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Mobile remote deposit capture will change financial services: Mercatus

A new study by Mercatus LLC found that consumers’ interest in remote deposit capture is strong enough to alter the current deposit process of banks.

Financial institutions can use mobile deposit captures to create a strategy for thin branch expansion. Mobile remote deposit capture services coupled with other mobile banking initiatives could eliminate the need for consumers to go to physical locations to do basic banking.

“Given the forecasted consumer adoption of mobile RDC, over 1.5 billion check deposit transactions will migrate from bank branches to mobile devices by 2014,” said Bob Hedges, managing partner at Mercatus, Boston. “Migrating branch check deposit volume to mobile RDC will have a big impact on the branch operating environment.

“Despite limited bank deployments, consumer interest in mobile remote deposit capture is very strong,” he said. “Among consumers who currently use mobile banking, nearly two-thirds indicated they were likely to adopt mobile RDC if their bank offered it.  

“Given the forecasted strong consumer adoption of mobile, we should anticipate strong consumer adoption of mobile RDC.”

Mercatus is a strategic consulting and investing firm focused on retail financial services.

Itching for mobile
The Mercatus Mobile RDC Adoption Research Study was conducted in December 2009. For the study, the firm asked more than 2,100 American consumers regarding their retail banking services needs, decision making and behavior.

According to the study, close to 59 percent of today’s mobile banking customers are likely to adopt mobile remote deposit capture if their banks offer the service.

Sixty-six percent of mobile banking consumers between 26-34 years old and 69 percent of those between 35-44 years olds said they were likely to adopt mobile deposit capture.

Mercatus found that adoption potential was also strong among consumers who are not currently using mobile banking.

Among consumers not currently using mobile banking services, 35 percent of consumers 18-34 and 25 percent of those age 35-44 said they were likely to adopt mobile remote deposit capture if it were offered by their bank.

Several key factors are driving interest in mobile remote deposit capture such as convenience and accessibility of mobile phone-enabled deposits, 52 percent, faster accessibility to funds, 45 percent, and lower time cost relative to other deposit options, 39 percent.

Potential security concerns were cited as the leading consumer hurdle.

Other potential hindrances include the already convenient locations of branches and ATMs. Mercatus found that convenience is the dominant consumer consideration.

Reducing volume
The research firm found that consumers most likely to adopt mobile remote deposit capture are responsible for approximately 30 percent of branch consumer deposit volume.

Research done by Mercatus in December found that more consumers will use mobile banking than online services by 2015.

The December study also found that banks can improve customer acquisition by 60 percent by including mobile in their suite of services. The study was sponsored by Visa and was conducted over six-months (see story).

In the December study Mercatus also found that nearly one-third of consumers are using, or considering mobile.

“Banks can dramatically impact both their ability to acquire customers and their branch network’s cost structure by providing mobile remote deposit capture,” Mr. Hedges said.

“For banks without large branch networks, mobile RDC provides a compelling strategic opportunity to grow market share outside of the physical branch footprint,” he said.

“For banks with large branch networks, the adoption of mobile RDC represents a significant opportunity to reduce traditional branch deposit transaction volume.”