Mobile Remote Deposit Capture: Driving Profitability and Customer Retention Presenters: Mary Monahan, EVP/Research Director, Javelin Patrice Peyret, CEO, Plastyc Mobile Banking and Commerce Summit: June 2012
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Mobile Remote Deposit Capture: Overview
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The mobile deposit rush is on. The strong consumer desire for mobile deposit. The ROI of mobile deposit. Banker perceptions that inhibit mobile deposit. Strategies for the underbanked and prepaid.
Mobile Deposit is an Acquisition Strategy
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Key Message
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One in five mobile bankers uses mobile remote deposit capture.
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The Mobile Goal: Bring iPod-like Simplicity to Mobile Banking
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Show Consumers Why Mobile Banking is Practical and Can Make Them Safer
Top 3 Reasons Consumers Do Not Use Mobile Banking
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0% 10% 20% 30% 40% 50%
The cost of data access on my wireless plan
Security of mobile banking
I don't see the value of mobile banking
Percent of Consumers Q6: Security of mobile banking - You indicated you do not use mobile banking. For what reasons do you not use mobile banking? (select up to three)
March 2010, n = 2,373 Base: All consumers with mobile devices.
© 2010 Javelin Strategy & Research © 2012 Javelin Strategy & Research
Move Aggressively from ‘View’ to ‘Do’ -- and Sprinkle in Some ‘Wow’
Mobile Banking Functionality Offered at Leading U.S. FIs
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The Mobile Deposit Rush is On!
• USAA • Chase • US Bank • Citi • PNC Bank • PayPal • Charles Schwab • West Virginia FCU
Key FIs Offering Mobile Deposit
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Chase Redefines Mobile Banking (and Romantic Things to Do on a Honeymoon)
Chase TV Ad: Newlyweds Deposit Wedding Checks
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1 in 4 Consumers Wants Mobile Deposit
0% 10% 20% 30% 40%
All Consumers
Small Financial Institutions (Under$30MM)
Mid-sized financial institutions($30MM-$750MM)
Large Financial Institutions (over$750MM)
Desirable or verydesirable
March 2011, n= 1,880, 1,183, 1,818, 4,267 Base: All consumers with mobile phone who bank at large FIs; All consumers with a mobile phone who bank at mid-sized FIs;
All consumers with a mobile phone who bank at small FIs; All consumers with a mobile phone.
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Q41. Q42. Banks or credit unions can offer a service that enables customers to deposit a check by photographing it with the camera on their mobile phone, then sending the image to the bank through a mobile-banking application. How desirable is this service to you?
Consumer Desire for Mobile Deposit (by FI size)
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Target Key Segments First Desire for Mobile Remote Deposit by Key Segments
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0% 20% 40% 60% 80% 100%
All consumers
18 to 24
Small business owners
More than $150,000
iPhone users
Mobile bankers
Very desirable 5 4 3 2 Not desirable at all 1
Q42: Banks or credit unions can offer a service that enables customers to deposit a check by photographing it with the camera on their mobile phone, then sending the image to the bank through a mobile-banking application. How desirable is this service to you?
March 2011, n = 4,267, 345, 257, 471, 462, 749Base: All consumers, all consumers age 18 to 24, all
consumer who are small business owners, all consumerswho have an income of $150,000 or more, all consumers
with an iPhone, all consumers who are mobile bankers.© 2011 Javelin Strategy & Research© 2012 Javelin Strategy & Research
Banker Survey
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More Than Half of Surveyed FIs Plan
to Offer Mobile Deposit in the Next Year
0% 10% 20% 30% 40% 50%
We plan to offer, but are not surewhen
In 7-12 months
In 3-6 months
Within the next three months
Percent of financial institutions surveyed April 2011, n=19
Base: All financial institutions which do not offer mobile remote deposit
capture. Q1: When does your financial institution plan to offer mobile remote deposit capture?
Time Frame When Financial Institutions Plan on Offering Mobile RDC
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Everybody Wants to Offer iPhone, Android
Capabilities
0% 20% 40% 60% 80% 100%
Unsure
Other
Windows
Blackberry
iPhone
Android
Percent of financial institutions surveyedApril 2011, n=9
Note: Low n size bu trends may be drawnBase: All financial insitutions that plan to offer mobile
remote deposit capture in the next 12 months.© 2011 Javelin Strategy & Research
Q2: Which of the following mobile operating systems does your financial institution plan to support?
Operating Systems That FIs Plan to Implement
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1 of 3 Bankers Worries About Security of
Mobile Deposit Security Concerns Associated with Mobile Deposit
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The ROI of Mobile Deposit
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Lower Processing Costs Enhance ROI Traditional vs. Mobile Costs
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Branch and ATM Visits Should Decline After Implementation
0% 20% 40% 60% 80% 100%
Transferred funds online using a wire transfer through a money service business (such as Western Union)
Used a mobile phone to transfer funds to another individual
Transferred funds online using a wire transfer
Logged into an online banking session to transfer funds to another individual
Received a financial alert by text message (SMS)
Conducted mobile banking
Received a financial alert by e-mail (i.e. low- balance alert)
Transferred funds online between your own accounts at your primary bank to another institution
Logged into the website for online banking
Percent of consumers
Desire mobile deposit
All consumers with financial products who own a phone
March 2011, n= 4266, 1010Base: All consumers with financial products that
own a phone., all consumers with financial products that own a phone likely to use mobile
remote deposit capture.
Q42: Banks or credit unions can offer a service that enables customers to deposit a check by photographing it with the camera on their mobile phone, then sending the image to the bank through a mobile-banking application. How desirable is this service to you? "Very desirable" and "desirable" only, other options apply. Q18.or19 Please indicate the last time you conducted each of the following financial activities with your primary bank.
Banking Activities (by Those Who Desire Mobile Deposit)
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MRDC Strategies for the
Underbanked: Leveraging Prepaid Cards
Co-Presenter
Patrice Peyret, CEO, Plastyc
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Mobile RDC for Underbanked
• 60M underbanked in the US (source: FDIC) • Have to go to check-cashing stores:
– Waste of time: going to the store twice a month – Waste of money: high fees (except for certain printed
checks) • Higher penetration of smartphones among
under-banked than the US average – People with no fixed phone line and ISP at home – Their mobile phone is main online access and
mission-critical
Opportunity to save time and money for 60M people in the US
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The Last Remaining Gap between Prepaid Cards and Checking Accounts
• General Purpose Reloadable prepaid cards are… – …all “ACH-routable” i.e. “look” like checking for bank
transfers – …most with FDIC insurance – … many with Reg E compliance (for cards able to
receive tax refunds and other government funds) – …many with bill pay services including paper
checks
Mobile RDC coupled to Prepaid Cards = Checking Account
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Check Depositing is the Last Stop
• They are only missing check depositing to be 100% functionally equivalent to a checking account
Mobile RDC coupled to Prepaid Cards = Checking Account
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Remaining Challenges for MRDC + Prepaid Cards
• Customers more tempted to “cheat” – Photoshop a check, cash it, empty the card, disappear – Cash a large valid check twice:
• Through MRDC into a prepaid card • At a check cashing store immediately afterwards • … and go underground
• Customers less vetted: availability of MRDC will be a prime motivator to open a prepaid card account
Security requirements are more stringent than with regular checking accounts
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When/How to Expect MRDC for Underbanked
• Major prepaid issuing banks are currently vetting anti-fraud measures
• Anti-fraud measures will include – Geo-restrictions – Velocity and amount limits – Dissuasion through random phone calls during check
capture • MRDC for underbanked consumers with prepaid
cards will likely deploy progressively via pilot tests
Early 2013 should see a number of MRDC-prepaid offerings for the underbanked
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Key Takeaways
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Key Takeaways
• Mobile deposit is an acquisition strategy – but not for long.
• It can create revenue opportunities and cut costs.
• Integrated, targeted rollouts will have stronger appeal.
• Mobile deposit and prepaid can build a bridge to the underbanked.
• Educate consumers – and build fraud mitigation tools into the solution. 26
Mobile Remote Deposit Capture
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Thank You
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