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A Business Guide to RDC
John Leekley Founder & CEO
RemoteDepositCapture.com
November, 2011
A Unique Perspective
RemoteDepositCapture.com is an independent information & services resource for the Payments Industry.
– We are NOT a reseller, solution provider, etc. – We ARE experts in, and an open resource for the industry. – We work with the vast majority of leading solution providers, FIs, processors. – Thousands of FIs, corporations, businesses and consumers visit the site each month. – We are supported by many industry-leading organizations. – We were involved in the formulation of the FFIEC RDC Risk Management guidance and
training of over 1,200 auditors. – Services
• News & Research • RDC Marketplace • Solution Provider Directories • RDC Overviews • White Paper Central • FREE Webinars • and much, much more.
•Contacts:
Copyright 2011, Remote Deposit Capture, LLC A Business Guide to RDC 2
Discussion Objectives
• Definition of RDC • The Value of RDC • Business Model Options
– Pricing, Pros & Cons
• RDC’s Evolving Capabilities • Where to find a solution
Copyright 2011, Remote Deposit Capture, LLC 3
RDC Industry Projections
• Checks remain a primary payment method. • 2/3 of all $$$ received by businesses are by
Check (AFP). • Over $32 Trillion was paid by check in 2009 vs.
less than $5 Trillion via Cards (Fed). • There are over 27 Million Small Businesses in the
USA. • Undeniable business case for both end-users as
well as FIs. • Over 1 Million Mobile & Consumer RDC Users
(RDC)
Source: Celent
Source: ISV surveys 2006 – 2011, Celent estimates Note: does not include consumer or mobile RDC
Historic RDC Adoption
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2004 2005 2006 2007 2008 2009 2010 2011
# FI
s A
dopt
ing
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
# Sc
anne
rs D
eplo
yed
# Fis Adopting # Scanners Deployed
Copyright 2011, Remote Deposit Capture, LLC 4
Check Clearing Options
Checks can be cleared in 2 primary ways
Clearing Method Advantages Disadvantages
Check 21 Reg CC
•Applies to All Checks •Can provide faster Availability
•Can be more costly than ACH (IRDs)
ACH Reg E
•Theory: Inexpensive •Day 2 Operations
•Applies to only •“Eligible Items” •Requires Notification
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The Typical RDC Clearing Process
RDC Customer
Depository Bank/Credit Union
Correspondent or Intermediary Bank
Electronic Deposit
Checks
ACH
ICL
IRD
ACH
ICL
IRD
(optional)
Graphic courtesy of NetDeposit
Processor
Copyright 2011, Remote Deposit Capture, LLC 6
RDC is a Payments Platform
RDC Applies to a family of related products & services most often differentiated by location of check capture.
Remote Deposit Capture
Lock
box
Bra
nch
Telle
r
Cor
pora
te
Mer
chan
t
Cor
resp
onde
nt
ATM
Con
sum
er
RDC is becoming an integrated technology platform increasingly used to process different types of payments and data with the ability to feed that data to
systems both internal and external to the organization.
Mob
ile
The term “Remote Deposit Capture” refers to the process of electronically capturing check images and data, transmitting that information for deposit and clearing, and truncating the original paper checks. This definition is evolving to include additional payment types, including card payments.
Copyright 2011, Remote Deposit Capture, LLC A Business Guide to RDC 7
RDC: A Spectrum of Opportunity
The total value a FI or corporation may realize depends upon; • Company Demographics: Volumes, Values & Locations • RDC System Characteristics: Functionality, Process & Price • Data & Workflows: Reporting, Integration & Automation
Operational & Deposit Automation Convenience / Transportation Reduction
Remote Deposit Capture Spectrum of Value Opportunity
Base Value Maximized Value
Functionality Basic High
Copyright 2011, Remote Deposit Capture, LLC A Business Guide to RDC 8
RDC Value Calculation
Base Value • Cost Savings • Cash Flow Acceleration • Account Consolidation Enhanced Value • Data Automation • Data Integration • Risk Management • Payments Platform
Copyright 2011, Remote Deposit Capture, LLC 9
Business Model Options
Businesses Have a growing number of RDC Options: • FI – Provided Solutions
– The Great Deposit War Has Begun – Greatest Pricing Flexibility
• Third-Party Service Providers – Merchant Acquirers / ISOs / VARs – In-House RDC
Copyright 2011, Remote Deposit Capture, LLC A Business Guide to RDC 10
FI-Provided RDC Solutions
Process Flow
1. Scan 2. Post 3. Clear 4. Availability Assignment
RDC Client
RDC Service / Depository Bank
Paying Banks
Copyright 2011, Remote Deposit Capture, LLC 11
FI-Provided RDC Solutions
Benefits • Direct Relationship (Security?) • Flexible Pricing
– Pay Via Account Analysis – Balances, etc.
Disadvantages • You’re Stuck • Limited Options / Functionality
Issues • Most FIs have been slow to enhance their service.
RDC Client
RDC Service / Depository Bank
Paying Banks The majority of businesses using RDC today use a service offered
by a Financial Institution.
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3rd-Party RDC Solutions
Process Flow 1. Scan & Transmit to Service Provider (SP) 2. SP Creates (X9) file, send to clearing bank (CB) 3. Clearing Bank, posts deposits, clears items 4. Availability Assignment based upon agreement between
CB and SP 5. Service Provider credits the amount of the deposit to the
client’s account at the client’s depository bank 6. Return items generally follow same process
– Many service providers have return item re-presentment and reporting functionality.
RDC Client
Clearing Correspondent / (BOFD)
Paying Banks
Service Provider
Depository Bank
ACH Credit
Copyright 2011, Remote Deposit Capture, LLC 13
3rd-Party RDC Solutions
RDC Client
Clearing Correspondent / (BOFD)
Paying Banks
Service Provider
Depository Bank
ACH Credit
Benefits • Bank-Agnostic • Enhanced Functionality • Integrated / Compatible Solutions
Disadvantages • Potential Risk • “Above the line” pricing
Issues • Selecting the “Right” provider (risk).
A growing # of businesses of all sizes are opting for 3rd-party solution providers, many are leaving their FI-provided service.
Copyright 2011, Remote Deposit Capture, LLC 14
“In-House” RDC Solutions
Process Flow 1. Scan Checks & Remittance Data 2. Create (X9) files, send ICLs to depository banks 3. Create Data Extracts for upload to A/R Systems, etc. 4. Depository Banks post deposits
– Same-Day Availability for “on-us” items
5. Clearing Bank Availability Assignment based upon agreement
6. Nightly sweeps to concentration account 7. Return items generally follow same process
RDC Client
Depository / Clearing Bank 4
Paying Banks
Depository Bank 1
Depository Bank 2
Depository Bank 3
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“In-House” RDC Solutions
RDC Client
Depository / Clearing Bank 4
Paying Banks
Depository Bank 1
Depository Bank 2
Depository Bank 3
“In-House” RDC solutions have typically been the domain of large organizations with sophisticated Treasury Management Capabilities…
but these types of capabilities are increasingly available and affordable.
Benefits • Cash Flow Acceleration • Bank-Agnostic • Enhanced Functionality • Integrated / Compatible Solutions
Disadvantages • Cost • Implementation & Support Resources
Issues • Maintenance & Investment
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RDC’s Evolving Capabilities
• Check Processing • Capture Check Data & Images • Remittance Processing (Coupons, etc.) • A/R Systems Data Upload • Consolidate Distributed Processing • Consolidate Depository Relationships • Risk Management • Evolving Capabilities:
– Various Payment Types – Risk Management
RDC is about the Payment – Not just the check
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Where to Find an RDC Solution
• The RDC Marketplace @ RemoteDepositCapture.com • RDC Solution Provider Directories @ RemoteDepositCapture.com
– Software, Hardware, Banks, Business Services, Risk Management…
• National Tradeshows: – The RDC Summit: www.RDCSummit.com – Association for Financial Professionals: www.afponline.org – NACHA Payments: www.nacha.org
• Regional Tradeshows: – Regional ACH Associations (Eastpay, GACHA, Westpay, NEACH, etc.) – Regional Treasury Management Associations
• Your Current Payments Processor • Your Current Bank
Copyright 2011, Remote Deposit Capture, LLC 18
Additional Takeaways
• Use the Business RDC Calculator for free: – http://remotedepositcapture.com/calculator/business.aspx
• Quickly & Easily find the “Right” RDC Solution Provider in the RDC Marketplace (When RDC Solution Providers Compete, you win): – http://remotedepositcapture.com/rdcmarketplace/marketplace.aspx
• Compare Check Scanners & RDC Terminals, visit RDC’s Scanner Matrix: – http://remotedepositcapture.com/toolbox/scanner.matrix.aspx
• Almost anything & everything RDC – www.RemoteDepositCapture.com – Continue the discussion in the RDC Community Forums!
Copyright 2011, Remote Deposit Capture, LLC 19
