Feb. 9, 2008

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Some enterprising U.S. banks couldn't wait to bring Internet banking to the next level and now some are enabling their customers to make bank and check deposits via the Internet, without leaving their home or office. All that is needed is a scanner, a PC and an Internet connection.

The new technology was developed by CheckFree, an online banking software developer that was recently acquired by Brookfield, Wiscosin-based business information management and services firm Fi-Serv for US $4.4 billion.

Mike Ringuette, executive v.p. of Fi-Serv Global Payments said "this is a major breakthrough in the banking industry and represents the next wave in Internet banking for consumers and business people alike.

Ringuette added "overall, consumer capture will fundamentally change the way consumers interact with their bank, financial institution, brokerage firm, utility or other payment processor when depositing checks. This new solution allows banks, credit unions, other financial institutions and payments processors to offer expanded deposit windows due to the immediate receipt of an electronic image and all associated electronic data, with the potential to reduce costs and environmental resources associated with personnel, transportation and processing in the branch or back office."

Financial institutions can add their own fraud protection to make sure bad checks aren't being cashed. Checks will be processed within the usual standard time frame.

"The system is very user-friendly. All a customer needs to use the system is a simple scanner, a pc and Internet access. The user just goes to a bank's website, enter the amount of the check, scan both sides, do a quick review and simply submits it," said Ringuette.

Emmett Higdon, an online banking analyst with Forrester Research said "if this technology is taken to its extreme, neighborhood bank branches could eventually disappear."

"However, and as can be expected, the system isn't perfect, even though in the long run the technology will be a boon to consumers," said Ed Kountz, a senior analyst with JupiterResearch.

Kountz added "this really is one of the last pieces of the puzzle to be able to operate the banking experience remotely. This type of notion has long been one that's been hard to solve."

He added "Remote Deposit Capture is certainly an interesting solution. Over the short term, it allows people to basically deposit a check, as long as you have the necessary equipment. It's a way to compete both offensively and defensively for banks that hasn't been done before."

Attracting consumers is perhaps the biggest obstacle to the system's success. "Visibility and just consumer awareness are the early hurdles. But from the banking perspective, the opportunity for consumers to have a relatively inexpensive and uncomplicated way to remotely record check deposits is advanced and will be worth watching," said Kountz.

"It's bigger for small business customers, and that's where you're going to see the uptake of this product," he said. "That's somebody who has a need to make deposits on a frequent basis but finds that getting to a branch is inconvenient."

Kountz said "the banking industry has been headed in this direction for quite some time."

The new Internet banking service will likely prove popular, particularly among customers who have to make frequent trips to the bank.

Online banking customers will have to check with their specific financial institutions before to make sure the service is available through those institutions, CheckFree said.

The service is already available in more than 150 banks across the United States.

Anne Manes, a banking analyst with the Burton Group said "increasingly, people are using online banking and more often today than ever. I think this is a growing trend that will help consumers down the line."

She added "it means more initially for the banking industry than consumers. The ability to convert paper checks to electronic files is certainly a great idea. That kind of set the stage for this."

Manes added "there hasn't been any customer demand for this kind of functionality, but it's something we've been slowly moving down the road toward. It's one of the last major pieces we need to fully complete the notion of branchless banking, both on a local level as well as globally."

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Source: CheckFree Banking.

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