Checks are central to small business finances and
will remain so for the foreseeable future. However, meaningful adoption of
RDC solutions by small businesses is inevitable. Highly predictable market
forces will produce escalating competition as more deployers enter the
market, driving down solution costs and spurring adoption.
Like the US North American expansion in the
nineteenth century, remote deposit capture (RDC) is rapidly gaining
territory. But just how far and how fast will it expand? In a new report, Manifest
Destiny: Small Business Remote Deposit Capture, based on three
separate quantitative surveys, Celent concludes that broad-based adoption
by small and micro businesses (SMBs) is indeed the manifest destiny for
RDC, and will come about in large measure over the next three years. Banks
with large branch footprints have long had a stranglehold on small
business financial services. For those willing to think and act
differently, remote deposit capture will change that.
Although as many as 60% of US financial institutions
have remote deposit solutions, two-thirds offer the same product to large
and small businesses alike. But 30% of retail banks are planning separate
remote deposit initiatives aimed specifically at small businesses.
Historically, such initiatives have been rare, due to high solution cost
and back office infrastructures that weren’t ready to efficiently
process incoming check images. This trend should continue as a number of
factors align to foster significant small business adoption through
simultaneously improving client demand and eroding historic financial
institution barriers.
“Two things jump out of this
research,” says Bob Meara, author of
the report and senior analyst with Celent’s Banking group. “The first
is just how important checks are to small businesses. In our survey,
checks represent 75% or more of total receivables for over two-thirds of
small businesses. Second is the terrific opportunity for remote deposit
among the smallest businesses, 20 million of them with annual revenues of
less than US$1 million. Banks haven’t focused there yet, but new,
low-cost scanners coupled with thin client applications will open up a
whole new market for banks.”
This report begins by suggesting the
manifest opportunity small business RDC represents as a vehicle for low
cost deposit growth, particularly given today’s challenging lending and
interest rate picture. The report also presents an overview of the small
business landscape, highlighting the significant opportunity among
businesses with revenues of less than US$1 million.
The report details the centrality of
checks to SMBs, demonstrating RDC's tangible value both for customers and
deploying financial institutions. It then offers a forecast for SMB RDC
adoption along with key variables that will impact client adoption.
Finally, the report presents a number of practical suggestions for seizing
the SMB remote deposit opportunity based on interviews with highly
effective financial institutions.
This 43-page report contains 33 figures
and seven tables. It borrows from three separate surveys: one conducted
among small businesses in June 2007, and two conducted among financial
institutions conducted in June and December.
A table
of contents is available online.
