Why MRDC Hasn’t Fulfilled Its Promise: What Your Credit Union Can Do
By Robert McGarvey
A new research report from Javelin on “Why Digital Banking Often Fails to Reduce Offline Volume” has an infographic that just popped my eyes. The subject: “Reasons Why Consumers Avoid Mobile Banking and Turn to the Branch or ATM for Check Deposits.”
Javelin offers answers but, first, why do you think your members do this? Especially when, in theory, nothing could be more convenient than using a smartphone at your kitchen table to deposit a check that came in the day’s mail.
But lots and lots of consumers don’t use MRDC. Why? The Javelin report explores that question.
I can give you a hint about why. A few months ago I opened a new account at Arizona Central Credit Union. I deposited a check for around $25,000, drawn on Capital One (closing an account), and I deposited it at a branch a few blocks from my apartment.
Recently I opened the ACCU app to make a deposit and saw my MRDC limit is $500. I shut the app.
I opened a Chase app, where my limit is many times that, and deposited the check.
I’m not alone. 15% of the consumers who don’t use MRDC told Javelin they were afraid their check was too big.
They’re probably right.
Even Mitek, the principal MRDC cheerleader, in its 2017 Mobile Deposit Benchmark Report, moaned about this barrier to wider usage: “Deposit-limit policies at three quarters of FIs essentially represent penalties for customers who use mobile deposit, representing an unsustainable barrier to digital migration and growth….Many consumers state they have been prevented from using mobile deposit by the FI’s dollar limits, yet conversations with industry executives tell us that advanced risk management policies can enable customer-friendly deposit limits that also limit misuse.”
Yep, and that’s been true for years. But still most credit unions retain absurdly conservative deposit limits.
As for long holds – and I have personally seen holds as long as seven business days on a mobile deposit – there is no defensible reason for the practice, other than a desire to thwart MRDC usage.
Could be that’s exactly what some credit unions want to do. Processing fees are involved with deposits via vendors such as Mitek. Force the consumer to walk the check in and there’s no Mitek fee.
But maybe there also is no consumer, as the consumer does as I did and calls up a friendlier app such as Chase and makes the deposit.
Note, too, Javelin said 17% of consumers who did not use MRDC said their reason was that “I needed the funds quickly.” Long holds chase away members.
Probably the biggest barrier to MRDC usage, per Mitek, is insecurity about the technology. Reported Mitek: “Fear of fraud is the most powerful impediment to widespread mobile deposit
adoption, cited by 43% of non-users from large FIs. FIs must unequivocally assure customers that mobile deposit is every bit as secure as an ATM or bank branch. Immediate feedback and receipts upon deposit acceptance, and notification of funds availability will help resolve these fears. Walking customers step-by-step through their initial experience may also alleviate worry, as fear over making a mistake is holding back 34% of non-users at large FIs.”
According to Javelin, 14% of non users said: “I didn’t feel safe depositing a large check via the phone.”
A last, huge obstacle to MRDC usage – fortunately seen at ever fewer financial institutions – is charging fees for MRDC. That never made sense and certainly doesn’t make good business sense today. Reported Mitek: “In 2017, for the first time, none of the major banks reviewed charged a fee for standard processing of mobile deposits. Still, worries over fees remains a block to nearly one out of three FI customers. Therefore, marketing the costfree nature of mobile deposit is an imperative to boost channel migration.”
Now, just maybe MRDC will never capture all deposits. Javelin research found that 27% of non users said they had to go to the branch for other reasons. 32% said they had to go to the ATM for other reasons (presumably withdrawing cash). So they made their deposits through those channels.
But there remains huge growth potential for MRDC if credit unions raise deposit limits, erase unnecessary holds, stop charging fees, and go on the offensive to assure consumers that MRDC is as safe as making a deposit at an ATM.
That’s because, among those who do use MRDC, a consistent comment according to Mitek is praise for the “ease of use.”
But there’s even hope for capturing the non-users. Advised James Robert Lay, CEO of Digital Growth Institute who specifically addressed how to gain usage by those who so far are resisting MRDC: “What will increase mobile deposit use is credit union staff working with account holders that come into the branch to deposit checks. Hold account holder’s hands (and their phone) to guide them through the process. Heck, employees might find the account holder does not even have a credit union’s mobile app downloaded to their device.
It’s a bit of a paradox but to increase digital product use requires human interaction and intervention as change is hard, even though the mobile deposit is easy.”
So right. So smart.