Single-Branch USAA Looks to iPhone App to Capture More Deposits

USAA, one of the pioneers of remote deposit capture, leaped to the technological frontiers again on Tuesday with the addition of remote deposit capture capabilities to its three-month-old mobile-banking application for Apple Inc.'s iPhone. The new feature enables customers to snap a picture of a check's front and back, and then send the image to USAA for deposit in a process that takes less than two minutes. USAA is a diversified insurance and banking company based in San Antonio, Texas, that serves 7.2 million active-duty and retired members of the military and their families. At a conference call with reporters, Jeff Dennes, executive director of mobile services, said the application will help USAA overcome a key weakness in gathering deposits: It has just one branch, in San Antonio. Until USAA launched its Deposit@Home service in 2006 that lets customers scan checks and send the images to its bank subsidiary, USAA Federal Savings Bank, the firm took in all its deposits either by mail or direct deposit. Now Deposit@Home brings in 25% of USAA's deposits. The enhanced iPhone app, dubbed Deposit@Mobile, seems certain to raise that percentage. About 14% of USAA's customers interact with the bank via mobile devices?three times the rate of what other big banks that lead in mobile banking report, USAA claims. Some 350,000 to 400,000 USAA mobile-banking customers are using iPhones, according to Dennes. He added that some tech-savvy consumers have told USAA they'll switch bank accounts because of Deposit@Home and the bank's mobile deposit capabilities. “I do expect deposits to go up,” he said. That's probably not hyperbole, according to senior analyst Robert Meara of Boston-based Celent LLC. “I can't think of a reason why USAA wouldn't do this,” he tells Digital Transactions News, noting that USAA has a scattered customer base that includes many young adults receptive to new technology. “They're perfectly positioned to be an early adopter of this. Since Deposit at Home, they've grown [deposits] at three times the industry average.” Developed in-house, the free iPhone app with its new remote capture feature requires the user to first register with USAA before being approved to send checks. As a risk-management tactic, the company has required customers to have a property or casualty insurance product and have been underwritten for a credit product before doing remote capture. The insurance requirement, however, will be dropped in the next two to three months, according to Dennes. The transaction process is simple: the customer logs in to his account, selects the deposit function, takes a picture of both sides of the check, and touches a screen button to send the images via Check 21 rails to USAA. The software prompts the user to re-take a picture if image quality is poor. Dennes said 500 USAA employees tested the app, and that more than 2,000 deposits have been made with it already. “We felt very comfortable we were able to get any bugs out of the system,” he said. Most remote deposit funds are available for immediate customer use, he said. Deposit@Mobile works with all three of the iPhone's models, including the new 3G S. Dennes said versions are under development for other mobile phones and operating systems, including the BlackBerry from Research in Motion Ltd., Palm Inc. devices, and Google Inc.'s Android and Microsoft Corp.'s Windows Mobile systems. Ironically, the big banks that have been leaders in mobile banking may not rushed to copy USAA in providing mobile remote capture, or at least are not heavily promoting it, according to Meara. That's because more than nearly any other remote-banking service, mobile deposits could divert traffic from their vast branch networks. “While risk concerns often emerge as the primary issue, I think the unspoken issue is what are we [bankers] going to do with these branches,” Meara says. “It's becoming more known that banks are struggling with branch profitability.” USAA's announcement follows a decision late last month by big bank processor Fiserv Inc. to test mobile-capture software from Mitek Inc., a San Diego-based vendor of image-analytics technology (Digital Transactions News, July 29).