MRDC 2.0 And Your Credit Union 

By Robert McGarvey 

 For CU2.0  

A new report from RemoteDepositCapture.com makes plain that mRDC now is a must for credit unions.  Declared the report: “mRDC is no longer a competitive differentiator, but instead a ‘must-have’ offering Financial Institutions need simply to remain competitive.” 

Without mRDC you just may not be competitive. That’s a stinging reality. 

This claim, incidentally, is underscored by a separate report, led by the Federal Reserve of Boston, that claimed 73% of the institutions it surveyed already offer mRDC and another 18% “plan to offer.”  Just 9% don’t have mRDC on their dance cards. 

Small credit unions are very much included among the adopters. Said the Fed: “ Even among the smallest respondents, 78 percent support or plan to support mRDC within two years “ It defined “smallest respondents” as < $100M in assets. And just 22% of them have no plans to offer mRDC. 

Big institutions are all aboard. Among institutions with assets >$1 billion, the Fed said 92% already offer mRDC and only 3% have no plans to follow. 

mRDC has become a must have.  That’s a key reality in today’s new reality where we have entered the era of mRDC 2.0. Now the focus is on new uses, more usage by members, and there also is a wholly new kind of thinking around mRDC fraud and how to combat it. 

A lot has happened to mRDC since 2009 when USAA debuted mRDC.  A handful more joined the chase in 2009-2010. But then the race was on at full speed inside most CUs to offer mRDC. 

Initially many credit unions grumbled about the fees associated with mRDC – fees charged by third party processors – but, by now, most larger institutions have simply decided to suck up the added costs, which incidentally usually are much, much lower than the costs associated with a paper check deposited at a branch. 

That’s a fact: mRDC saves a credit union money.  While expanding the convenience and utility of the account to members who now can make deposits while dressed in their PJs and sitting at the breakfast table.  That is cool and it ultimately is why mRDC usage will remain popular as long as paper checks circulate and these days about 17 billion of them get written in the US annually.  That number continues to slip down but it will be years before checks vanish (and aren’t we all waiting for the long predicted death of cash?). 

Face it: checks are hanging around and so will mRDC because it just is so much better than driving to a branch or to an ATM. 

John Leekley, CEO of RemoteDepositCapture.com, said many institutions have gotten increasingly more skilled at their mRDC offerings. 

A plus: Leekley pointed to data that shows a 35% year over year increase in mRDC transactions which means more checks are getting deposited this way. 

Are more fraudulent checks also getting deposited? Roll back the clock and that was a huge fear among many credit union execs, some of whom stalled when it came to rolling out mRDC.   

Today’s take is very different, said Leekley, who indicated that his survey found that “the vast majority (74%) of respondents indicated they had no losses directly attributable to mRDC.” 

That means zip. 

The big fear still revolves around duplicate deposits – depositing the same paper at multiple institutions – but the numbers don’t show there is a threat of any real magnitude. Leekley’s report goes on: “Exclusive to RemoteDepositCapture.com, the industry’s mRDC Duplicate Loss Rate in 2016 was just 0.035%, or 3.5 in every 10,000 items. To put this in perspective, according to the Federal Reserve, the industry’s overall return item rate was 0.4%, or approximately 40 out of every 10,000 checks deposit.” 

What’s next for mRDC? Most credit unions now appear to want to get more consumers depositing more items with mRDC. 

Leekley also indicated many institutions are giving a re-think to mRDC deposit limits. Traditionally, some institutions set very low limits, to manage exposure to fraud. But, said Leekley, more effective and more consumer friendly approaches involving smart use of big data are taking hold.   

Many institutions also are looking to increase business use of mRDC, added Leekley, who said this was a big frontier for many.  Exactly how will be a huge topic of discussion and exploration this year but know this: now is the time for you to begin to seek to push mRDC usage into new arenas. 

It’s a good tool, it works. Let its success fuel your institution’s.  

Why MRDC Hasn’t Fulfilled Its Promise 

By Robert McGarvey 

For Credit Union 2.0

 

A new research report from Javelin on “Why Digital Banking Often Fails to Reduce Offline Volume” has an infographic that just popped my eyes. The subject: “Reasons Why Consumers Avoid Mobile Banking and Turn to the Branch or ATM for Check Deposits.” 

Javelin offers answers but, first, why do you think your members do this?  Especially when, in theory, nothing could be more convenient and simpler than using a smartphone at your kitchen table to deposit a check that came in the day’s mail. 

But lots and lots of consumers don’t use MRDC and even those who do, don’t always use it.  Why? The Javelin report explores that question. 

I can give you a hint about why. A few months ago I opened a new account at Arizona Central Credit Union.  I deposited a check for around $25,000, drawn on Capital One (closing an account), and I deposited it at a branch a few blocks from my apartment. 

Recently I opened the ACCU app to make a deposit and saw my MRDC limit is $500. I shut the app. 

I opened a Chase app, where my limit is many times that, and deposited the check. 

I’m not alone. 15% of the consumers who don’t use MRDC told Javelin they were afraid their check was too big. 

They’re probably right. 

Even Mitek, the principal MRDC cheerleader, in its 2017 Mobile Deposit Benchmark Report, moaned about this barrier to wider usage: “Deposit-limit policies at three quarters of FIs essentially represent penalties for customers who use mobile deposit, representing an unsustainable barrier to digital migration and growth….Many consumers state they have been prevented from using mobile deposit by the FI’s dollar limits, yet conversations with industry executives tell us that advanced risk management policies can enable customer-friendly deposit limits that also limit misuse.” 

Yep, and that’s been true for years. But still most credit unions retain absurdly conservative deposit limits. 

As for long holds – and I have personally seen holds as long as seven business days on a mobile deposit – there is no defensible reason for the practice, other than a desire to thwart MRDC usage. 

Could be that’s exactly what some credit unions want to do. Processing fees are involved with deposits via vendors such as Mitek. Force the consumer to walk the check in and there’s no Mitek fee. 

But maybe there also is no consumer, as the consumer does as I did and calls up a friendlier app such as Chase and makes the deposit. 

Note, too, Javelin said 17% of consumers who did not use MRDC said their reason was that “I needed the funds quickly.”  Long holds chase away members. 

Probably the biggest barrier to MRDC usage, per Mitek, is insecurity about the technology.  Reported Mitek: “Fear of fraud is the most powerful impediment to widespread mobile deposit[Text Wrapping Break]adoption, cited by 43% of non-users from large FIs. FIs must unequivocally assure customers that mobile deposit is every bit as secure as an ATM or bank branch. Immediate feedback and receipts upon deposit acceptance, and notification of funds availability will help resolve these fears. Walking customers step-by-step through their initial experience may also alleviate[Text Wrapping Break]worry, as fear over making a mistake is holding back 34% of non-users at large FIs.” 

According to Javelin, 14% of non users said: “I didn’t feel safe depositing a large check via the phone.” 

A last, huge obstacle to MRDC usage – fortunately seen at ever fewer financial institutions – is charging fees for MRDC. That never made sense and certainly doesn’t make good business sense today.  Reported Mitek: “In 2017, for the first time, none of the major banks reviewed charged a fee for standard processing of mobile deposits. Still, worries over fees remains a block to nearly one out of three FI customers. Therefore, marketing the costfree nature of mobile deposit is an imperative to boost channel migration.” 

Now, just maybe MRDC will never capture all deposits. Javelin research found that 27% of non users said they had to go to the branch for other reasons. 32% said they had to go to the ATM for other reasons (presumably withdrawing cash).  So they made their deposits through those channels. 

But there remains huge growth potential for MRDC if credit unions raise deposit limits, erase unnecessary holds, stop charging fees, and go on the offensive to assure consumers that MRDC is as safe as making a deposit at an ATM. 

That’s because, among those who do use MRDC, a consistent comment according to Mitek is praise for the “ease of use.” 

But there’s even hope for capturing non-users. Advised James Robert Lay, CEO of Digital Growth Institute who specifically addressed how to gain usage by those who so far are resisting MRDC: “What will increase mobile deposit use is credit union staff working with account holders that come into the branch to deposit checks. Hold account holder’s hands (and their phone) to guide them through the process. Heck, employees might find the account holder does not even have a credit union’s mobile app downloaded to their device.  

It’s a bit of a paradox but to increase digital product use requires human interaction and intervention as change is hard, even though the mobile deposit is easy.” 

So right. So smart.