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Remote deposit capture is approaching universal availability: report

mitek small optWhile consumers love the convenience of mobile remote deposit capture,  the service has not been universally adopted by financial institutions because of perceived potential risks but this could change, with virtually all financial institutions expected to soon offer such capabilities, according to a new report.

Adoption of remote deposit capture is expected to accelerate as it becomes clear that benefits associated the service outweigh any risks, with the survey from and Mitek revealing that 80 percent of financial institutions offering mobile remote deposit capture report no losses and 90 percent say the benefits outweigh risks and costs.

“The overwhelming majority, 90 percent, indicated that the benefits and value associated with mobile deposit offset any risks or additional operating costs,” said Scott Carter, chief marketing officer at Mitek, San Diego, CA.

“The reason that is important is that it does appear that losses are quite manageable and quite low,” he said. “They could be a bit higher than what banks are reporting.

“Part of the reason for that is that banks do not have all of the business intelligence and processes in place to properly attribute by channel what’s happening in their portfolios, in large part because mobile is still new to them.”

Critical mass
The survey found that sixty-three percent of financial institutions currently offer mobile remote deposit capture and 33 percent plan to offer it in the next 12 months.

Only 4 percent have no plans for the service.

The findings reveal that 80 percent of financial institutions have no losses associated with mobile remote deposit capture and, of those who did report losses, 96 percent experienced losses from consumer deposits, 15 percent from small business deposits and no losses from corporate deposits.

While the service has reached critical mass of availability to consumers, it is not yet broadly accessible to small businesses or commercial clients. Among those who provide mobile remote deposit capture, 95 percent offer it to their retail clients but only 63 percent provide it to their small business customers and 37 percent to commercial customers.

Customized deposit limits
Another key finding is that 61 percent of institutions offer customized deposit limits based on policy rules, segmentation, scores and other types of decision analytics

While mobile brings some added layers of security in the form of app login, mobile authentication as well as device insight and location, mobile remote deposit capture presents risks, mainly related to duplicate deposits.

Among those who incurred a loss, 62 percent believe that losses were within their acceptable limits, and took no action.

Some financial institutions have indicated that a majority of losses occur with new accounts and have consequently imposed tighter limits on young accounts and more relaxed restrictions on more tenured customers.

In terms of fund availability, 51 percent offer next day availability while 28 percent offer immediate or same-day access to funds while 16 percent offer two day availability and 9 percent offer three day.

Risk mitigation
The report also reveals that there is considerable variability in the types of risk mitigation strategies used by financial institutions, with 84 percent applying deposit value limits, 71 percent using image quality analytics, 59 percent CAR/LAR mismatch and 54 percent deposit volume limits.

Other less frequently methods include cross channel duplicate detection, endorsement detection, delayed availability, device ID and geo location.

“While we have reached a critical adoption in the consumer and retail space, we will see a lack of availability in the small business and commercial segment,” Mr. Carter said. “But there are indications that a number are planning to implement the service or make it available to those segments over the next 12 months.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York