By Sailaja B
Remote Deposit Capture (RDC) is termed the most important technology, the American banking sector has seen. Most of the top banks in the USA have rolled-out RDC for their customers. Fast paced life of people who want to spend less time at bank branches, ever evolving technology and the increased usage of digital banking channels (smartphones in particular) have forced banks to rethink their channel-banking strategies. The next generation customers definitely expect seamless experience across depository channels.
What is RDC?
Remote Deposit Capture is a system that allows a customer to scan a cheque and transmit the cheque’s image to a bank for deposit by using an encrypted Internet connection – all from the comfort of home, office or any other location. As soon as the bank receives the image of the cheque from the customer, it deposits the “cleared” cheque amount to the customer's account.
Why RDC?
Banks are looking-up at RDC because it facilitates the automation of deposits at branch tellers, branch back-office, image-enabled ATMs and merchant and consumer locations of varying volumes and value. For banks, the RDC technology helps in cutting down the paper costs and ATM cheque-drop box pickups as well as avoids physical transportation of the cheques to a Clearing House which reduces processing costs and speeds up the cheque clearing process.
Risks Associated with RDC
The complexity of the risk varies depending on the scope of RDC implementation. Implementing RDC in the institution's back-office operations may be less risky than setting up RDC at remote locations, such as customers' business premises or homes, which are not under the control of the institution. Customers’ account information could be stolen when an unencrypted Internet connection is used to transmit the cheque image. There is also a possibility that the cheque which is already presented may be re-presented, leading to duplication. Hence financial institutions should have risk management solutions to protect its own IT systems as well as those of its third-party service providers and its RDC customers.
RDC in the near Future
The advantages of RDC far outweigh the risks associated with it. Success with digital channels are driving changes in Channel Banking Strategies. The Federal Bank of USA states that mobile cheque deposit ranks fourth among the most commonly used feature, as 51% of mobile banking customers used mobile phone cameras for depositing cheques during 2014. Mobile RDC is truly revolutionizing banking.
RDC in India
The cheque clearing system in India has moved from purely paper based clearing to the exchange of electronic MICR information. Reserve Bank of India has introduced “Cheque Truncation System” which stops the flow of physical cheques using image-based cheque clearing system online. In this process, the MICR (Magnetic Ink Character Recognition) data and cheque images are captured by the collecting bank branch and further transmitted electronically. A RDC pilot run was done at New Delhi recently. RBI may further test RDC at other important Clearing Centers in the country.
In the distant future, paper based cheque payments would be redundant. Financial institutions are gearing up for customer-centric banking technologies.
Remote Deposit Capture (RDC) is termed the most important technology, the American banking sector has seen. Most of the top banks in the USA have rolled-out RDC for their customers. Fast paced life of people who want to spend less time at bank branches, ever evolving technology and the increased usage of digital banking channels (smartphones in particular) have forced banks to rethink their channel-banking strategies. The next generation customers definitely expect seamless experience across depository channels.
Remote Deposit Capture is a system that allows a customer to scan a cheque and transmit the cheque’s image to a bank for deposit by using an encrypted Internet connection – all from the comfort of home, office or any other location. As soon as the bank receives the image of the cheque from the customer, it deposits the “cleared” cheque amount to the customer's account.
Why RDC?
Banks are looking-up at RDC because it facilitates the automation of deposits at branch tellers, branch back-office, image-enabled ATMs and merchant and consumer locations of varying volumes and value. For banks, the RDC technology helps in cutting down the paper costs and ATM cheque-drop box pickups as well as avoids physical transportation of the cheques to a Clearing House which reduces processing costs and speeds up the cheque clearing process.
Risks Associated with RDC
The complexity of the risk varies depending on the scope of RDC implementation. Implementing RDC in the institution's back-office operations may be less risky than setting up RDC at remote locations, such as customers' business premises or homes, which are not under the control of the institution. Customers’ account information could be stolen when an unencrypted Internet connection is used to transmit the cheque image. There is also a possibility that the cheque which is already presented may be re-presented, leading to duplication. Hence financial institutions should have risk management solutions to protect its own IT systems as well as those of its third-party service providers and its RDC customers.
RDC in the near Future
The advantages of RDC far outweigh the risks associated with it. Success with digital channels are driving changes in Channel Banking Strategies. The Federal Bank of USA states that mobile cheque deposit ranks fourth among the most commonly used feature, as 51% of mobile banking customers used mobile phone cameras for depositing cheques during 2014. Mobile RDC is truly revolutionizing banking.
RDC in India
The cheque clearing system in India has moved from purely paper based clearing to the exchange of electronic MICR information. Reserve Bank of India has introduced “Cheque Truncation System” which stops the flow of physical cheques using image-based cheque clearing system online. In this process, the MICR (Magnetic Ink Character Recognition) data and cheque images are captured by the collecting bank branch and further transmitted electronically. A RDC pilot run was done at New Delhi recently. RBI may further test RDC at other important Clearing Centers in the country.
In the distant future, paper based cheque payments would be redundant. Financial institutions are gearing up for customer-centric banking technologies.
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