If My Phone Was My Wallet: Reflections from NACHA Payments 2010

If My Phone Was My Wallet: Reflections from NACHA Payments 2010
It’s hard to imagine a business trip without a Smartphone. This week at NACHA Payments 2010, an embarrassing event caused me to consider the practical risks of overreliance on mobile devices. Mobile payments were a hot topic in Seattle this week. Multiple sessions argued the coincidence of factors that will bring about the ascent of mobile payments in North America. Few need convincing that mobile devices are increasingly becoming the primary point of contact for a growing segment of the population. Most nod in agreement that mobile devices would be a great mechanism for P2P convenience payments for example – but wholesale replacement of plastic? Is this really a good idea? While assertions about the superior security and convenience of mobile payments abounded at the conference, I didn’t hear much discussion about a rather obvious risk. What happens if one’s phone stops working? Perhaps I’m a bit of a curmudgeon about this trend, but I’m reluctant to place even more dependence on mobile devices than we already have. Consider airline electronic check-in for example. Like many, I find it convenient to check-in from the office and print boarding passes ahead of time in return for faster navigation once at the airport. But, I’m not yet ready to trust my next business trip to an eBoarding pass for its incremental convenience. Once again, what happens if your phone stops working and the boarding gate is about to close? The first evening at Payments 2010, I was scheduled to meet a colleague at a reception event. The room was large and crowded and I was unable to find him. Sending him a quick text seemed like a reasonable next step. This posed a modest problem for me, however because I had just graciously accepted a glass of fine Washington State Merlot and there was no convenient place to set it down in order to operate my device. (My fine motor skills aren’t advanced enough to operate the HTC device without using a stylus. It therefore takes both hands for me to send a text message.) Unwilling to risk the fine wine, I simply tried to hold both the wine and my HTC for the quick text. Be forewarned – it’s not a bright idea. My device ended up in the glass and most of the merlot onto my previously white shirt. Three days later, my phone still hasn’t recovered. All this has been both an embarrassment and inconvenience. Heck, I stopped wearing watches long ago since phones keep decent time. Mine used to. But, if my phone was my wallet, I might be sleepless – and stranded in Seattle.

USAA’s Mobile Remote Deposit Capture Initiative

USAA’s Mobile Remote Deposit Capture Initiative
A Different Kind of Bank: Why you’ll Never Need a Branch Again” was the title of last evening’s USAA Webinar merchandizing its mobile banking initiative. USAA was the first bank that we’re aware of to deploy remote deposit capture to consumers in any meaningful scale. With three years under its belt, USAA now supports well over 150 thousand active users on its Deposit@Home product. For perspective, this is more than ten times the number of RDC clients of any other US bank. Now, it’s at it again – this time, enabling mobile banking users to deposit checks using suitably equipped mobile phones. Scoffers are quick to point out that USAA is an anomaly. Indeed it is. USAA Federal Savings Bank serves 5+ million members – all from a single branch in San Antonio. Well, not exactly. The bank happens to have a single branch in San Antonio. Obviously then, USAA cannot rely on its branch network as many banks do to serve its customer base. With assets of $35b (March 2009) and nearly triple the industry average deposit growth over the past three years, USAA appears to be doing just fine without an expensive branch infrastructure. Its transaction mix is rather unlike most banks. Already, USAA has over 1 million mobile banking users, and the service is barely eighteen months old. USAA’s ambition with its mobile banking and mobile deposit service is simple- to make it convenient for its members to bank with USAA whenever and however they wish. Hmmm, that sentiment sounds remarkably similar to that offered by a large number of what we might call traditional retail banks also investing in self-service delivery channels. Observing USAA’s initiative begs the question; will mobile remote deposit capture become broadly adopted by retail banks just as internet and mobile banking has? Mobile RDC is both a great concept and an operationally sound approach – at least the Mitek powered solution is. It represents a powerful way to migrate significant transaction volume from branches to a low-cost self-service channel. In our research, Celent found that nearly 90% of teller transactions involve checks, and a full third are simple check deposits. Why not empower consumers to deposit checks themselves at a fraction of the cost of teller transactions?

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We think most banks will pass on the idea. Why? Because mobile RDC is disruptive. It may delight millions of consumers, but it also would challenge the status quo among retail operations organizations, forcing rapid change in ways few banks may be prepared to embrace. USAA doesn’t have this problem. Over a short period of time, USAA has transformed what was once a significant competitive disadvantage (no branches) into a compelling competitive advantage. Its membership and deposit growth proves it. Retail banks need to pay attention.

2009 Banking Innovation & Insight Day Roundup

2009 Banking Innovation & Insight Day Roundup
Celent held its 2nd Banking Innovation and Insight Day last Wednesday. The event was a great success, and attendance was up 10% over the 2008 event. That’s a mighty impressive feat given current economic conditions. The Celent/Oliver Wyman team delivered very interesting and captivating presentations:
  • We opened up with a great presentation by Celent SVP, Bart Narter, who gave a comprehensive summary of the top technology trends in the banking space.
  • Celent Senior Analyst, Red Gillen, captivated the audience with his review of the healthcare banking space. This was no easy task as Red’s presentation was just after lunch
  • Oliver Wyman Partner, Aaron Fine, gave the audience a fresh perspective on deposit gathering
There were also 2 interactive panel discussions. Both had a great set of panelists
  • Alternative Payments Go Mainstream, moderated by Bart Narter. This eclectic group provided an innovative take on the payments space and explained how the market is evolving:
The event concluded with the Model Bank Awards. I had the honor of handing out awards to the 18 banks who were selected for our recent Model Bank Report. We would like to thank those that attended, and we look forward to seeing you all next year! If you would like to submit a nomination for the 2010 Model Bank Report, we invite you to visit www.celentmodelbank.com

NCR’s Mobile Deposit Move

NCR’s Mobile Deposit Move
On 28 April, NCR announced its integration of Mitek Systems’ ImageNet Mobile Deposit to its’ APTRA Passport imaging platform. The NCR decision follows integrations already completed by J&B Software and RDM Corporation. This was a smart move on NCR’s part in our opinion. Others are sure to follow. Mitek announced its ImagNet Mobile Deposit platform in January 2008 and followed with announcements of Blackberry support in September 2008 and Apple iPhone compatibility in October. To be sure, Mitek is pushing the envelope with remote deposit in an environment where the industry is barely adept at small business RDC using specialized check scanners and “consumer capture” is largely offered among credit unions alone. But all this is changing. In our opinion, mobile remote deposit is destined to succeed for two reasons: convenience and device ubiquity. Apple shipped 2.3m iPhones in 2007 and 13.7m in 2008. RIM boasts about 25 million BlackBerry subscribers through February 2009. The world is quickly going mobile, and mobile banking is riding the wave. Bank of America alone boasts well over a million mobile banking users (June 2008). Apart from risk concerns, why wouldn’t mobile RDC be an obvious feature for select mobile banking users? We’re not alone in expecting mobile remote deposit to catch on. In research derived from a Fiserv-sponsored online survey of roughly 300 customers in October 2008, one third of respondents see a need to offer mobile deposit capture services to their business customers. The majority of respondents indicated that businesses that sell products and services at the buyer’s location (such as home appliance repair businesses and food and beverage distributors with trucks in the field) are their primary target market for mobile deposit capture. We agree. Banks would do well to launch mobile RDC first to business clients while there may still be fee income to be had. But banks clearly aren’t rushing into mobile RDC as they had with RDC’s original incarnation. Caution is understandable, but scoffing is short sighted. Celent’s position is that viability of mobile check deposits rests on four requirements: 1. Client usability – the application must be fast, simple to use and provide reasonably consistent performance despite widely varying lighting conditions, steadiness of hands and check stock characteristics. Obviously, mobile deposits introduce greater variability in image characteristics than images captured on specialized scanners. 2. Operational viability – even the most enriching user experience would be for naught if mobile deposits wreak havoc in the back offices of deploying financial institutions. 3. Security – image and data transmissions would need to be secure. Any security vulnerabilities would prove disastrous. 4. Broad device support – part of the value proposition for mobile deposits rests on not having to invest in image capture devices. To provide some direct experience in using ImageNet Mobile Deposit, Celent requested a test account from Mitek and experimented using the authors AT&T Tilt device. Installing and learning the simple application took no longer than 15 minutes. Sample deposits were performed using a mix of personal and business checks after lining out the check codeline for security. Overall user experience was favorable – even for this novice camera phone user. And, the image analytics appear to have been up to the task. With intentional carelessness toward lighting, contrast and steadiness of hand, resulting check images appeared Check 21 ready. Mobile RDC is clearly a nascent market, and banks have lots on their hands these days. But sitting on the mobile RDC sidelines may leave banks wishing they hadn’t.
Checks captured on the author's device with intentional carelessness

Checks captured on the author's device with intentional carelessness