USAA Deposit@Mobile User Impressions

USAA Federal Savings Bank was an early-adopter of mobile RDC (mRDC) with its Deposit@Mobile product introduced in 2009, which followed the 2006 introduction of its desktop RDC product, Deposit@Home. This offers user impressions of its newest app version, currently available for the iPad and available for the iPhone and Android shortly. The upgrade offers two significant capabilities: • The option for automatic scanning, much like how most QR code readers operate. • The ability to deposit multiple checks in each deposit. The capabilities were developed in-house. Both are significant in Celent’s opinion and demonstrate USAA’s continued leadership in this space. Like many users, I upgraded USAA’s mobile app without hesitation and without knowing what was new. The next time I logged into the app, the new Deposit@Home capabilities were front and center with a pop-up window merchandizing the “automatic check capture” feature (below). USAA1 Once I navigated to “Deposit Checks” I was greeted with a more detailed explanation of what was new. Both features were clearly explained and I was able to deposit using automatic scanning or using the old workflow. Naturally, I tried the new capability. USAA2 Once Deposit Checks was selected, the scanning began immediately. As shown below, what to do was rather obvious. The image capture occurred within about two seconds once I had the check reasonably outlined by the green band. Rear image capture occurred identically. Once both sides were captured, I could continue with additional items using the same process. I scanned two items. Once image capture was complete, the application took me quickly through each item to indicate the deposit amount as well as the deposit account. The straightforward way to deposit into multiple accounts was rather clever. Although most users won’t likely have the need to deposit multiple checks, small businesses surely would along with the “power user” segment. USAA3a The deposit confirmation (below) was detailed and immediate. It showed with clarity, where the funds were deposited and confirmed availability of each item. USAA4 Overall, I found the app brain-dead easy to operate, and the deposit was successful on the first attempt – more than can be said of many mRDC applications in service. The process was a bit faster than the old approach for single item deposits, and significantly faster for multiple item deposits. The application is refreshingly flexible compared to the rigidity of most available mRDC apps, while not sacrificing usability. In the spirit of full disclosure, I have been a USAA member since serving a tour on-board nuclear submarines (SSBN 658) in the mid 1980’s. Originally an insurance subscriber, I now enjoy a broader range of USAA services.

What Makes USAA Unique?

USAA was kind enough to invite me with other opinion leaders to spend a couple days at their headquarters in San Antonio at their expense. I was impressed, not by the hotel, but by the way USAA punches above its weight, especially on digital channels. They were the among the first out with mobile remote deposit capture, and do an outstanding job of integrating across lines of business. Why is this?  
  1. USAA feels more like a credit union than a bank. Actually it is more of an insurance company than a bank, but that is different tangent, and one in which I have no expertise. Customers are called members and surplus profit is returned to the member owners, much like a credit union.  As Bob Meara has documented in his excellent report on branch transformation, credit unions tend to invest more in automation than banks. When banks ask, “What is the ROI?”, credit unions ask, “Does it improve member service?”
  2. In order to be a member, one must have some sort of tie to the US military: either active duty, honorably discharged, or a close relative. So USAA has a clear target market, which has specific needs. Their members are geographically dispersed across the globe, which places some unique requirements on USAA. And USAA understands these requirements viscerally; nearly one in five employees is a Veteran. USAA’s celebration of Veterans Day goes above and beyond what you would find at most other institutions, by an order of magnitude. While I don’t generally write about such non-technical topics such as corporate culture, it is absolutely palpable at USAA. Providing financial services, to members of the US armed forces is a mission, and pursued with a missionary like zeal.
  3. USAA has no, or today, very few branches. The difficulty in setting up a USAA branch near members stationed in Afghanistan, for example, forces USAA to think about how to serve their members via digital / non-branch channels. I say non-branch because USAA allows members to deposit checks at around 2,000 UPS stores. It is a non-branch channel, but involves brick and mortar. Since USAA isn’t investing in brick and mortar, they can invest more in digital.
  4. Active duty soldiers don’t bring PCs with them on deployments. They do have smart phones. It is my perception that the active duty service member is the most revered customer, though likely the least profitable. This drives innovations in mobile.
  5. LOB silos are much less pronounced due to the strong member service culture. USAA has an integration layer across the banking, insurance, and investment product lines and ties this all together with a single CIF. Now we get to the techie side and what it means for products and customers. Let’s compare what Citi, Capital One, First Republic, and USAA—all respected financial institutions — are able to do to achieve the 360 degree view of the customer on their Internet sites.
  Citibank  

Citi lines of business

                            Capital One         First Republic

First Republic Lines of Business

                    USAA       The difference is telling. I’ve heard rumors that USAA may open up its membership to a much broader audience. On one hand I hope it is true. I think it would raise the game. On the other, I hope it’s not, because it would dilute the culture that drives USAA to really excel in its chosen niche.    

USAA and UPS Stores: A Lesson in Branch Relevance

In October 2010, USAA announced its partnership with The UPS Store to act as an in-person deposit gathering channel for the bank – something USAA has done without for years and still managed to enjoy a deposit growth rate of roughly three times the industry average. Last week, USAA announced its Easy Deposit service is now available at 1,700 The UPS Store locations. From its start in 1983, the objective of USAA Federal Savings Bank was to leverage the company’s strong brand equity and high customer satisfaction among its insurance, credit, and brokerage customers to build a strong banking franchise. USAA struggled with attracting member checking and savings deposits— for good reason. Without a branch network, USAA relied on mail-in deposits. To facilitate, it has provided free self-addressed stamped envelopes for members. But this approach, with its delayed funds availability and high internal processing cost, was not a competitive proposition. USAA more recently pioneered desktop and mobile RDC solutions for its banking customers as an alternative for mail-in deposits which used to be its mainstay. The solutions have been a huge success. So why this? The obvious answer is that despite the overwhelming success of Deposit@Home and Deposit@Mobile, a significant number of USAA members aren’t opting in. Far from an indictment against remote deposit capture, USAA’s latest move – along with its opening additional full-service retail branch locations in Killeen, TX and Washington, D.C. speaks volumes about the enduring relevance of branch banking in our increasingly multichannel world. Moreover:
  • This move gives credence to the “branch is not dead” argument. Financial institutions serve a diverse customer base with differing needs and preferences. As much of a success as Deposit@Home and Deposit@Mobile have been, they have not rendered branch banking obsolete – even for USAA. Traditional retail banks should expect significant deposit transaction migration to self-service channels with desktop and mobile RDC, but not overwhelmingly so. There will remain – for at least a number of years – important customer segments for which RDC solutions won’t appeal.
  • On the other hand, retail branches are disturbingly devoted to deposit gathering. USAA’s move will give it quick access to 1,700 locations near its target geographic markets at a small fraction of the cost of traditional branches. Traditional banks that think they don’t compete with USAA need to think again.
  • As transactions continue their migration to self-service channels, there will be increasing demands placed upon retail FIs to re-think their branch models. The status quo is no longer sustainable. As transaction volumes leave the branch, so will foot traffic. FIs will have to create new reasons for customers to visit the branch and obtain proportionally higher cross sell ratios just to maintain. At the same time, declining transaction volumes will produce increasing unit costs on the remaining transactions. It’s not a pretty picture.
  • USAA obviously isn’t selling in The UPS Stores. Any cross-selling will be for UPS Store products and services, not those of USAA. This isn’t a problem for USAA because it has become adept at selling its wares without face-to-face interaction. Traditional retail banks need to learn this art! For most U.S. financial institutions precious little sales effort exists apart from the branch network. This too is unsustainable.
Again, welcome to the new normal! What do you think?

USAA Gets into Branch Banking (sort of…)

This week, USAA announced its partnership with The UPS Store to act as an in-person deposit gathering channel for the bank – something USAA has done without for years and has managed to enjoy a deposit growth rate of roughly three times the industry average recently. USAA expects the free check-deposit service, USAA Easy Deposit, will be offered in 1,700 The UPS Store locations by the spring. USAA is a reciprocally owned and diversified financial services company serving active duty, retired, and former military personnel and their families. It offers a wide variety of services including consumer banking. While it has always served the military, USAA has broadened its eligible membership over the years as its financial strength and operational capacity would support. In 2005, all enlisted personnel became eligible for USAA membership, and in 2009, USAA opened its membership to another 3 million former service members and their families. From its start in 1983, the objective of USAA Federal Savings Bank was to leverage the company’s strong brand equity and high customer satisfaction among its insurance, credit, and brokerage customers to build a strong banking franchise. USAA struggled with attracting member checking and savings deposits— for good reason. Without a branch network, USAA relied on mail-in deposits. To facilitate, it provided free self-addressed stamped envelopes for members. But this approach, with its delayed funds availability and high internal processing cost, was not a competitive proposition. USAA more recently pioneered desktop and mobile RDC solutions for its banking customers as an alternative for mail-in deposits which used to be its mainstay. The solutions have been a huge success. So why this? For starters, Easy Deposit isn’t exactly a new idea for USAA. In 2006, USAA partnered with Financial Technologies, Inc. (FTI) a subsidiary of now defunct Net Bank to operate a network of local deposit taking locations branded as Quick Post service. It provided free overnight depository services at any UPS Store location nationwide to the delight of members. UPS shipped the check deposits nightly to a capture site in Louisville, KY, where FTI performed deposit review and item correction, sending data and images to USAA. Quick Post was discontinued, however, in late 2006 as part of a Net Bank reorganization. USAA needed a replacement – so it turned to something even better; Deposit@Home and later Deposit@Mobile. So after tasting the delights of RDC, why would USAA be turning back the clock with Easy Deposit, even with its operational improvements over Quick Post? I have three thoughts. • On one hand, this move gives credence to the “branch is not dead” argument. Financial institutions serve a diverse customer base with differing needs and preferences. As much of a success as Deposit@Home and Deposit@Mobile have been, they have not rendered branch banking obsolete – even for USAA. Traditional retail banks should expect significant deposit transaction migration to self-service channels with desktop and mobile RDC, but not overwhelmingly so. There will remain – for at least a number of years – important customer segments for which RDC solutions won’t appeal. • On the other hand, this move underscores the extent to which branches have become primarily a deposit gathering channel. Of course they are. Branch level deposits are a staple branch scorecard metric. The problem is, FIs depend on considerable sales success to justify the prodigious investment needed to build and maintain a competitive branch presence. USAA’s move will give it quick access to 1,700 locations near its target geographic markets at a small fraction of the cost of traditional branches. Traditional banks that think they don’t compete with USAA need to think again. • Finally, as transactions continue their migration to self-service channels, there will be increasing demands placed upon retail FIs to re-think their branch models. The status quo is no longer sustainable. As transaction volumes leave the branch, so will foot traffic. FIs will have to create new reasons for customers to visit the branch and obtain proportionally higher cross sell ratios just to maintain. At the same time, declining transaction volumes will produce increasing unit costs on the remaining transactions. It’s not a pretty picture. Welcome to the new normal.