[I am in Las Vegas for the TAWPI Payments in Transition conference –
these are my notes from one of the sessions. An index of all of the
sessions and links to the rest of my notes is here. – EMc]
Distributed Capture Panel Discussion
Mary Hockridge, Executive VP, NetDeposit
Brandon Kunz, Director of Product Strategy, Enterprise Payments Division, Goldleaf Financial
Charles W. Kelly Sr., formerly Senior VP, Huntington National Bank
Jon Reneslacis, Director, Product Management, VSoft
Moderator: Mark Brousseau, Brousseau & Associates
[program blurb] This interactive
panel discussion features insight and advice from prominent solutions
providers. During the session, attendees will gain a better understanding
of the latest technologies and strategies for remote deposit capture, payments
automation and receivables management. The main focus of the discussion will be
to detail the most important technologies shaping the market and the key trends
and innovations that are changing the way information is captured, processed,
managed and delivered
It was great to re-connect with Mary
Hockridge – we worked together on a distributed capture prototype for Wells
Fargo nearly 10 years ago when she was with Carreker. Back then everyone
thought we were crazy because banks and vendors were concentrating on
consolidated, huge item processing sites and we wanted to capture images in
remote branches. It was hard to find vendors who understood what we were trying
to accomplish but Carreker and Panini got it and embraced it. Now Mary is at
NetDeposit riding high on the remote capture wave and is a panelist this
Q – How does your organization
approach the distributed capture space?
Mary, NetDeposit – technology
solution provider for check electronification products: remote deposit and
image cash letter – either licensed and ASP. Resell scanners to bank customers
and their end users (ordering, fulfillment, taxes, etc.), provide back room
services for banks that want to outsource, and offer end to end marketing/sales
tools for RDC to help customers’ product introductions succeed.
Wally, Creditron – End user
remittance and wholesale lockbox. We are focused on
what the check represents for the AR/cash application process.
Scalability and flexibility to extend AR.
Brandon, Goldleaf – software for
financial services, from small/community to top 10 banks. Recently acquired
Alogent. Focus is on payments and deposit automation. Branch back counter,
front counter, kiosk, ATM, all on one platform. automation rather than capture
Jon, VSoft – privately held company.
Doubled employees. Acquired a bank data center recently (former customer) to
offer in house and ASP service. Mostly community/smaller banks + some top 25
and non-bank customers (gov't).
Charles, Huntington – Regional bank,
54 million in assets. Will share experience from transition due to acquisition
of Sky Bank (which had in house service provider) vs. Huntington (which had an
outsource model) – and lessons learned during re-evaluating the two strategies.
Q – Mary, where do you think we are
in the evolution of RDC and DC
Mary, NetDeposit – Clearly RDC has
gone through fast evolution from inception to adoption. Moving well into
the mainstream. Analysts predict that by end of 2009, there will be 1 million
remote capture installations live, e.g. sold scanner, trained, setup, and
scanning deposits. The wild card is
small biz and micro biz adoption. Huge numbers, but can service providers
and banks, adapt their pricing, service model to match small biz (smaller
budgets). Further differentiation of vendors to address niche industries
(property management, insurance). Also non FI players (ISOs that sell merchant
card products, and software companies that provide AR software for specific
industries, direct adoption by insurance, broker/dealer with significant needs
such that they go straight to technology provider, by-passing banks.
Q – Brandon what do you think the big
story is for distributed capture?
Brandon, Goldleaf– The adoption of
RDC hasn't gone as anticipated – thought full service applications were more
likely than self-service applications. Makes sense that branch back
counter was first, now moving to front counter/teller. Transportation and
accuracy benefits. But eclipsed by remote deposit at companies of all sizes,
rather than just top companies. Great opportunity for everyone.
Q – Jon, what is story in community
Jon, VSoft – Dominated by fear, maintaining
traditional idea of being more nimble, closer to customer. Big banks have
volume, can buy into new territories. Community banks feel pressure to protect
and provide intimacy for customers – small businesses and sole proprietors. Use technology to enhance not erode customer
Q – Charles, what about larger
Charles, Huntington – go beyond large
customers, even small biz. Target high net wealth customers with desire to make
deposit from home office (coolness factor counts for them). Link with cash
vault – virtual vault – or to capture remittance as well as payment. Or capture other key documents and store
securely. Leverage platform investment and link to other products and services
that the bank offers.
Q – Wally, what is the interest among
companies you are talking to?
Wally, Creditron – Over the last 25
years, traditionally higher volume means a better business case. But with RDC the
cost of trip to the bank amortized across a very small number of items, making
the biz case look even better. Moving
away from bricks and mortar, but how to bring client close to you if visiting the
branch less frequently? Provide value add using information. Integrate deposit
solution into QuickBooks, Great Plains, etc.
Q – I am struck by how few lockbox
providers are not offering distributed capture to wholesale lockbox customers, particularly
Wally, Creditron – It is starting to
happen. Concern surrounding security and control. Lockbox operations management is nervous about extending scanning
outside their controlled environment to remote site at customer location.
Q – Goldleaf, how much interest is
there in distributed payments capture?
Today in branch, can accept deposit (payment)
at teller line, scan payment and payment coupon. Read both and parse, validate
data account number, determine principle vs. interest, and create a complete
solution. How to apply to remote deposit as well? Add logic so that when scanning check, recognized that we've seen one
just like this last month – same RTN, account number – and we credited it to Wally.
So this must be a payment from Wally, too. Automate data population (acct
number, etc). Smaller billers may not have coupons, so there may be more work
Charles, Huntington – We did remote
deposit lockbox in 2005. Provider needs to interface with lockbox (or item
processing system that looks like a lockbox). Company with software suite addressing
RDC needs to integrate with lockbox vendor. But how do vendors determine who they
want to allocate precious development dollars to interface with? [EMc comment –
this where we can better standards to move payment and remittance data from one
system to another, avoiding the need for custom interfaces.]
Mary, NetDeposit – The challenge is in enabling edit routines,
intelligence of lockbox system in remote capture at client location. Customer
has intelligence of business; lockbox software had check processing optimization
expertise. Remittance capabilities are hard to control/optimize at customer
location vs. the highly controlled lockbox workflow environment. There are usability
trade-offs and automation tradeoffs The less that customer does, the less likely
that here will be edit rule exceptions when the transactions reach the lockbox.
By utilizing SaaS it is possible to distribute capture to corporate and
have centralized – solid – process for exceptions. Allow end user to make
corrections, repair their own transactions.
Jon, VSoft – I am a former lockbox
product manager. For now, put aside customer that has a lockbox and is only trying
to deal with a few strays that wind up at corporate office. But what about the customer
that is debating whether to have a wholesale lockbox or handle myself, cannot
compete with the mail float advantage of a lockbox. Scanning needs are greater
than what a small, desktop scanner can address. More appropriate for nuisance payments.
Q – Charles, how did you sell this?
Charles, Huntington – The company had
a lockbox, but still received payments at corporate office. ROI was calculated
for 9 months, but actually paid off in 30 days. Allowed customer to get huge payments
(delivered to their office) deposited more quickly and got funds availability a
day ahead. Most customers don't appreciate or understand mail float. Float
savvy customers will want a lockbox in the right geography. Remote capture is appropriate for desk
float. Appropriate for certain industries, e.g. healthcare offices.
Q – Billers: we aren't check processors.
We outsource to you for a reason.
Charles, Huntington – A typical
medical practice has one person does all office tasks: receivables, ordering,
payments, organize meetings, etc. Help them save time, avoid extra errands.
Jon – vsoft – Why should I pay you when I am doing the work? Sales challenge is
to find the value for each individual customer. Of a universe of ten possible
RDC benefits, 1-2 benefits are most applicable for each customer. For instance,
we had a customer whose office manager was really sloppy with the ten-key. They
got $8 charges from the bank for out of balance deposits on a regular basis.
They were sold on a remote capture solution that requires transaction
Q – billers are looking for a solution
that drives receivables. Might be coupon, invoice – need that data yet we are
using check scanners. How can industry address need to scan supplemental documents?
Some customers waiting until there is a solution that addresses remittances.
Jon, VSoft – Initially treasury was excited
about fast check deposit. Now moving on to the data integrity, and more
value-add: Is it a local install, is it ASP? How do I administer users? Merchants are not item processors or
document imagers. They have other responsibilities.
Brandon, Goldleaf – merchant customer
with two scanners (one for check one for doc?). Who are we expecting to take on
responsibilities of trained lockbox personnel? Will technology take up the
slack as capture moves to customer locations?
Q – Wally, how do you respond? Biz
model needs documents plus checks…
Wally, Creditron – Yes, customers are
capturing both check and remittance data. What is the need for the data? The AR
system needs it to apply the payments to the customer accounts. Ideally the solution is linked to cash
application batch screen. Simply add a scan button to the screen they are
already using – integrated with their usual process.
Q – Why can't we use page scanners
instead of check scanners?
Mary, NetDeposit – Page scanners do
not include MICR reading. So rely on
optical recognition. NACHA rules have limitations if you use a device that does
not recognize MICR. But the rules are fuzzy. As consumer capture becomes more prevalent,
quality of the image becomes the primary issue. Skew, etc. Everyone
downstream is subject to the quality of the image that is captured. Need affordable,
accessible scanner price tag for heavy users as well as small, micro biz , down
to consumer. Package in such a way that it is a natural purchasing decision for
customer. In the early days, company treasurers agreed to pay $1000 for
scanners up front. Not likely for other market segments.
Q – Wally, are you comfortable using
page scanners for check?
Wally, Creditron – Not with current technology.
[Mark interjects] It happens today, using OCR to read MICR. Leading vendors are
doing it – [Wally continues] … but you asked me if I am comfortable with it. Different in a high volume shop with
trained operators. In a small environment, capture is harder to control.
Brandon, Goldleaf – flatbed scanners have benefit over deposit
automation because of remittance automation. But invoice is a whole different
situation, with non-uniform format. Need more programming. For the deposit itself,
you can use the image. Vendors are thinking about it (holy grail) because it makes
deposit automation pervasive on a much wider scale. Comfortable in some situations.
FIs using it today, but the non-MICR model has a different risk profile (have
assets on deposit, know their customer very well).
Q – Billers have accused vendors of
dragging feet on combined check + page scanning.
Brandon, Goldleaf – device support is fairly easy with only a
few major providers of check scanners. But there is a wider range of page
scanner providers. TWAIN provides some consistency. Do you want to optimize
the current workflow (for which subset of customers) and integrate to QuickBooks
or are you going to re-evaluate the paradigm and have deposit itself drive the transaction?
Q – Jon, what about your customers?
Jon, VSoft – I’d rather talk about consumer capture than billers – I
have an intense internal debate about consumer capture. I love the idea from a
technology perspective, challenge of integrating flatbed, the opportunity for consumers.
I want to do it! But I get very few checks: $2 refund, $25 from my grandmother
– how will banks make money on a consumer remote deposit product? Banks don't
want to have anything to do it with it. Credit unions think vendors are too
late. But where is the business case?
Charles, Huntington – he's
right. No biz case on typical consumer.
How many checks do you receive? Very few. But for high net worth customer the
bank struggled to develop a product, but the customer demanded it! Developed
product, established process/rules to govern check storage, etc. Some niche markets
(talent management firms dealing with celebrities, for example). Vary by customer
niche. But the delivery mechanism is key.
Brandon, Goldleaf – What options does the customer have with a
$2 check? Mail to bank using a 42 cent stamp, drive to bank with gas at $4/gallon,
or just throw it out? Value to consumer is huge (convenience) and huge
opportunity to attract new deposit customers. Once BofA or WF introduces it,
consumer remote deposit will take off.
Jon, VSoft – But until the scanner can give me a $20
bill I will go to ATM. A small dollar check is not urgent. I'll carry it
around until I go to the ATM next. Banks by their nature are risk adverse;
selling this to a consumer is hard. Who sells – teller? They aren't savvy. Hard
to train sales force to sell RDC to customer: treasury, IT, receivables. Who
can address consumer questions about availability? Technology interfaces?
Audience comment: no business case, occasional
usage, huge support costs. Ouch!
Q – Will BOC meet expectations?
- Mary, NetDeposit – yes
- Wally, Creditron – no
- Brandon, Goldleaf – [didn’t catch his
- Jon, VSoft – yes, but expectations
should have been much smaller
- Charles, Huntington – [didn’t
catch his response]
Q – What will be the
key differentiator in RDC?
- Mary, NetDeposit – reporting
- Wally, Creditron – integration with
- Brandon, Goldleaf – tech has to do
work, flexibility to integrate
- Jon, VSoft – matching to most prevalent
uses of customers
- Charles, Huntington – open
Q – Are there too many RDC providers?
- Mary, NetDeposit – yes
- Wally, Creditron – too many similar providers
- Brandon, Goldleaf – yes
- Jon, VSoft – no, focused on
- Charles, Huntington – no
Q – Biggest mistakes banks make in
- Mary, NetDeposit – not enough
training of users, back office folks
- Wally, Creditron – central office
rolling out standard, without taking into account varying processes, needs of
their office locations/divisions
- Brandon, Goldleaf – not involving
everyone (stakeholders within customer and bank)
- Jon, VSoft – training
- Charles, Huntington – not
understanding full scope of solution
Q – What will be the big story in 18
- Mary, NetDeposit – greater risk
management, integration with authorization of checks for e-tailers/POS
- Wally, Creditron – Remote
deposit of cash (that's what our customers are asking for)
- Brandon, Goldleaf – intraday settlement,
from 1-2 days to 1-2 hours
- Jon, VSoft – Businesses’ treasury departments
understand least cost routing, and the best way to clear. But what about
slower way to clear? They are interested
in slowing down disbursements!
- Charles, Huntington – Technology
emerges to allow integration of RDC in market segments we haven’t even