April 11, 2011 by 1 Comment
In March, U.S. Bank launched two consumer/small business products after extensive pilot testing: • Deposit Point, a desktop RDC product bundled with its online banking solution. • Deposit Point Mobile, Initially available to U.S. Bank Mobile Wallet users who have an iPhone. Following up on my previous post, Celent finds two aspects of the product launch noteworthy. 1. U.S. Bank is making both desktop and mobile RDC available to its consumer and small business retail banking clients 2. It is charging $.50 per deposit for the service. The last post addresses the former. This post address U.S. Bank’s move to charge for the service in an environment where most banks charge monthly fees for commercial RDC products while offering consumer RDC free of charge. Some have proclaimed U.S. Bank’s price point for Deposit Point a non-starter. Celent offers two responses: • We don’t think so, and • We hope not We don’t think so: To call the idea of charging consumers and small businesses $.50 per deposit a non-starter denies RDC’s concept strength. RDC saves time and money – and it’s “green”. All three benefits are compelling to many consumers and small businesses. It’s not clear how much testing U.S. Bank did prior to establishing a price point for its Deposit Point. Obviously, some customers will pass on the idea once the price point is known. Fine! Alternatives are available for those customers preferring to drive to a branch or ATM and stand in line. More importantly, launching Deposit Point with an associated fee establishes that the convenience of RDC indeed has value. The bank is free to bundle Deposit Point with other services or to discount the product in the future. We expect it to do so. In the meantime, the bank should be able to enjoy some early-mover benefits. To do otherwise would be leaving money on the table. The fee structures accompanying PayPal, Popmoney and ZashPay suggest there may be some sustainability to a pay-for-deposit RDC model. We hope not: Will the pay-for-deposit model survive? One thing is certain, a raft of large banks are gearing up to launch mobile and consumer desktop RDC products of their own in short order. But for the next year or two, these financial institutions will be in the minority. And most that do launch consumer RDC products will not make them available to the mass market because of the perceived risk in doing so. Most consumers won’t have access to RDC. This opens up a sizeable market for third party, bank-neutral solutions – as long as there is revenue to be had in return for the risk taking. The next six months will be telling.
March 31, 2011 by 3 Comments
Earlier in March, U.S. Bank launched two consumer/small business products after extensive pilot testing: • Deposit Point, a desktop RDC product bundled with its online banking solution. • Deposit Point Mobile, Initially available to U.S. Bank Mobile Wallet users who have an iPhoneTo be eligible for Deposit Point, one must have had a U.S. Bank checking or savings account for at least 12 months, be enrolled in online banking and have no more than two returned items over the past three months. Eligibility for Deposit Point Mobile similarly required longevity with the bank and enrollment in U.S. Bank Mobil Wallet. Ostensibly, U.S. Bank’s strategy with these products is to improve convenience among existing customers, not to use the channel for new customer acquisition (at least not initially). While this may appear to be a concession, there may be clear wisdom here as well. Here’s why. To mitigate risk, financial institutions typically establish suitability or eligibility criteria for RDC users and place sensible deposit limits on those users. Tighter eligibility requirements allow less restrictive deposit limits. U.S. Bank set deposit limits as follows: • Consumers: $2,500 per day, $5,000 in a five-day period • Small businesses: $5,000 per day, $15,000 in a five-day period These are generous deposit limits compared to the Chase Quick Deposit mobile RDC option, for ecample. If a bank doesn’t have the flexibility to enforce multiple deposit limits based on user segments, we think U.S. Bank’s approach will be much more satisfying to customers wanting to deposit pay checks or other non-trivial items. Celent finds two other aspects of the product launch noteworthy. • U.S. Bank is making both desktop and mobile RDC available to its consumer and small business retail banking clients • It is charging $.50 per deposit for the service This post addresses the former. A subsequent post will address the latter. Last fall, Celent sought to understand if consumer desktop and mobile RDC would co-exist, or if mobile RDC might leapfrog its desktop cousin. If research results are to be believed, U.S. financial institutions intend to launch a goodly number of both product variations. Yet, in discussions with financial institutions, many wonder why they would want to launch both desktop and mobile variations. After all, if a customer could just use their smart phone, why would they want to set up a desktop scanner for the same purpose? Do these same banks have both internet and mobile banking platforms? Of course. Mobile banking hasn’t and likely won’t render internet banking channel obsolete. So why would about 25% of financial institutions think mobile RDC will render desktop RDC obsolete in the short-term? Celent’s research supports U.S. Bank’s wisdom in making both product variations available. Mobile banking is hot right now, but the addressable market of internet banking users is much larger and will likely remain so for some time. Although very early, U.S. Bank is seeing higher adoption rates with its desktop solution. See, what did I tell you? We need to remember that financial institutions serve a diverse customer base. Offering customers the ability to interact with their financial institution when and how they prefer is going to be a winning strategy. The same applies for remote deposit capture. Kudos to U.S. Bank for making both options readily available. Next week, we’ll address the fee issue.