Released: 2012 Remote check capture, once a niche service offered selectively to business customers, has transformed to be a mass-market service and integral capability in mobile banking solutions. Across the financial services industry, Mobile RDC projects are underway in banks, thrifts and credit unions of all sizes to meet the market demand from retail and small business customers. Furthering that momentum, deposit growth continues to be a strategic cornerstone of retail banking and Mobile RDC has been proven to be a catalyst for generating new revenue sources, new customers, and deposit growth. As financial institutions refine their mobile banking strategies, Mobile RDC has been elevated to be a priority initiative. To help you navigate to a successful Mobile RDC deployment, this report will: - provide industry update on Mobile RDC - illuminate the key success criteria for a Mobile RDC service - provide practical suggestions and best practices to appropriately address implementation speed bumps so that financial institutions are well prepared to achieve the benefits of offering this service

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Mobile Deposit
Why Now…and How

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© 2012 Mitek Systems, Inc. All rights reserved.
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Table of Contents
Introduction........................................................................................................................................ 3
Industry Landscape.......................................................................................................................... 4
The Drivers Behind Financial Institution Adoption............................................................................... 4
Strategic Delivery Channel .............................................................................................................. 4
Competition..................................................................................................................................... 4
Customer Acquisition and Deposit Growth ...................................................................................... 5
Focus on the Customer Experience....................................................................................... 6
Banks, Mobile and Social Media .................................................................................................... 7
Best Practice Approach to Solution Implementation ................................................................ 8
Understanding Mobile RDC Risk ........................................................................................................ 9
Qualifying and Provisioning Customers ............................................................................................ 10
Item and Deposit Limits .................................................................................................................... 10
Making the Business Case............................................................................................................ 11
Launch Approach ............................................................................................................................. 11
Marketing Strategy ........................................................................................................................... 11
Conclusion........................................................................................................................................ 12

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This paper may not be reproduced or distributed without the express written consent of Mitek Systems, Inc.
Introduction
Remote check capture, once a niche service offered selectively to business customers, has transformed to be a
mass-market service and integral capability in mobile banking solutions. Across the financial services industry,
Mobile RDC projects are underway in banks, thrifts and credit unions of all sizes to meet the market demand from
retail and small business customers.
Furthering that momentum, deposit growth continues to be a strategic cornerstone of retail banking and Mobile
RDC has been proven to be a catalyst for generating new revenue sources, new customers, and deposit growth.
As financial institutions refine their mobile banking strategies, Mobile RDC has been elevated to be a priority
initiative.
Growing regulation in the US financial markets make it imperative that financial institutions perform due diligence
and establish risk management policies and practices before launching new products. The legal, regulatory and
operational risk issues with Mobile Deposit serve as speed bumps on the path to a broad and aggressive roll out
of the product. Financial institutions that push through the speed bumps effectively and quickly are rewarded with
first mover advantages in the market.
In addition to providing an industry update on Mobile RDC, a key objective of this paper will be to illuminate the
key success criteria for a Mobile RDC service and to provide practical suggestions and best practices to
appropriately address implementation speed bumps so that financial institutions are well prepared to achieve the
benefits of offering this service.
Mitek Systems (NASDAQ: MITK) is a mobile imaging software solutions provider that allows users to remotely
deposit checks, pay their bills, get insurance quotes, and transfer credit card balances by snapping a picture with
their smartphone or tablet cameras instead of using the device keyboard. Mitek’s technology increases
convenience for the consumer by eliminating the need to have to go to the bank branch or automated teller
machine, and dramatically reduces processing and customer acquisition costs while increasing customer
retention. With a strong patent portfolio, Mitek is positioned as the leading innovator in mobile imaging software
and currently provides its solutions to Fortune 500 financial services companies. For more information about
Mitek Systems, please visit www.miteksystems.com.

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Industry Landscape
The Drivers Behind Financial
Institution Adoption
Strategic Delivery Channel
For many financial institutions, their mobile banking
solution was a paired down version of their online
banking service rendered as an app for iPhone and
Android operating systems. However, as mobile has
grown into a maturing channel, banks and their
vendors have produced richer mobile offerings that
take advantage of the unique capabilities inherent
with smartphone technology. Mobile RDC is a prime
example of this; where the smartphone camera is
used to capture a check for deposit.
Delivering self-service solutions opens the door for
greater efficiency and improved channel delivery
economics. The cost of servicing a customer through
mobile is significantly less than the cost associated
with a visit to a banking office. With only moderate
adoption of Mobile RDC by consumers, banks can
expect to see reduced branch deposits and cost
savings.
Additionally, mobile banking users tend to interact
with their banks more frequently because the bank is
assessable anytime and anywhere. The incredible
convenience benefit to consumers is equally
matched by the strategic cost structure benefit to the
financial institution.
Competition
According to a market research paper entitled
"Mobile Remote Deposit Capture: Changing How
Consumers Bank and Banks Compete" by
AlixPartners LLP, the global business-advisory firm,
Mobile RDC is a powerful, must-have capability for
banks. Banks that fail to implement a mobile-
banking strategy with Mobile RDC as an essential
capability, risk losing market share, the report found.
For financial institutions with limited branch and ATM
networks, Mobile RDC levels the playing field and
allows them to compete against large brick and
mortar banks. The financial institutions that have
led the charge with mobile banking and Mobile RDC
hold a clear competitive advantage.

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Customer Acquisition and Deposit Growth
Aggressive national advertising by Mobile RDC
heavy weights JPMorgan Chase, Charles Schwab
and others, has contributed significantly to both
consumer awareness and customer demand for
Mobile RDC.
This customer demand compounded by the
proliferation of smartphones makes Mobile RDC a
disruptive technology. Consumers have become
accustomed to and place a high value on
convenience, making Mobile RDC an important
mobile banking feature and a strong customer
acquisition tool.
Just as Mobile RDC is an effective customer
acquisition tool, it is also a strong defense against
customer attrition. Perceived as a high value, sticky
feature, customers who use Mobile RDC are less
likely to change banking relationships.
The ultimate goal of customer acquisition and
retention strategies is to grow non-interest bearing
deposits and fee income. Checking accounts in
particular are a low-cost source of funds and a key
source of fee income. Increasingly core deposit
growth is vital to the strength and financial
performance of banks and credit unions making
Mobile RDC an important service to offer.
Financial Institution Adoption
Trend
Banks are scrambling to meet the growing customer
demand for mobile RDC. A study from Boston-based
Celent LLP, which collected information from 218
banks as well as financial industry vendors and
service providers, found that 80 percent of financial
institutions are planning or considering a mobile
RDC solution.
i
i Celent LLP, November 2011 The State of Consumer
RDC 2011: Mobile Takes Center Stage

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Focus on the Customer Experience
Smartphones and smartphone apps have fundamentally changed consumer expectations for doing business and
accessing information. The bar has been raised for service delivery and information access. It is increasingly
difficult for a financial institution to rationalize not embracing mobile as a strategic delivery channel.
Embracing the mobile delivery channel means laser focus on the customer experience. Customers expect the
technologies behind the convenience and reliability of the mobile channel to deliver the same quality and
personalization they have come to expect with other Apps.
For financial institutions, services and applications that allow customers to perform banking conveniently are at
the heart of a good mobile banking user experience. Capabilities that enable the customer to better manage their
finances are also significant customer satisfaction differentiators and will simultaneously reinforce a bank’s
commitment to technology and their customers.

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Banks, Mobile and Social
Media
Heightened customer expectations extend well
beyond the technology and the Apps they use.
Consumers expect total transparency and ready
access to information from many sources such as;
social media, blogs, and App store customer ratings.
A financial institution’s reputation can best be
managed if they are prominently present on social
media channels and join the online dialogue.
Tweets, posts, and customer ratings are resources
that consumers do use when evaluating options.
User feedback, posted in the iTunes Store and
Android Market, is valuable information to
prospective customers and can provide great insight
to the financial institution App publisher.
Having Mobile RDC can boost the rating of a mobile
banking app in the iTunes Store and Android
Marketplace. However, not having a popular feature
can bring an onslaught of negative comments. This
was confirmed in a review of 25 mobile banking
Apps which did not include Mobile RDC. Within only
5 comments on each of the 25 App store customer
feedback page, there was a comment pointing out
the App lacked the capability to make a mobile
deposit.

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Best Practice Approach to Solution Implementation
In order to keep pace with unprecedented consumer
and adoption of new technology, financial institutions
are under tremendous pressure to launch new
mobile and online banking services at breakneck
speed.
While technology opens the door to new markets
with less reliance on brick and mortar infrastructure,
these new solutions must be implemented with
careful consideration to information security,
operating risks, legal, and compliance
requirements.
This challenge is amplified by the following:
 Multiple integration points required between
the mobile platform, the financial institution’s
authentication system, core data systems,
and the various downstream processing
applications
 An increasing dependence on third party
service providers and SaaS solutions
 Growing regulatory and compliance
requirements

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Understanding Mobile RDC Risk
It is essential for financial
institutions implementing Mobile RDC to have a
clear understanding of the elements of risks
associated with this service. After an end-to-end risk
assessment, it is vital that the financial institutions
document and adopt a Mobile RDC Policy, which
establishes their strategy and the tactics that will be
used to identify, measure, monitor, and control risks.
At its core, Mobile RDC is a check deposit service.
Financial institution should leverage their enterprise
infrastructure and existing core competencies for
deposit risk management. The deposit risk scenarios
associated with Mobile RDC include the same risks
as deposits made through traditional channels
(branch/ATM).
Additionally there are risks unique to remote check
capture because the depositor is still in possession
of the original paper check. The potential for loss
comes from the risk that both the image and the
original check will be presented to the clearing
system and/or the check image will be presented
more than once for payment. In this scenario,
known as Duplicate Item Presentment, the RDC
depositing financial institution has the risk of
receiving a return item well after the expiration of an
uncollected funds hold, if such a hold was even
placed.
Because of this increased level of risk, it is not only
prudent but is recommended in the FFIEC Guidance
on Remote Deposit Capture that financial institutions
implement controls to mitigate losses caused by
customers who abuse the service. The
recommended controls are in addition to
commercially acceptable practices for deposit risk
management.

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Qualifying and Provisioning
Customers
Best practice approaches to determine Mobile RDC
eligibility is to implement an automated system that
can prequalify customers for the service. Common
metrics used for eligibility analysis include, length of
time as a customer, average balance in accounts
and incidents of NSF or overdraft activity. Financial
institutions that use a prequalification system are
able to offer the solution broadly without requiring
customers to apply for the service and wait to be
notified that they qualified after the financial
institution performs analysis.
Additionally, customers should be periodically re-
qualified as dictated by the financial institutions
Mobile RDC Policy.
Item and Deposit Limits
It has become a common practice for financial
institutions to impose deposit limits to manage risk
with Mobile RDC. Deposit limits restrict the number
and dollar amount of checks deposited through the
service over a defined period of time (daily, weekly
and/or monthly).
The purpose of this practice is to manage the bank’s
exposure to losses from checks deposited by image
through mobile. By limiting the value of checks in the
collection process at any given time by a depositor,
the bank mitigates their exposure to overdraft losses
caused by depositors withdrawing funds that are
later returned from the clearing system because of
duplicate presentment.
After a Mobile RDC user reaches their limit, they will
need to use the branch or ATM for making deposits.
Checks, deposited in the branch and ATM, do not
carry the risk of duplicate image presentment
because the bank is in possession of the paper
check.
Ideally, deposit limits are systematically set based
on each customer’s risk score and individual deposit
behavior. However, only a few financial institutions
have implemented Mobile RDC Risk systems with
the sophistication required to dynamically set and
manage individualized limits. A fair number of
financial institutions use default limits that are by
definition more conservative and risk aggravating
good customers.
While protecting the bank against losses with
service limits and restrictions, care should be taken
to avoid restricting the product to the extent that
good customers do not find value in the service. An
overly conservative approach will undermine the
commercial success of the service offering.
Financial institutions that have achieved market
success with Mobile RDC have found the right
balance in their risk management programs.

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Making the Business
Case
Launch Approach
Consumer adoption of smartphones has made
mobile banking a strategic imperative for financial
institutions. Offering mobile access to advanced
banking features is a “table stakes” item for
competition amongst financial institutions. Mobile
RDC has proven to be a highly valued service.
Technology also makes it easier for customers to
change banks with the roll out of online account
opening and electronic funding services. Financial
institutions that were early adopters of Mobile RDC
gained first mover advantage and also a reputation
of competence by evolving their services in line with
technology.
Just as critical to getting to market with a robust
mobile offering, financial institutions need to take
care not to undermine the effectiveness of their
product launch by failing to make it broadly
available. Established customers in good standing
will expect to be eligible for this service. Along these
same lines, imposing onerous limits and restrictions
creates the potential that customers will not perceive
Mobile RDC as a valued convenience. As such a
successful Mobile RDC launch should be broad and
well marketed.
Marketing Strategy
Prior to launch, existing mobile and online banking
customers should be taken through a
prequalification process for Mobile RDC. Qualified
customers can then be directly targeted with
marketing in the mobile banking app and in online
banking.
Marketing via the financial institution’s main web site
by using a public site banner ad to grab attention
and direct users towards the new feature are
effective in raising interest and increasing adoption.
By integrating social media plug-in’s so that users
can “share” or “like” the product or experience with
others in their network generates interest without
costly advertising. YouTube videos, integrated into
mobile and online banking are effective tools to
market, educate and build interest in Mobile RDC.

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Conclusion
Smartphones have fundamentally changed the game for businesses and their customers. Financial institutions
can win by leveraging the mobile channel to engage their customers, raise satisfaction, and reinforce value. A
key feature toward this end is Mobile RDC. In this era, banking that is dependent on geography will not remain
relevant.
While mobile technology and customer expectations are evolving rapidly, financial institutions must still take the
precautions necessary to ensure their solutions are secure and sound. As the early movers with Mobile RDC
have proven, the service can be launched and risk management issues addressed. The risk of not offering a
robust mobile banking solution with Mobile RDC is loss of market share and relevance with customers.

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Disclaimer:
This publication contains general information only and is based on the experiences and research of Mitek
Systems, Inc.
Mitek Systems, Inc. is not, by means of this publication, rendering business, financial, investment, or other
professional advice or services. This publication is not a substitute for such professional advice or services,
nor should it be used as a basis for any decision or action that may affect your business. Before making any
decision or taking any action that may affect your business, you should consult a qualified professional
advisor.