Your Smartphone's Camera Will Revolutionize How You Bank

Terreece Clarke used to hate the chore of depositing checks. Every month, the freelance writer in Columbus, Ohio, would get three to five checks, each of which required a trip to the bank with her kids in tow.

"The hassle of finding the time to get to the bank or drive through the ATM and fill out forms, wait, etc., drives me crazy," Clarke said. "And did I mention I have three kids? Bank lines almost guarantee someone will have to pee while we wait, and I cannot count how many times I have gotten to the ATM to discover I don't have a pen or have left the check sitting on my desk at home."

To avoid the headache, she switched to Chase (JPM) to take advantage of its remote deposit capture, which allows her to use her iPhone 4S to deposit checks from the comfort of her living room couch. She simply snaps a picture of the check and sends the image to the bank, where it is swiftly deposited in her account.

"Now, when I get the mail I do the happy dance for payment, whip out my phone, take a pic, file the check and move on," she said. "Anything that allows me to spend less time on the administrative tasks of running a business is worth its weight in gold."

A Banking Game Changer

While the numbers are still small -- only 3% of banking customers use remote deposit, according to one recent survey -- the technology is poised to become a game changer.

Some 63% of Americans still take deposits to a bank branch teller, and just over half deposit two or more checks per month, according to a survey by TNS on behalf of ING Direct (ING). When you throw ATMs into the mix, you cover 85% of banking customers.

But even people who still trek to the bank acknowledge that filling out a deposit slip feels old-school: 35% of them say that depositing checks with a bank teller is outdated, time consuming or replaceable, according to TNS.

ING Direct recently launched its first remote deposit tool, CheckMate, for iPhone and Android devices. "Saving time and money are top priorities for most busy Americans," explained Jim Kelly, the direct bank's chief operating officer.

Today, the service targets "self-selected, self-directed technology savvy consumers," said Todd Sandler, ING's head of product strategy and deposits. But the landscape is changing fast. "Tablets are outpacing personal computers and laptops," Sandler said. "This is the next step in offering a flexible banking option."

Luring Customers With Mobile Services

In fact, banks that don't have a viable remote deposit option may find themselves losing business -- and fast. Customers like Clarke are willing to switch banks for the added convenience.

Savannah Brentnall, a social media consultant in Los Angeles, deposits six to eight checks per month. "I recently switched from Wells Fargo (WFC) to Schwab (SCHW) online banking, and their mobile deposit app was one of the reasons," Brentnall said. "It's a godsend for someone like me, who bills by the hour. Every minute I spend running errands is time I can't bill for."

Krista Van Veen, an office manager at a CPA firm in Carmel, Calif., ditched Bank of America (BAC) for USAA. "I was totally gung-ho about banking with my smart phone, and USAA has a great app," she said. She gets a confirmation of her deposit within seconds, and her online balance instantly reflects the addition. She can then swiftly tear up the physical check.

Remote deposit technology may be the "killer app" that gets people to go online for all of their banking, said James DeBello, CEO of Mitek, the company that powers Chase's mobile check deposit. "Mobile check deposit is a game-changer because it moves mobile banking functionality from basic features like checking a balance or finding a branch to an advanced feature that allows consumers to complete a transaction."

And mobile deposit is just the beginning. "Mobile image capture will have a lasting impact on retail banking and will drive additional innovations for mobile finance solutions such as mobile image bill pay, mobile check cashing, loading up prepaid cards for those to have had to rely on check cashing facilities, balance transfer and more," he said.

But Is It Secure?

Of course, not everyone is jumping on the mobile banking bandwagon. Lynn Javitz, who runs a wedding and design business in New York City, sat through a demo of the iPhone app at Chase before deciding against it.

"As a prior victim of minor identity compromise, I choose to do no computer banking," Javitz said. "I do not check balances online, and I did not want any type of indication of any account number on my phone should I lose the phone." She also didn't want to hassle with password protecting her device. "I chose to say, 'never mind' and just go to the bank."

Banks are well aware that security concerns are keeping a lot of potential mobile banking users on the sidelines, and they're doing whatever they can to quell the anxiety.

"We've been accepting checks for 12 years for 7.5 million customers and have state of the art security," ING Direct's Sandler said. "The digital imagination of that and the frictionless transaction doesn't mean that there's a compromise in terms of security."

Sandler cited ING's proprietary security technology and the fact that protections are embedded in confirmation emails as an added layer of security.

Banks are also mitigating risk by instituting dollar limits on remote deposits. Susan Robertson is a self-described "early adopter" who was "all-in from the word 'go'" with remote capture technology, but the the Chase iPhone app won't let her deposit checks over $1,000 as a precautionary measure.

"I own a rental property in Florida, and the rent check is more than that, so I still have to physically go to the bank or ATM to deposit that every month," Robertson said. "I really wish they would remove the limit; I don't understand why they would treat $1,001 differently than $999; it doesn't make sense to me as a consumer. Seems like I ought to be able to do the same thing."

ING Direct's CheckMate has a $3,000 limit to protect the bank from possible fraud.


Gary Brand, director of Source Capture Solutions at Fiserv, which develops remote capture solutions, noted that restrictions tend to loosen up as the technology becomes more widely adopted. And he firmly believes it will be: "It's the first time I've seen a technology that has made people switch financial institutions, made businesses consider how they accept checks," Brand said. "It's a great thing for the financial institutions to bring more services to the client base and reach them in a way they never had before."

But that benefit comes with the need to mitigate the risks, according to Brian Barnier, a risk adviser with the Information Systems Audit and Control Association, a global nonprofit organization that deals with IT governance.

"The risk can pop up in both the electronic transaction and in managing the paper check integrity through fraud, privacy breaches and more," Barnier said. "The practical answer to addressing such risk is to focus on process to understand how an accidental or malicious incident or high transaction volume could break the process, early warning if it's breaking, and then smart steps to prevent and prepare."

Because banks know their customers and have detailed monitoring systems in place, Banier said, they can regulate any behavior of ill-intent.