Avoid the bank, deposit a check via phone

Closeup of check

You can enjoy your lunch without the annoying bank run, thanks to the growing number of banks that offer remote deposit capture, or RDC.

This mobile technology enables you to slam-dunk your check electronically from your desktop, fax, scanner or smartphone.

In addition to the obvious benefit of not having to waste your lunch hour queuing up at your nearest branch, remote deposit affords quicker access to your cash, helps dodge overdraft and late fees, and allows you to deposit checks at your convenience 24/7, depending on the bank.

Chase and USAA offer free remote deposit to customers nationwide, as do a fast-growing number of credit unions, online banks, community banks and brokerage firms.

The process is simple: Open the bank's app on your smartphone, snap an image of your check with the built-in camera and submit it for deposit. A reply screen will inform you whether the deposit was received.

If you don't have a smartphone, you can still deposit remotely using a scanner and your bank's RDC online portal.

Banks began rolling out scanner- and computer-based remote deposit capture to their business customers in late 2004.

That's when the Check Clearing for the 21st Century Act, or Check 21, freed banks to clear checks based on an image of the original instead of having to transport the check itself to the paying bank.

The financial services industry was initially hesitant to extend remote deposit to consumers for fear of fraud, compliance issues and concern that it would cost too much to implement and market. The financial meltdown in 2008 moved many nascent consumer RDC programs to the back burner.

But remote deposit capture was a godsend for USAA, which rolled out the first consumer version in 2006 to its 7.3 million military and ex-military members scattered around the world.

Customer RDC quickly took off and now accounts for a quarter of all deposits. USAA launched its iPhone app in September 2009.

In 2010, Chase's Quick Deposit iPhone app threw down the gauntlet for the rest of the major players.

"The big banks with a lot of branches are the market movers. If one of them launches, there will be a lot of fast followers," says Bob Meara, senior analyst at Celent.

That may happen, but not without a good deal of cost-benefit analysis and plain old head-scratching on the part of shell-shocked bankers caught in tempestuous times.

On the one hand, banks are more desperate to attract new customers than ever in the face of new, tougher financial reforms that stand to cost them a bundle.

The heat being generated by the smartphone app craze could help them do just that and perhaps cover the launch costs as well.

"I could totally see that happening," says Meara. "There are plenty of people spending $5 or $10 for an iPhone app. Would they pay $1 to deposit a check and not have to run to the bank? It might be a way to engage young people, because nothing short of free beer is going to get them into a bank branch."

But there lies the rub. In this new parched regulatory landscape, banks are counting on their branches to cross-sell a range of tangential financial products, from securities to insurance, that will help bolster the sagging bottom line. And it's tough to sell anything to customers who have no need to visit the branch.

To further complicate matters, check-writing has been in a slow death spiral for years. Analysts estimate that total check volume is dropping 5% to 7% annually. The new smartphone apps also enable person-to-person, or P2P payments, which are expected to further erode check volume. Why invest to upgrade a dying payment mechanism?

"Everybody knows that check volumes are declining, but they're not declining rapidly," says Meara. "The fact is, checks are going to be around in reasonably high volumes in the U.S. for at least another decade, and you still have lots of checks at branches. Checks remain predominant in terms of defining what branch managers do for a living."

Now that Chase has set the stage for a stampede to remote deposit capture, it is highly likely that it will become a standard feature of retail banking in the near future. What remains to be seen is whether that will hasten the demise of branch banking altogether, and if it does, what services might consumers miss in the process?

If you're into remote banking, learn about our must-have apps.

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