MRDC 2.0 And Your Credit Union

 

By Robert McGarvey

 

For CU2.0

 

A new report from RemoteDepositCapture.com makes plain that mRDC now is a must for credit unions.  Declared the report: “mRDC is no longer a competitive differentiator, but instead a ‘must-have’ offering Financial Institutions need simply to remain competitive.”

Without mRDC you just may not be competitive. That’s a stinging reality.

This claim, incidentally, is underscored by a separate report, led by the Federal Reserve of Boston, that claimed 73% of the institutions it surveyed already offer mRDC and another 18% “plan to offer.”  Just 9% don’t have mRDC on their dance cards.

Small credit unions are very much included among the adopters. Said the Fed: “ Even among the smallest respondents, 78 percent support or plan to support mRDC within two years “ It defined “smallest respondents” as < $100M in assets. And just 22% of them have no plans to offer mRDC.

Big institutions are all aboard. Among institutions with assets >$1 billion, the Fed said 92% already offer mRDC and only 3% have no plans to follow.

mRDC has become a must have.  That’s a key reality in today’s new reality where we have entered the era of mRDC 2.0. Now the focus is on new uses, more usage by members, and there also is a wholly new kind of thinking around mRDC fraud and how to combat it.

A lot has happened to mRDC since 2009 when USAA debuted mRDC.  A handful more joined the chase in 2009-2010. But by 2011 the race was on at full speed inside most CUs to offer mRDC.

Initially many credit unions grumbled about the fees associated with mRDC – fees charged by third party processors – but, by now, most larger institutions have simply decided to suck up the added costs, which incidentally usually are much, much lower than the costs associated with a paper check deposited at a branch.

That’s a fact: mRDC saves a credit union money.  While expanding the convenience and utility of the account to members who now can make deposits while dressed in their PJs and sitting at the breakfast table.  That is cool and it ultimately is why mRDC usage will remain popular as long as paper checks circulate and these days about 17 billion of them get written in the US annually.  That number continues to slip down but it will be years before checks vanish (and aren’t we all waiting for the long predicted death of cash?).

Face it: checks are hanging around and so will mRDC because it just is so much better than driving to a branch or to an ATM.

John Leekley, CEO of RemoteDepositCapture.com, said many institutions have gotten increasingly more skilled at their mRDC offerings.

A plus: Leekley pointed to data that shows a 35% year over year increase in mRDC transactions which means more checks are getting deposited this way.

Are more fraudulent checks also getting deposited? Roll back the clock and that was a huge fear among many credit union execs, some of whom stalled when it came to rolling out mRDC.  

Today’s take is very different, said Leekley, who indicated that his survey found that “the vast majority (74%) of respondents indicated they had no losses directly attributable to mRDC.”

That means zip.

The big fear still revolves around duplicate deposits – depositing the same paper at multiple institutions – but the numbers don’t show there is a threat of any real magnitude. Leekley’s report goes on: “Exclusive to RemoteDepositCapture.com, the industry’s mRDC Duplicate Loss Rate in 2016 was just 0.035%, or 3.5 in every 10,000 items. To put this in perspective, according to the Federal Reserve, the industry’s overall return item rate was 0.4%, or approximately 40 out of every 10,000 checks deposit.”

What’s next for mRDC? Most credit unions now appear to want to get more consumers depositing more items with mRDC.

Leekley also indicated many institutions are giving a re-think to mRDC deposit limits. Traditionally, some institutions set very low limits, to manage exposure to fraud. But, said Leekley, more effective and more consumer friendly approaches involving smart use of big data are taking hold.  

Many institutions also are looking to increase business use of mRDC, added Leekley.  Exactly how will be a huge topic of discussion and exploration this year but know this: now is the time for you to begin to seek to push mRDC usage into new arenas.

It’s a good tool, it works. Let its success fuel your institution’s.

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