserved What’s New with Remote Deposit Capture? Industry Update & Recap from the RDC Summit Steven Vaglio, AAP SVP, EastPay Payments Advisory Services & Marketing

2 Respect Teamwork Passion Integrity Trust EASTPAY  Not-for-profit Regional Payments Association  Educational Programs  Member benefits – Voice & Representation in National Rule Making and Regulatory Process – Toll free operational assistance and – Discounts on seminars, publications, conferences  Online purchasing and registration  8 ACH Accredited Professionals (AAP) on staff 2 © 2013 EastPay. All Rights Reserved

3 Disclaimer  This presentation and applicable materials are intended for general education purposes and nothing in this presentation should be considered to be legal, accounting or tax advice.  You should contact your own attorney, accountant or tax professional with any specific questions you might have related to this presentation that are of a legal, accounting or tax nature.  Image source: Thinkstock © 2013 EastPay. All Rights Reserved 3

4 4 Discussion Objectives  Level Set for RDC – RDC’s Evolving Capabilities – The Value of RDC – Business Model Options  Highlights from the RDC Summit – Mobile RDC – Corporate RDC (American Red Cross) – Risk Management – Small Business Opportunities – The Future of RDC  Q&A / Discussion

5 © 2013 EastPay. All Rights Reserved 5 RDC: A Spectrum of Opportunity The total value a FI or corporation may realize depends upon:  Company Demographics: Volumes, Values & Locations  RDC System Characteristics: Functionality, Process & Price  Data & Workflows: Reporting, Integration & Automation Operational & Deposit Automation Convenience / Transportation Reduction Remote Deposit Capture Spectrum of Value Opportunity Base Value Maximized Value FunctionalityBasicHigh

6 © 2013 EastPay. All Rights Reserved 6 RDC is a Payments Platform RDC Applies to a family of related products & services most often differentiated by location of check capture. Remote Deposit Capture Lockbox Branch Teller Corporate Merchant Correspondent ATM Consumer RDC is becoming an integrated technology platform increasingly used to process different types of payments and data with the ability to feed that data to systems both internal and external to the organization. Mobile The term “Remote Deposit Capture” refers to the process of electronically capturing Payments and data, and transmitting that information for deposit and clearing. This definition is evolving to include additional all payment types, including card, ACH and Cash payments.

7 © 2013 EastPay. All Rights Reserved 7 RDC’s Evolving Capabilities  Check Processing  Capture Check Data & Images  Remittance Processing (Coupons, etc.)  A/R Systems Data Upload  Consolidate Distributed Processing  Consolidate Depository Relationships  Risk Management  Evolving Capabilities: – Various Payment Types – Risk Management RDC is about the Payment – Not just the check

8 © 2013 EastPay. All Rights Reserved 8 The “Value” of RDC is better understood… Base Value  Cost Savings  Time Savings  Account Consolidation Enhanced Value  Data Automation  Data Integration  Risk Management  Payments Platform  Cash Flow Acceleration

9 © 2013 EastPay. All Rights Reserved 9 Business Model Options Businesses have a growing number of RDC Options:  FI – Provided Solutions – The Great Deposit War Has Begun – Greatest Pricing Flexibility  Third-Party Service Providers – Merchant Acquirers / ISOs – In-House RDC  Value Added Resellers – Industry-Specific Accounting Packages

10 © 2013 EastPay. All Rights Reserved 10 The RDC Summit 2012 The RDC Summit 2012 is the industry’s premier conference on Payments and Remote Deposit Capture, featuring hundreds of attendees from leading Banks, Credit Unions, Corporations, RDC Solution Providers, Regulatory Agencies and more. Highlights: 95% of the RDC Industry in Attendance 3 tracks: Corporate, Credit Unions & Community Banks, Retail & Commercial Banks Over 24 total Sessions Expert Speakers (American Red Cross, JPMC, Sysco Foods, Mitek Mobile and more Over 30 Sponsors & Exhibitors

11 © 2013 EastPay. All Rights Reserved 11 Bob Hedges Managing Director AlixPartners LLP David Rathke SVP, Treasury Product Management Frost Bank Darcy Samson VP, Small Business Deposits U.S. Bank 0 Go Large or Go Home: Mobile & Consumer Capture Case Studies

12 © 2013 EastPay. All Rights Reserved 12 Mobile Is Playing an Increasingly Important Role in Consumer Decisions to Switch Primary Banks Question: How would you describe the role mobile banking services played in your decision to change primary banks? Note: Number may not add due to rounding. Q2 2010 through Q 2 2011, based on 6 months switching; Q4 2011 through Q2 2012 based on one year switching. Source: AlixPartners Mobile Financial Services Tracking Study, Q2 2010 (N=14), Q4 2010 (N=31), Q2 2011 (N=44), Q4 2011 (N=99), Q2 2012 (N=193)AlixPartners Role of Mobile Banking in Primary Bank Switching Decision Among Smartphone/Tablet Owners Who Switched Primary Banks, Q2 2010 - Q2 2012

13 © 2013 EastPay. All Rights Reserved 13 Mobile Remote Deposit Capture Adoption Is Now Taking Off Mobile Remote Deposit Capture Adoption Q4 2010 - Q2 2012 Question: Some banks now offer a secure way to deposit a paper check by taking a picture of the check using a camera-equipped mobile device and sending the picture to your bank using your mobile device. This technology is referred to as remote deposit capture. Are you aware of this service?; Have you ever used the remote deposit capture service at your bank to deposit a check with your came Source: AlixPartners Mobile Financial Services Tracking Study Q4 2010 (N = 2,942 respondents, N = 711 smartphone/tablet owners), Q2 2011 (N = 3,024, N = 811 smartphone/tablet owners), Q4 2011 (N = 5,594, N = 2,802 smartphone/tablet owners), Q2 2012 (N = 4,554, N = 1,876 smartphone/tablet owners)AlixPartners

14 © 2013 EastPay. All Rights Reserved 14 Mobile Remote Deposit Capture Is a Critical Feature in Consumers’ Banking Decisions Question: What are the most important features of mobile banking that would cause you to switch primary banks? Please choose your top three features Source: AlixPartners Mobile Financial Services Tracking Study, Q2 2012 (N = 815)AlixPartners Mobile Banking Features That Would Cause People to Switch Primary Banks Among Smartphone/Tablet Owners at Least Slightly Likely to Switch Primary Banks for Mobile Banking, Q2 2012

15 Mobile RDC for Corporates Reality & Revelations © 2013 EastPay. All Rights Reserved 15 Brook Ballard Senior Manager, Treasury Operations Sysco (President, Houston TMA) Kurt Matis President & CEO FTNI 0

16 © 2013 EastPay. All Rights Reserved 16 It May Be Too Early for Corporate mRDC…  For Corporates, Mobile RDC will be the next frontier  Current limitations include application of funds  Association of detail of payment to check imaged

17 © 2013 EastPay. All Rights Reserved 17 Evolution of Corporate RDC

18 © 2013 EastPay. All Rights Reserved 18 Mobile RDC Today

19 © 2013 EastPay. All Rights Reserved 19 Evolution of Corporate Mobile RDC

20 © 2013 EastPay. All Rights Reserved 20 Making Corporate RDC a Reality  Phase I benefited the banks & businesses – Eliminate Trip to Bank – Quicker access to funds  Phase II-IV benefited the businesses – Reduced data keying – Reduced data processing costs – Streamline A/R – Quicker reporting & follow-up Conclusion: Mobile RDC needs to advance to the point that businesses benefit not increase A/R costs through manual matching & posting of receivables.

21 © 2013 EastPay. All Rights Reserved 21 RDC to the Rescue Steve Casey Corporate Treasurer American Red Cross 0

22 © 2013 EastPay. All Rights Reserved 22 One Red Cross  One Red Cross – an enterprise vision for maximum effectiveness and efficiency in all systems, processes, and procedures.  One Red Cross Banking – We must be able to…. –Establish visibility and immediate access to Red Cross funds. –Accept and deposit coins, currency, checks and credit cards with standard processes. –Enable chapters to procure goods and services within the community to deliver needed services. –Be prepared to provide financial support to clients in response to emergencies. –Maintain and build community-based relationships and partnerships with banks. “One Red Cross Bank Account” symbolizes the result of aligning a network of banks providing modern cash management services with centers of expertise providing accounting and donor management operations.

23 © 2013 EastPay. All Rights Reserved 23 Red Cross RDC Integrated capture & digitization of all donation types & related documents Checks Cash/Coin Credit/Debit Gift Letters ID Cards Payments Gateway to process all transactions and documents Common, easy- to-use application for field office collection of donations Integration with back-office systems Finance Accounting Donor DB Flexible Payment Processing ACH ICL Acquirer

24 © 2013 EastPay. All Rights Reserved 24 Red Cross RDC – Results! An efficient and effective back office allows the Red Cross to continue to maximize the use of each donor’s contribution to help those in need.  We now have ONE: – System to capture, digitize, and transmit donations – Gateway to process all donations – Integration of donation transaction info to back-end systems  Business impact: – RDC has allowed Red Cross Finance team to begin consolidation of COE's into a Shared Service Center – Consolidation is occurring about a year earlier than originally planned

25 © 2013 EastPay. All Rights Reserved 25 RDC Impacts @ the American Red Cross  DDA Accounts: – Pre-RDC: 4,200+ – Post-RDC: ~60  Banking Relationships: – Pre-RDC: 300+ – Post-RDC: ~13  Time it takes to “apply” donations / funds: – Pre-RDC: 3 – 5 Days – Post-RDC: 1 day, on average  Other Valuable Benefits – Elimination of trips to the bank, increased volunteer productivity, data automation, single point of control, better cash management & investing visibility / capability, better application of funds, and more.

26 © 2013 EastPay. All Rights Reserved 26 RDC Risk Management  All Bark, No Bite – Actual losses uniquely attributable to RDC have been minimal.  Compliance & Perceived “Fear” = #1 Issue for FIs  #1 Risk: Duplicate Presentment / Physical Items after deposit.

27 © 2013 EastPay. All Rights Reserved 27 Corporate RDC Risk Management “Top Ten” 1.Setup Automated Reports & Alerts 2.Separation of Duties 3.Have a Backup Plan 4.Restrictively Endorse All Items 5.Safekeep all items 6.Destroy all items 7.Implement Positive Pay 8.Choose the “Right” Solution 9.Understand the “Cons” 10.Utilize Duplicate Detection

28 © 2013 EastPay. All Rights Reserved 28 The Greenfield Opportunity Small Business RDC Christine Barry Research Director Aite Group 0

29 © 2013 EastPay. All Rights Reserved 29 RDC is a natural fit for small businesses, yet product adoption is below bank expectations  RDC helps small businesses save time, increase convenience, and operate more efficiently  More than 50% of U.S. banks have deployed RDC  Less than 5% of small businesses have adopted it  For most institutions, adoption is below expectations Source: Aite Group survey of top 50 U.S. Banks, September-October 2011

30 © 2013 EastPay. All Rights Reserved 30 Low small-business adoption is not reflective of interest in the product Source: Aite Group small-business survey, August 2011

31 © 2013 EastPay. All Rights Reserved 31 In fact, interest in RDC has grown over the last two years Source: Aite Group small-business surveys July 2009 and August 2011

32 © 2013 EastPay. All Rights Reserved 32 …Small businesses may go elsewhere Source: Aite Group Small-Business Survey, August 2011

33 © 2013 EastPay. All Rights Reserved 33 Small Business: The “Greenfield” Opportunity There are over 29 Million Small Business Locations in the USA Today.  Fewer than 1 Million use RDC Today  Mobile RDC will play an increasing Role – Low Volume, Convenience Play  Desktop Integrated RDC will be increasingly attractive. – Account Reconciliation / Data Application  The ability to accept multiple payment types is increasingly important – A Single Payments & Data processing platform.

34 © 2013 EastPay. All Rights Reserved 34 We’ve only just begun…  Fewer than 2 million locations in operation t oday on Traditional RDC  Checks remain a primary payment method.  2/3 of all $$$ received by businesses are by Check (AFP).  Over $32 Trillion was paid by check in 2009 vs. less than $5 Trillion via Cards (Fed Study).  There are over 29 Million Small Business locations (Less than 1 million in operation today)  Undeniable business case for both end-users as well as FIs.  Over 1 Million Mobile & Consumer RDC Users  Integration of Card, ACH, Cash.  Document & Data Automation

35 © 2013 EastPay. All Rights Reserved 35 The Road Ahead Remote Deposit Capture is increasingly being used by businesses and corporations as an integrated, value-added technology platform to process all payments and related data, resulting in cashflow acceleration and automated data application.  Mass Adoption Mobile Capture – FIs, Third-Parties & Consumers  Increasing Role of 3 rd -Party Solutions – PayPal, Intuit, ISOs, ISVs, AFS (Alternative Financial Services), etc.  RDC as a Payments Platform – Checks, Cards, ACH, Cash  Data Automation, Integration & Risk Management

36 Questions? © 2013 EastPay. All Rights Reserved 36

37 Contact The Presenter  Steven Vaglio, AAP SVP, EastPay Payments Advisory Services & Marketing svaglio@EastPay.org

38 www.EastPay.org 800-681-4224 General Information info@EastPay.orginfo@EastPay.org Audit and Risk audit@EastPay.orgaudit@EastPay.org Education education@EastPay.orgeducation@EastPay.org

39 Follow Us on Twitter © 2013 EastPay. All Rights Reserved 39 @EastPay https://twitter.com/EastPay

40 Learn More - Online  Exception Item Processing series (three part series)  Account Takeover series (two part series)  Tips & Tactics: Onboarding Originators  ACH Marketing – Expand Your Customer Base  ACH Risk Fundamentals  Managing High-Risk Originators  RDC Rules and Regulations  Real RDC Risk Challenges  Mobile and Consumer RDC  ACH Audit Preparation: Are You Ready?  Breaking News: Payments Industry Update 2013 © 2013 EastPay. All Rights Reserved

41 Learn More – In Person  Getting to Know Your 2013 NACHA Rules Book  Payments University (Two-days)  Fraud Symposium  Manage Your ACH Risk or Explain Your Losses  AAPs Start Here - Learn and Prepare (Two-days)  AAP Test Before You Test (Two-days)  Wire Transfer Training  Healthcare  ACH Super Day © 2013 EastPay. All Rights Reserved

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