Driving RDC Strategy to Success

By Denis Bergeron, Director of Product Management for NCR’s Payment Solutions Group

Who would have imagined that in the search for more sophisticated business models in the financial industry , Check21 would generate such accelerated activity around remote deposit capture (RDC) for commercial clients, large and small. A U S Banker survey, administered in September 2007, found 85% of respondents said RDC is somewhat or very important to their financial institution’s (FI) strategic direction y et the current adoption rate stands at only 2% among US businesses.

With the multitude of statistics available today around RDC, a consistent message is clear. RDC is important; few have implemented widely and a significant opportunity is still ahead.

For FIs, remote deposit represents incremental fee income through the enhancement of services to existing customers and new clients. With geography no longer a constraint, FIs can now approach potential clients that were previously unreachable. On the client side , the enhanced deposit service offers convenience, ease of use, and cost saves through fewer errors and reduced trips to the bank. The revenue benefits come with a streamlined process can provide the FI with operational saves as well.

As FIs consider various RDC offerings, many are looking to their business strategy to determine what and how to implement. Being a few years after the initial market adoption, FIs are now able to leverage “collective RDC lessons ” from some early adopters.

Five keys to s uccess
The most successful early adopters had a clear plan around what objectives they wanted to accomplish , and how. For some, the driving force for RDC was a tactical move to address cost issues or retain customers, while for others it was an aggressive push into the marketplace to grow revenue.

There are many facets of a strategy to consider while identifying a RDC solution , though five are mentioned most often: Market Presence, Segmentation, Product Positioning and Packaging, Competition and Cost Leadership . Is RDC a primary tool to increase market presence, protect the bank’s customer base or both? Gaining share requires a focus on the competitive advantage and quick to market approach. The RDC solution should be readily available, feature rich and easy to deploy in order to attract new customers.

A key component of any strategy is defining who your target market is. At a macro level, the market presence assessment begins the process of identifying your target segments though more granular decisions are needed to position an offering. An example is the different needs of small business customers , versus medium sized corporate clients.

A discussion around markets and targets is not complete without considering product strategy and positioning. Will RDC be bundled with other offerings, what are the different service levels and so on. Understanding the target market and what product will attract different customer channels are key elements when choosing the right RDC offering and how it will be implemented.

Merchant processors and ISOs are entering this space looking at RDC as a differentiating product and something to make their services more comprehensive. Competing against such entities requires a different focus than competing FIs. Financial Institutions could leverage their deep understanding of the payments industry and their ability to ensure the safe processing of these transactions versus a more product-centric approach they may utilize when competing against other FIs.

In order to address cost, an FI should consider efficiencies in check operational processes, support and deployment. Additional consideration should be taken when productizing RDC with other products, solutions and processes and wrapping around these products and services to ensure alignment with your operational focus.

Establishing your product and market strategies early on in the RDC evaluation process will greatly simplify some often difficult decisions around prioritizing feature importance, how the product should be delivered, and what new processes may be needed. Considering your strategy and business objectives before choosing a RDC solution is instrumental in maximizing the potential that remote deposit capture can provide your institution.