Technology Level Resets the Cheque Landscape

Technology Level Resets the Cheque Landscape

In the spring issue of Payments Business Canada, Jason Schwabline, Alogent's Chief Strategy Officer, speaks to how technology, and specifically RDC, can break down barriers to entry for financial institutions and other non-traditional or smaller services organizations. The full article can be found below, as well as on the publication's website.

Technology Level Resets the Cheque Landscape

It’s simple. Consumers want convenience. And in today’s world of big-name online retailers, we’re conditioned to expect effortless and immediate responses with slick apps and eye-catching appearances.

The banking climate is no different, putting pressure on longstanding, traditional brick-and-mortar institutions to adapt or be left behind. And because of this, it’s no surprise that we’ve seen such a tremendous growth of mobile banking and remote cheque deposit as compared to other in-person transactions. 

No longer is a physical branch location required to expand the client base and meet the needs of the customer, thereby eliminating what were once geographical inhibitors of growth. In fact, a December 2018 study from Abacus Data reported that 91 per cent of Canadians believe technology has made banking more convenient, with mobile and app-based transactions continuing to grow. 

Meanwhile, many financial institutions still struggle with data silos and disparate systems, each with different business rules and other internal blockades that don’t allow for a unified customer experience or data sharing for business intelligence and analytics.

Innovation expectations
Providing access to innovative financial solutions, anywhere, anytime has become a minimum customer expectation. Although Millennials represent Canada’s largest segment of the population and account for nearly 36 per cent of mobile banking usage, 23 per cent of all other demographics are also following suit, according to the Abacus Data study. 

A true catalyst for change, technology is pushing financial institutions and the deposits market to meet the 24/7 needs of consumers and business customers alike. The latest findings published by Payments Canada in the 2019 Canadian Payment Methods and Trends report reflect the impact that technology has had on the payments landscape.  

According to the report, in 2018, the payments market in Canada grew to 21.1 billion consumer and business transactions worth more than $9.9 trillion.  When compared to the data from five years ago, it’s clear that a transition is underway as Canadians continue to expand their use of mobile and electronic payments.

The strength of cheques
While cheques are slowly declining due to the entry of other electronic payment types, Canada still sees nearly one billion cheques processed each year and a growing self-service channel.

In addition, Payments Canada data shows that while debit and credit cards continue to make up the largest portion of the transaction volume, electronic fund transfers and cheque and paper transactions still dominate the overall transaction value.  

In 2018, the total value of cheque and paper items decreased by 4 per cent, marking a disruption to the previously established five-year average of 1.5 per cent annual value growth.  Still, in 2018, even with fewer cheque items written, the average value of a cheque was $5,833, over 50 per cent higher than it was in 2013 ($3,737).

Moving to omnichannel deposits
The true test of efficiency and convenience, however, comes when the same simple and intuitive user interface (UI) and user experience (UX) can be deployed across all channels i.e. omnichannel. This is a blend of full- and self-service cheque acquisition, whether from a mobile phone or tablet, kiosk or desktop computer.

As these remote cheque deposit capabilities continue to grow with banks, other non-traditional or smaller financial services organizations are starting to look for ways to increase their customer bases and transaction volumes through similar offerings. 

What once required an in-person visit to a retail location to cash a cheque can now be done from the convenience of one’s home with the same mobile technology as a hosted offering or even as a service. Scalable, secure and able to provide a seamless UX, this cloud-based offering enables cheque cashers, merchants and smaller institutions that don’t have the same IT infrastructure as a national bank to offer a similar self-service experience.  

Business intelligence key
With new technology breaking down barriers to entry, and level-setting the remote cheque deposit and cheque cashing landscape, banks, credit unions and non-traditional financial services organizations will surely look to the business intelligence linked to these applications and their usage. Not only does data analysis help to mitigate risk, it enables the organization to track trends, pinpoint shortfalls and enables the management of an effective payments ecosystem. 

With the technology available today there is no reason why mobile cheque deposit cannot be leveraged to deliver cross-border payments capabilities to customers. This unified UX approach to cross-channel cheque acquisition also translates into simplicity for the financial institution: a simple and centralized reporting structure that turns otherwise idle information from various silos into a consolidated, usable resource. 

According to the Canadian Bankers Association, more than 76 per cent of Canadians banked through online and mobile channels last year. With features like mobile cheque deposits tailored to both consumers and small business clients, and solutions scalable for institutions of all sizes with measurable benefits and tangible data assets, this figure is sure to grow into this year and this new decade.