By : Marnie Thorp
July 25, 2017 08:00 AM
The use of checks as a form of payment may have declined significantly from its peak, but there's still a long way to go before we can consign them to the history books. According to the Federal Reserve's 2016 Payments Study, there were some 17.3 billion check payments in the US in 2015, with a total value of $26.83 trillion.
In value terms, the drop between 2012 and 2015 was only 0.5 percent, and the Fed noted the pace of decline was slower than in the past. So while checks may no longer be the first choice for many people, they still have a key role to play, particularly when it comes to larger payments.
This is particularly the case for small and medium-sized enterprises, for which check payments continue to be an extremely important source of revenue. And yet for many of these firms, how they process these payments hasn't changed much, despite numerous advances in the consumer check market.
SMEs still rely on consumer solutions
One of the most widely adopted solutions in this area is remote deposit capture (RDC). But while this has become an everyday part of banking for many consumers, who are able to take advantage of new mobile capabilities to deposit checks, small business users are still not well-served by this technology.
Research by Celent, for instance, reveals that more than half of retail banks (53 percent) do not offer a dedicated small business RDC solution, instead offering the same product they provide to customers, albeit with different deposit limits. Some 15 percent do not offer mobile RDC to SMEs at all.
This means that many small organizations are left relying on consumer-grade technology. One of the issues with this is that consumer-grade solutions don't offer the level of functionality a small firm may require. From a consumer perspective, simplicity is key - all they want to do is take a picture of a check with their phone's camera and have it automatically deposited into their account. But this is not the case for businesses, for whom features such as multi-check deposits and integration with accounting software may be important.
The alternative to this is a solution intended for corporates - and again, this is far from ideal for a small business. A corporate solution is typically designed to deposit large volumes of checks into multiple accounts, requiring more information in the deposit, having potentially multiple levels of authority for the deposit preparation and final approval to complete transactions due to the large number of users who will interact with it. These are not typical for SME needs.
Why banks need a dedicated small business solution
A dedicated small business check deposit solution will offer more capabilities than consumer tools, but means businesses don't have to worry about the complexity or expense of solutions designed for much larger corporates.
For banks, offering these services gives them a better opportunity to serve their small business customers in a way that more effectively meets their requirements. By only offering consumer and corporate offerings, they may end up driving small businesses into paying for a product that has far more features than they need - a major risk factor for banks - or leave them hindered by consumer tools that don't offer enough.
When developing offerings for the smallest businesses, the time-saving factor of RDC can be a particular bonus. Owners of these companies are always starved for time, so being able to quickly and easily deposit these checks from a mobile device can be a real game-changer. Even if it only saves a few minutes per check, this quickly adds up for small businesses where every minute of their day is precious.
Striking the right balance between the ease of use of consumer options and the features of corporate RDC tools should therefore be a clear priority for any bank looking to improve its SME offerings. It's not only good for revenue, but helps ensure these firms are being offered the help and support they need to succeed.