Banks Explore Virtual Branches for Corporate Customers

The combination of Check 21 legislation and advances in check image technology have enabled the capture of images of check deposits at nonbank sites - such as within a corporations own offices. These images are transmitted electronically to the bank and reconverted to printed form as substitute checks for further processing. Several banks in the U.S. have already begun to offer business customers remote deposit capture, in effect creating a virtual bank branch that can provide significant convenience and flexibility to those corporate customers. Highlights of the research include: - Several banks are offering business customers remote deposit capture, which they believe creates a virtual branch. In addition to offering clients greater convenience and cash management control, banks see this move as helping them consolidate the banking business of clients that maintain accounts at multiple banks - while also potentially winning new corporate clients. - There are several business environments that are well suited for remote deposit products. These include corporations using deposit concentration services, businesses receiving high-value checks, companies receiving checks at nonpayment locations, and businesses using Internet banks. - TowerGroup believes that banks will succeed in their quest to sell remote deposit products to their corporate banking customers. Although the initial focus of these initiatives should be on clients with low-volume check deposits, the product has future application for higher-volume depositors as banks ultimately implement electronic check presentment - the next stage in the check electronification process. - Banks will need to address several issues related to remote deposit capture before widespread roll-out of this technology can occur. These include the defining of legal liability between the bank and corporate depositor, the quality of the check images remotely captured, and new controls to detect erroneous or fraudulent check deposits.