By Kate Marshall Dole, Analyst, Innovation and Research, Center for Financial Services Innovation
If you are like most people, you carry your mobile phone everywhere you go. Your mobile phone may even be the first thing you look at when you wake up in the morning. In other words, your mobile phone has your eyes and ears throughout the day unlike anything (or possibly anyone) else. It stands to reason, then, that your mobile device may be the perfect tool for delivering real-time access to your financial account information. Mobile devices, and more specifically, mobile financial services, have significant implications for promoting success in consumers’ financial lives.
In the early fall, when we published our latest white paper on mobile financial services for the underbanked (written in partnership with Celent), one of the areas we identified as holding potential for financially underserved consumers was mobile remote deposit capture (RDC). We argued that mobile RDC, particularly when paired with prepaid accounts, could improve these consumers’ lives by saving them time and expense relative to the alternatives. However, we noted two barriers to broadly offering mobile RDC to underserved consumers – the potential fraud risk to providers and the delay in funds availability for consumers. In our research, we heard these concerns from many players across the spectrum of mobile financial services companies.
While these two barriers have not yet been entirely overcome, it’s a testament to the rapidly evolving nature of technology that, in the few months since the paper’s release, we’ve seen several announcements of plans to offer mobile RDC with prepaid. Processing companies such as Chexar, FIS and FactorCheck have developed risk-management software that can evaluate check images. These companies then take on the risk of the transaction, rather than the prepaid program manager.
The speed with which funds can be made available remains paramount, and more work needs to be done to ensure that the value proposition for consumers is in place – if it takes several days for funds to be deposited in their accounts using RDC, these consumers would likely choose a trip to the check casher for immediate funds instead. However, mobile RDC could be a key entry point for underserved consumers to begin to take advantage of the full array of tools that are available on the mobile phone – everything from balance checking capability to bill pay alerts and savings reminders to locating ATMs with the most favorable fee structure. These mobile financial services offerings, and many more, will only grow over time in their availability and ability to promote successful consumer behaviors.