Critical Success Factors to Implementing Remote Deposit Capture

By Jana Waughn

Remote Deposit Capture is one of the fastest growing technologies among organizations that receive large numbers of checks and the financial institutions that process them. By pursuing best practices, enterprises can achieve positive return on their RDC investment within 12 months. By starting the clearing process more quickly, Remote Deposit Capture enables organizations that use it to get and deploy cash from check payments more quickly. That enables firms to have higher balances and earn more income from interest-bearing deposit accounts, pay off balances accruing finance charges, and use money for other cash management needs.

The growth in Remote Deposit Capture is hitting the “hockey stick” curve that many other new technologies enjoyed as they moved from early adoption to mainstream adoption phases. Aite Consulting Group forecasts that the number of banks processing with Check 21 technology will grow by a factor of 10 by 2009. Celent reports there are 250,000 workstations currently using Remote Deposit capture, a figure that’s expected to grow to 1 million by the end of 2009 and 5 million by the end of 2012.

Though there is no question regarding the benefits, and, hence, the popularity, of Remote Deposit Capture, there are some best practices that separate the most successful implementations.

Create a business case study.

Compare the state of the operational flow and costs with Check 21 and Remote Deposit Capture capability installed compared to the current environment. Executives are more likely to approve the project, and approve it more quickly, if they can see a tabular display of cost and workflow benefits and speed of recovering their investment than if they just have a promise that the technology will “offer improvements that will pay for themselves over time.” A thorough payback analysis will outline the benefits for the decision making process, such as the expected reduction in errors and savings from less data entry and reduced clerical staff.

Leverage your banking relationships.

Use Remote Deposit Capture to build relationships that will provide the best total benefits to your firm in terms of services and interest on deposits and fees for services, rather than continuing to use a financial institution because the bank’s branches are geographically convenient. Remote Deposit Capture enables the user to consolidate banking relationships in order to become a more valuable customer for the financial institution – enabling you to get the best value from the relationship.

Thoroughly analyze potential vendors.

Look at their successes, talk to their customers, check their stability. The vendor’s successes and customer feedback will indicate the vendor’s expertise and ability to work with customers, not just the ability to close a sale. Financial stability is important to ensure the vendor will be in business to support the technology. The technology offers several advantages, but few if any will be realized if the vendor is unwilling or unable to provide ongoing support and advice.

Also consider how customers have used the vendor’s products. Is it just converting a paper document to an electronic image, or does the digital information flow through to the organization’s back-end accounting system for additional efficiencies?

Get buy-in from all levels within the firm.

If someone opposes the project, particularly at a critical juncture, he or she can delay progress, resulting in costly delays. The better the buy-in, the more everyone will work to a successful and efficient implementation, enabling the organization to benefit from the technology more quickly. The best Remote Deposit Capture systems aid firms with cash management, Sarbanes-Oxley compliance via better documentation and monitoring controls, risk management and accounting, so there should be education of and buy-in from different departments within the organization.

Have a complete understanding of the number
and types of checks that you deposit.

Firms that get more checks or checks that need to be apportioned to different accounts will get the fastest payback from a properly integrated Remote Deposit Capture system. Though many consumers have adopted online bill payment and have sharply reduced the amount of checks they write, many still prefer paper checks. Additionally, businesses are still writing checks for most of their purchases because they still need a way to track payments among several different accounts for bookkeeping purposes.

Brokerage firms, for example, get checks from commercial and consumer customers that include funds for several different accounts (e.g., Mutual Fund A, Mutual Fund B, etc.), posing complexity in accounting and delaying processing. With traditional check processing methods, each item would need to be entered separately, then sent on for processing. Any time data is re-keyed, it delays the accounting process and increases the chance for human error.

Another factor for broker/dealers is the settlement time promised to their customers. A broker/dealer usually promises settlement with their clients within a specified number of days. If a check comes into the office late or is held up in delivery (as in the days following 9-11), the brokerage must honor their settlement commitment, even if the check itself hasn’t cleared.

Firms of all sizes in a variety of industries can enjoy quick benefits from adding Remote Deposit Capture capabilities.

Avoiding the Pitfalls

In order to build a successful Remote Deposit Capture operation, it is also important to avoid mistakes that have resulted in a less-than-optimal launch at some installations.

Here are some common mistakes:

Assuming that all users are fluent in banking technology and rules.

Some may see Remote Deposit Capture as just another way of doing the same process without an eye to the benefits. To get complete buy-in, everyone in the organization should be apprised of the faster clearing, better cash management and other benefits that Check 21 affords an organization.

Being afraid to ask for enhancements and improvements to the software.

To receive the fastest and most comprehensive benefits from Remote Deposit Capture, the organization must use the most complete package available. Don’t settle for simply replacing paper with scanned images. Ask for the latest enhancements and improvements to the software. Does the application offered provide integration with backend accounting systems in order to maximize efficiencies? Or does it require that all information must be keyed in separately from scanning? Such a manual process eliminates much of the time- saving benefits of the technology and introduces a level of potential human error in the re-entry of data.

Make sure to have a backup means of processing.

While the conversion to a Remote Deposit Capture system should go smoothly if the different parts of the system are tested and checked along the way, a backup means of processing is a prudent precaution in case of unexpected glitches.

Failure to check a provider’s references.

A Remote Deposit Capture technology vendor may tell you to expect all types of benefits, citing the well known advantages of the technology and promising all types of support. But how well does that vendor work as a partner with your business? Is the support offered nothing but smoke and mirrors? Don’t be reluctant to check a Remote Deposit Capture provider’s references. Talk to other users of the product to learn if it delivers the promised benefits and to learn if they ran into any unexpected challenges in installation or implementation and how well the vendor has lived up to promises in the past. Ask references if there were hidden costs or other surprises.

Involve IT from the earliest stages.

IT needs to understand more than just the hardware and software. To deliver the maximum benefits, IT has to understand the end results and benefits that business executives anticipate so that they can be delivered as expected. Involving IT from the earliest stages helps eliminate any need to start over to get the expected end results.

If these imperatives and caveats are adhered to, your deployment should pay for itself within a year, and will distinguish itself from deployments that take much longer to prove fruitful.

Jana Waughn is CEO of RemitPro. She can be reached at 402-505-7721 or jwaughn@remitpro.com.

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