Checks are becoming rarer and rarer, but they are still being used enough to warrant an investment in new technologies in order to make them easier to handle. In many ways, checks are a relic of a bygone era, a more analogue era. Today’s digital economic world favors more technological solutions, and now that bank transfers are straightforward and mostly free, the check can seem needlessly inefficient.
One of the biggest drawbacks of using checks has always been the fact that they need to first be deposited into a bank account, and then they need to cleared. This clearing process can sometimes be incredibly slow, and it isn’t always convenient for some people to visit their local branch in order to deposit their checks.
The remote deposit capture system is an attempt at addressing this issue and offers an innovative solution that might just give the humble check a fresh lease on life.
What it is
Remote deposit capture (RDC) is a system in which allows customers to deposit their checks remotely. The system is able to transmit images of a scanned check securely to the customers bank for deposit. Once images of remote deposit checks arrive at the bank they can be checked by a human employee and the amount can then be credited to the appropriate account. Some banks use an automatic system to read the checks and then have either the customer or an employee verify it. When the customer verifies it, any discrepancies will be caught at the bank’s next audit.
Who it’s for
The remote deposit capture system is something that many of us have been asking for for a while now. Unfortunately, as it stands, banks are focused on delivering this service to their business customers rather than to individuals. It is likely that more of us will be able to benefit from RDC technology soon. The current bottleneck appears to be in handling the potentially large volume of checks, as well as identifying reliable methods of preventing fraud and abuse.
Does it Work?
Businesses who are currently using RDC report generally very positive experiences. There are a few flaws in the RDC approach, but these aren’t impeding its current rapid growth. Banks have historically been at the forefront of new technologies, from phone and online banking to NFC-enabled bank cards. New technologies have been turned to making customers lives easier and using banking services more convenient.
The main challenges with RDC technology are security related. First of all, banks need to find a way to prevent fraud and abuse, as if all the bank sees is an image of a check, then they need a way of verifying it’s genuine that doesn’t require its physical presence. Of course, the bank could have all their customers also mail in their checks, but then the cost of having employees cross referencing these needs to be factored in. This is also a process which could take time, as if funds aren’t issued until it is complete then customers will have to wait to receive their money. If the funds are issued, and then corrected later if necessary, this leaves the system open to abuse.
RDC is an emerging banking technology which is showing every indication of becoming an industry standard over the next decade. Once the security obstacles are overcome we can expect to see RDC being widely used for checks.