Reducing or eliminating check transportation costs, achieving greater funds availability, lessening deposit risk, and improving the deposit reconciliation process are still key concerns of banking customers just months after the Check Clearing for the 21st Century Act took effect, according to Chris Hadorn, a Senior Manager with BearingPoint, Inc.
“In a recent series of focus panels, or ‘Voice of the Customer’ work sessions, corporate clients stressed that the promises of this legislation are realized when banks offer new products and services to help reduce costs and improve customer relationships,” said Hadorn. “The ‘Check 21 Act’ creates opportunities for banks to expand their corporate client base through the creation of new products, which can address the many payment-related challenges faced by these clients.”
Hadorn noted that an example of such a new product is a Remote Corporate Deposit (RCD). A Remote Corporate Deposit allows a corporate client to deposit images of scanned checks for deposit rather than depositing the physical checks. This may improve on the availability of those deposits for the corporate customers, while also allowing them to reduce depository relationships and associated fees and reconcilement. Such improvements can potentially eliminate transportation costs and result in more effective cash management.
“Any corporation receiving checks and depositing them with a financial institution is a potential candidate for this product. The benefits can increase with higher value checks and checks received in geographically disbursed regions. A corporation can obtain these services through a bank, or develop the capabilities in-house and simply send a file for deposit to various banks,” said Hadorn.
Hadorn also noted that RCDs create “stickiness” with their corporate customers, making it less likely for corporations to switch banks. Additionally, RCDs provide the bank with a vehicle to extend beyond its geographic boundaries, capturing electronic deposits that were not considered viable in the past or by capturing deposit business from traditional credit-only relationships. This product is also a defensive play as banks are ramping up this capability simply to ensure that their competitors do not capture their corporate business.