Remote Deposits
Dropping off deposits at the bank is a routine matter for small businesses. But once in awhile they can wind up in the wrong place — such as a McDonald’s garbage bin.
That’s what happened to Michael Lundeby, CEO of CRC Marketing Solutions, an Eden Prairie-based marketing communications agency.
A few years ago, his accountant decided to combine her bank errands with a fast-food run, but realized upon returning to the office that she’d forgotten to stop by the bank. And that she’d misplaced her company’s $20,000 deposit.
“It was a whole afternoon ordeal,” says Lundeby, recalling how employees retraced her steps. Their search led to the recovery of the lost checks, which the accountant had accidentally tossed along with her lunch trash at McDonald’s.
Preventing future monetary mishaps was one reason he decided to try out remote deposit. His long-time bank, St. Paul-based Bremer, rolled out the new product in September 2005.
Instead of driving a deposit to the local branch three miles away, Lundeby now uses a scanner, about the size of a Kleenex tissue box, to read checks. The system is Internet-based, so data is sent electronically to the bank via his work computer. The bank delivered and hooked up all the necessary equipment at his office.
The program is set up to allow multiple users with different passwords and access levels. An assistant, for example, can scan the checks while a high-level officer submits and approves the information, he says.
Lundeby then stores the scanned checks in a lockbox for two weeks. Once they’ve cleared at the bank, he destroys them. CRC Marketing Solutions has revenue just above $2 million and 15 employees.
Several other banks in the Twin Cities have begun offering remote deposit — also called remote deposit capture, or remote capture — in the last few months, though not all are marketing to small businesses.
Others are waiting for best-of-breed to emerge among the dozens of remote-deposit products available right now, wary of the difficulties they’ve heard some users have experienced.
Time savings
For Bremer, small businesses were a perfect match for remote deposit. “It’s a huge savings of time,” allowing owners to concentrate on other tasks, says Scott Reinhard, Bremer Financial Services vice president and marketing communications manager.
It also guarantees that companies get quicker access to their funds. With only a handful of big checks from large projects coming through his office every few days, Lundeby would wait until he had a decent-sized stack before heading to the bank to make a deposit, he says. Now he can deposit a check right away.
Since launching remote deposit in the fall, the bank has had a “good response,” says Reinhard. The number of companies using it are in the “double digits” — “on par with what we expected,” he says.
To get set up with remote deposit at Bremer, companies must first buy a scanner. They have several to choose from, with each offering different capabilities. Low-end scanners are $450, while more sophisticated ones run to $1,200. As a wider variety of scanners are introduced, the market should expand even more, says Reinhard.
The service then costs $65 a month; there are no set-up fees.
Besides the new fee-income stream, remote deposit benefits the bank by expanding its footprint, says Reinhard. It can now reach customers who might not be located near one of their branches.
Wells Fargo launched remote deposit last spring, but they’re marketing it exclusively to large companies for now.
“That’s a very new product. Our small-business customers just aren’t at that point,” says Greg Peterka, small-business sales development manager at Wells Fargo of Minneapolis. Peterka himself is based in Lakeville.
Small companies don’t have the need to justify the costs, he says. Remote deposit is really geared for companies with a large volume of checks and multiple locations, he says. Another banker points out that some small businesses take in only cash from their customers, so wouldn’t benefit from such a tool.
Peterka says remote deposit will undergo a similar maturation process like other bank products. “Ten years ago it wasn’t practical to have a small company with five or 10 employees on a payroll service. It wasn’t cost-effective,” says Peterka.
Today, he points out, the Wells Fargo payroll service is popular with companies of all sizes. “When costs come down, then small businesses can jump on board,” he says.
More plan to offer
Highland Bank and Venture Bank — small banks that cater to small businesses — tentatively plan to offer remote deposit in 2007.
Of all the various new banking services out in the market, remote deposit is the biggest one he’s considering for his bank, says Rick Wall, CEO of Highland Bank, St. Paul. But he’s “putting the pieces in place to get that done” at a measured pace, he says.
His and other bankers’ hesitation isn’t over whether small businesses are a good market. Rather, they’re taking their time conducting due diligence. They’re concerned about the quality of the products available and their compatibility with their own internal systems, they say.
“We’re kind of waiting the curve a little bit because it’s so new,” says Crystal Hatcher, senior vice president at Venture Bank, Bloomington. Her bank is researching various remote-deposit options, and receiving proposals from vendors.
She and her colleagues say they’re comfortable with not being a front-runner with remote deposit. When selling new technology, there’s always a fine line between “leading and bleeding.” One bank, she says, had to update its software 11 times in the first month of its rollout. Customers, in turn, had to load those updates at their own offices.
“We don’t want to cause inconvenience for our customers,” says Hatcher. “We want the product to be a good, solid one that meets their needs.”
Scanners can also be problematic, she says. The least-expensive ones — those most likely bought by small companies since the most advanced scanners can be cost-prohibitive — may have a difficult time reading and interpreting the handwriting on checks. Users then have to go back and key in the information manually, and that can be an enormous waste of time, she says. Sometimes users scan an item more than once, or misplace the freshly scanned checks.
Accuracy — or a lack thereof — in reading checks did initially worry him, says Lundeby of CRC Marketing Solutions. He still handles the remote deposit himself “to kind of keep an eye on it.” But so far, “there isn’t a single check that didn’t post the way it was supposed to,” he says.
In fact, moving the scanner from one computer to another and reinstalling the program proved to be hassle-free, he says. “You click a few buttons, and you’re set up and ready to go.”
But ultimately, Hatcher says she wonders, is it necessary to shoulder small-business owners with yet one more responsibility — the proper handling and depositing of their checks?
“You’re taking things we’ve been doing for years and years as a bank and you’re now pushing that into the hands of the merchant,” she says. “Is that really their business?”
[contact] Crystal Hatcher, Venture Bank: 952.830.9999; chatcher@venturebankonline.com; www.venturebankonline.com. Michael Lundeby, CRC Marketing Solutions: 952.937.6000; www.crc-inc.com. P. Gregory Peterka, Wells Fargo: 952.985.2107; greg.peterka@wellsfargo.com; www.wellsfargo.com. Scott Reinhard, Bremer Bank: 651.227.7621; sjreinhard@bremer.com; www.bremer.com. Rick Wall, Highland Bank: 952.858.4753; rick.wall@highlandbanks.com; www.highlandbanks.com
