By David Abbott, EMEA Payments Lead, International Group, Fiserv
Technology has revolutionised core bankingservices over the last few years and we have seen consumer interactions with banks migrate from branches,to the telephone andPC, most recently morphing into ‘always on’ mobile banking.When it comes to Payments innovation never stops, with Apple launching Apple Pay to attempt its own entry into the millennials daily payments regime. So, it’s probably no surprise that after 350 years of faithful work in support of the U.K.’s economy, and afterseveral minor facelifts, it’s finally time for the ‘analogue’ cheque to take its place in the digital payments ecosystem by way of its capture by a phone camera or remote scanner.Widely accepted in the United States, remote cheque deposit capture represents an innovativeopportunity for financial institutions in the UK to boost mobile customer engagement by providing the latest technology to their customers.
Since its heyday in the last century, U.K. cheque usage has been in gradual decline, but while reports show thatvolumes fell 12percent from 2012, in 2013, the U.K.’s banked community wrote over 1.3million cheques every working day, moving over £500 billionaround our economy during the course of the year.This decline in volume does have some side effects;unit and transport costs per cheque processed have steadily risen, resulting in repeated calls for the death of our last flexible friend.Unsurprisingly, the writers of those 1.3million daily promises to pay are keeping the cheque alive and are driving it into the digital age,
We know that paper chequesare expensive to process, but their status as the last ‘anywhere, anytime’ payment methodmeans theyfill a role that would otherwise be vacant. Recognising this, and after a failed assassination attempt by the Payments Council, HM Government included a draft regulation in the Small Business, Enterprise and Employment Bill that will enable cheques to be digitised and transmittedinstantly. Digitisation will be achieved using mobile phone cameras and apps, or scanners located in bank branches, ATMs, corporates or SME offices.Whilst legislation is due to be enacted in 2015, we have already seenforward-thinking banks beginningclosed loop or ‘On Us’ pilots, as slower responders ponder their options.
Whilst new to the U.K., mobile ATM and scanner-based remote deposit capture (RDC) technology has been a fact of life in the U.S. for many years. Introduced as an expedient to remove the need to ship paper cheques around the U.S., ‘Check21’ legislation(which created a cheque replacement document) has meant that digitised cheques are not only viable but are holding their own.
In a new cheque clearing model, using Faster Payments in the U.K. and intelligent mobile banking services, credit is transferred between trusted partiesinstantly, payers can be advised when cheques are presented for payment, and where a cheque bounces, payer and payeewould have the option to communicate and fix the problem quickly, minimising rework and exception processing.Banks are perfectly able to create this new order; they just need to leverage U.S. cheque processing experience, with their debit/credit card practices and blend with the established Faster Payments tool. Delivered throughexcellent mobile user interfaces, the possibilities are endless.
For customers who are increasingly turning to digital devices to conduct day to day activities, this new technology should be a major plus point. Banks have realised the potential that technology offers in terms of customer service, so they should be looking forward to providing a new level of interaction that will be welcomed by customers. No longer will customers have old cheques left on the mantelpiece or in their wallets waiting for that special trip to the bank branch – instead they will be able deposit cheques at their own convenience, exactly when it suits them. In a market where industries are working to bend themselves to the convenience of the customer, this technology represents another step that financial institutions can take to differentiate themselves from one another by bringing their customers closer, boosting loyalty and satisfaction.
Having an Edge
At a recent Fiserv discussion forum, the appetite for change was clear. One attendee representinga U.S. bank with U.K. branches made it clear that multinational clients, who had got used to RDC in the U.S., were incredulous that the U.K. did not employ the same technology. U.K.-only banks were keen to move forwards in order to realise the savings and service improvements as quickly as possible to maximise return on investment.Well, it would seem the times are changing, and I believe this change is closer than we think. Time will tell.