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The Changing Face of RDC

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2010/08/04
Bob Meara
With all the press following the Chase mobile RDC initiative, everyone is likely aware of mobile RDC. But, there’s another changing face of RDC that may not be as cool as depositing using one’s cell phone, but one no less important to banks.

In late July, Servant PC Resources announced integration of its Servant Keeper Church Management Software with Heartland Check Management from Hartland Payment Systems. With the Heartland solution, a client simply scans a check from their location using a remote scanner, and the deposit is processed. The client receives automatic notifications and can monitor every step of the deposit in real-time. At that point, the transactions are posted in Servant Keeper format to reconcile all member contributions without manual entry — making it an end-to-end solution. Additionally, the client can elect to have bad checks handled by Heartland’s automated recovery program.

This announcement – and the solution it trumpets – stands in sharp contrast with most bank sponsored RDC solutions in several important ways. Specifically:

  • It provides solution integration that adds value compared to a stand alone, deposit-only RDC solution offered by virtually all banks.

  • Banks aren’t doing the selling. In an August 2009 survey of 172 US financial institutions, the majority of respondents conceded that less than 5% of their small businesses were using RDC. Servant PC Resources serves over 22,000 US churches that will now be offered a compelling RDC value proposition as a simple upgrade to software they already use. Vertical market integrations like this offer solution providers (in this case Hartland Payment Systems) instant, low-cost access to strategic target markets. Churches deposit lots of checks.

  • Heartland performs deposit review and item correction, virtually eliminating the need for users to manually correct poorly captured check amounts, saving them time and improving the user experience.

But, banks don’t seem all that concerned about this changing face of RDC. In the same August 2009 survey, only one in four responding financial institutions voiced any concern about the growth of non-bank RDC providers (figure 1).

third-party-rdc-risk

What can financial institutions do to address this threat from non banks? First, some banks don’t see this as a threat. Why? Because some banks (perhaps a growing number) are more interested in deposit gathering than the fee revenue offered by RDC. For those banks wanting the RDC relationship, Celent suggests these steps:1. Offer the right product(s) for small business, with at least one option being one in which businesses don’t have to buy a specialized check scanner.

2. Make it easy to say “yes” with simple and affordable pricing and online enrollment.

3. Get busy selling.

コメント

  • Bob,

    Great insight. For more than a year now, I've been telling my audiences that the "direct to merchant" (or, in your case, direct to church) channel is the biggest threat to customer relationships. Bankers seem to be OK with conceding channel after channel to other providers, not realizing they are going to be left with only the expense side of processing transactions, not the fees! I'm working on a new RDC article right now that talks about this. The key here is the customers WANT the remote capture technology, but banks aren't willing to provide it. Acceptance of this product is high, but banks can't seem to translate that into action!

  • The Servant Keeper deal could be the tip of a big iceberg. Heartland has an aggressive growth plan for dominating check management, from RDC to recovery and collections, in small and medium sized businesses throughout the U.S. Because their all-in-one solution is entirely web based (provided by transmodus.net), it can be integrated into any accounting software system. Heartland is currently working similar software partnerships in several vertical markets, including 212 Topps for property management. What's more, small and medium sized banks can utilize the Heartland system for complete, privately labeled check management and roll it out to their customers in a fraction of the time and cost as their purchased or leased software RDC systems, while at the same time realizing multiple recurring revenue points. Several banks have already signed up, including First Southern of Florida. transmodus has created an all inclusive, web-based check and ACH management system and partnered with Heartland in a union that could threaten not just small and medium sized banks, but larger ones as well. Meara's article is beautifully understated; as the neutrality of the system and the ease of its browser-based implementation spurs adoption from businesses (in reverse fashion) back to depositing institutions, large or small, the percentage of 'threatened' respondees to his survey will increase, and quite rapidly. To me, this is a classic example of a basic business banking function that could be replaced by a new model.