Thursday, January 26, 2017

The Case for Mobile Deposit

By Michael Scheibach, Executive Editor

Mobile banking users want mobile deposit, or MD. The Federal Reserve’s report, “Consumers and Mobile Financial Services 2016,” in fact, found that MD is the second most common activity among these users, right behind receiving bank alerts; and 82 percent of mobile banking users have their bank’s application on their smartphones. This would indicate that every financial institution needs to move ahead, if it hasn’t already, with offering MD.

Seems reasonable. Yet according to the “2016 Mobile Deposit Benchmark Report,” while the big banks and regional banks had significant growth in MD over the past three years — 122 percent and 165 percent, respectively — community banks had zero growth. Of more concern for community banks, credit unions had 155 percent growth in MD during the same period. The study, conducted by Futurion and sponsored by Mitek, examines MD customer-friendly experiences and adoption patterns within 15 of the largest U.S. banks, and includes a supplementary comparative analysis of mobile deposit adoption for the four largest banks, 20 regional banks, several credit unions and all U.S. community banks.

“Community banks, as a whole, are often digital laggards,” says Jim Van Dyke, CEO of Futurion (, a research-based strategic technology consulting firm. “This creates a self-fulfilling prophecy in reduced ability to attract millennials and digital-first customer segments that represent future financial viability.”

It is important to note, however, that the size of a financial institution does not matter in terms of MD customer experience or adoption. In other words, says Van Dyke, community banks can improve in this area by emulating larger banks and provide mobile banking users with the same quality of customer experience as those who walk into a branch.

How is this achieved? Van Dyke offers the following best practices to improve your MD rate:

Study the most applicable banks in the report (, then have someone on the product team an open account with each bank and use the MD app to better understand the customer experience compared to your institution’s MD app.
Assess your institution’s MD customer experience to these financial institutions’ experiences as noted in the study.
Give particular focus to the specific areas rated best or worst for the top financial institutions. The best areas include consistency and standards, and real-time status; the worst areas include error and prevention, and item processing.
Finally, after taking these steps, develop a list of specific marketing requirements and timelines that encompass risk, product and retail line of business, and other functional areas.

Van Dyke believes FIs can improve their customers’ MD experience with the results of the Futurion study, which in turn will create a future spike in usage. He also points out that financial institutions have never had proof that customer experience and adoption go hand-in-hand, as well as a detailed roadmap for identifying what changes to prioritize.

Of course, improving the MD customer experience must be framed within the context of changing demographics, especially the rise to power of the digital-first millennial generation.

“With all segments and especially with those who are more digital first,” says Van Dyke, “paper payments die a death of a thousand cuts, and measured in half-lives. In other words, to profit from the newest methods (such as mobile point-of-sale payments or digital lending), you must be equally adept in customer experience for traditional commerce methods such as mobile check deposit. Checks won’t go away tomorrow, and one of the best ways to migrate people to the newest profit areas is to build digital usage in their more traditional financial services areas first.”

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