Summary of Survey

Findings

Status of Image Migration,

Branch Capture and
Remote Deposit Capture
Among Independent Bankers
Association of Texas (IBAT)
Members

October 2007

Conducted in conjunction with:

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

CONTENTS

OVERVIEW ..............................................................................................................2

BRANCH CAPTURE ..................................................................................................2

REMOTE DEPOSIT CAPTURE (RDC) .........................................................................2

CONCLUSIONS AND RECOMMENDATIONS ..................................................................2

SURVEY RESULTS ...................................................................................................4

Respondents Asset Size.................................................................................4

Image Migration Strategy Responses ...........................................................4

Branch Capture Responses ...........................................................................6

Remote Deposit Capture Responses ............................................................8

WHO IS ABOUND RESOURCES?..............................................................................11

©Abound Resources, Inc. and IBAT 2007 1

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

KEY FINDINGS AND COMMENTS BY ABOUND RESOURCES

OVERVIEW
In September 2007, Abound Resources, Inc. conducted a survey of IBAT member banks
to identify where the Texas market is currently with image migration, branch capture,
and remote deposit capture, as well as to understand remote deposit capture pricing.
Over 1,100 members were invited to participate in the survey and the initial efforts
produced a response rate of 13%, or 142 total respondents. The survey was
anonymous, however participants were asked to identify their asset size for
categorization.

BRANCH CAPTURE
IBAT member banks are significantly ahead of the national average in branch capture
installations (46% of IBAT members have branch capture installed vs. the average
national bank at 25%(1)). Abound believes that the faster branch capture adoption rate in
Texas has been driven, in part, by the wider geographical distribution of branch
networks. The greater reduction in courier costs creates a more compelling business
case for branch capture.

REMOTE DEPOSIT CAPTURE (RDC)

IBAT member banks with assets under $1 billion are behind the national average in
remote deposit capture installations, 24% of IBAT members versus the national average
of 32%(1).

IBAT member banks using remote deposit capture have fewer customer installations
than the national average (15.5 customers set up for remote deposit capture, versus the
national average of 19, which jumps to 38 when you include the top 10 banks with 4,200
deployments each (1)).

IBAT member banks charge more for remote deposit capture than the national average
(75% of IBAT member banks offering remote deposit capture charge a monthly
maintenance fee greater than $40 vs. only 33% of banks nationally charging a monthly
maintenance fee greater than $40(2)). One possible reason that IBAT banks charge
higher monthly maintenance fees is that 43% of respondents bundle the scanner fee into
the monthly maintenance fee.

CONCLUSIONS AND RECOMMENDATIONS (3)

Abound Resources saw no correlation between the relatively low remote deposit capture
penetration among IBAT member banks and the fact that they are pricing this product
above the national average. Instead, Abound believes the following contributes to the
low penetration:

o Lack of CEO leadership – As the case with most initiatives, if the CEO is not
championing remote deposit capture, the initiative will fail or only have modest
success. Banks that have been successful with marketing remote deposit
capture involve the entire bank in their sales efforts and have senior
management sponsorship and visibility.

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 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

o Defensive, not offensive strategy – IBAT member banks with low customer
penetration appear to have adopted a defensive strategy. In learning that
competitors are calling on one or more of their larger commercial customers, they
have quickly rolled out a remote deposit capture solution and offered it only to the
customers they think may be in jeopardy. IBAT member banks with high
customer penetration appear to have adopted an offensive strategy. They view
RDC as a tool for growth including core deposit growth.
o Perception that small community banks don’t need it – Some CEOs in
smaller banks assume their customers would not be interested in remote deposit
capture. Small and large companies across all industries and geographies have
responded favorably to remote deposit capture, but the only way to truly gauge
your customers’ interests is to ask them.
o Fear of fraud - In a follow up survey conducted via webinar, 82% of IBAT
member banks stated they would have more customers using remote deposit
capture if the bank was more comfortable with the risk. Learn to manage the risk
instead of allowing risk to manage you. Conduct a risk assessment, adopt the
appropriate mitigation strategies, develop a customer underwriting process, use
a comprehensive agreement that spells out the responsibilities and liabilities of
all parties, and develop a product contingency plan.
o No marketing and sales plan. Questions about pricing remote deposit capture
are the most oft asked, but pricing is only one piece of the marketing and sales
plan. Many of the most successful remote deposit capture banks are charging
healthy premiums for this service – the success is based on a well executed
marketing and sales plan.

Recommendations for those not yet doing Remote Deposit Capture

o Talk to your customers. Call your 10 largest commercial depositors this week and
ask them “Would you like to eliminate the daily costs and hassle of the daily trip
to the bank to make your deposit?” If the response is favorable, send a survey to
all of your commercial customers to gauge interest.
o If you decide to move forward, build a plan for your product deployment and
product marketing. Be sure your plan includes educating internally and
externally, focusing your sales efforts on benefits not the complicated features,
and assigning a product manager to stay on top of your sales efforts and product
delivery.

Recommendations for those disappointed with your RDC initiatives

o Talk to your customers using remote deposit capture. Get their insights into
what’s working and what’s not.
o (Re)build your marketing and sales plan to include your ideal targets, your benefit
language, your promotion and pricing. Get out of the office, go visit prospects
and don’t forget your website.

(1)
March 2007 Celent survey
(2)
ABA Banking Journal Community Bank Competitiveness Survey 2007
(3)
Abound’s conclusions are based on the survey findings, follow up conversations with IBAT
member banks, and Abound’s advisory work with IBAT member banks.

Additional findings can be found in the complete summary.

©Abound Resources, Inc. and IBAT 2007 3

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

SURVEY RESULTS

Respondents Asset Size:

Asset Size

14% 11%

<$50MM
7%
$51-100MM

$101-250MM
26%
$251-500MM
14%
$501-1BB

>$1BB

28%

Image Migration Strategy Responses:

1. Does your bank have an image migration strategy (a plan to move from check
processing to full image exchange)?

No 15.5%

Yes 84.5%

Based upon the answer to question 1, respondents were asked one of the
following questions.

©Abound Resources, Inc. and IBAT 2007 4

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

1.1. If Yes to 1 - Does your image migration strategy include any of the
following?

Using core or Item

Processing vendor to
1% access an im age
exchange netw ork

29% Using Federal Reserve

offerings
40%

Using an upstream
correspondent

Other

30%

1.2. If No to 1 - Please check the statement(s) below which best describes your
current status related to image migration. (Select multiples if applicable.)

Waiting on our core vendor or item processing

vendor to lead the w ay 30%

Waiting on m ore banks to adopt 10%

Waiting for a m ore com pelling ROI 20%

No urgent need 50%

Other 20%

Of the respondents who selected “other”, some of the answers included

the following:
• Liability potential
• Waiting for better processes in place

©Abound Resources, Inc. and IBAT 2007 5

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

Branch Capture Responses:

The survey continued on to ask questions about branch capture to determine

where this technology fits into plans to image enable back offices.

1. What is the current status of branch capture (checks scanned at branches and
the image files are transmitted to back office) in your bank?

13% No plans to im plem ent in

near future

11% Planning to im plem ent but

haven't started evaluating
options
46%
Evaluating options now

12%
Have signed contracts, in
process of im plem enting

Currently using, have

18% branches live w ith product

If respondents answered “Currently using, have branches live with product” to

the previous question then they were asked the following three questions:

1.1. How many branches are using the product? (Open ended question.) The
following graph depicts the range of answers:

15%

1 to 5
6 to 10
20% 11 to 15

65%

©Abound Resources, Inc. and IBAT 2007 6

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

1.2. Did you deploy at all branches?

No 23.3%

76.7%

Yes

1.3. Are you doing:

Both 8.3%

76.7%
Back counter

Teller line capture 15.0%

©Abound Resources, Inc. and IBAT 2007 7

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

Remote Deposit Capture Responses:

The objective in asking questions regarding remote deposit capture was to

identify if IBAT banks were live with the product, how successful they have been
in offering the product, how they were pricing the product, and how they are
deploying scanners.

1. What is the current status of remote deposit capture in your bank (also known
as corporate capture or merchant capture – where your customers can scan
checks and electronically make deposits from their offices)?

18%
No plan to offer in next 12
32% m onths
Planning to offer but haven't
started evaluating options
Evaluating vendor options
17% now
Have signed contract, in
process of im plem enting
Currently have custom ers
using product
8%
25%

If respondents answered “Currently have customers using product” to the

previous question then they were asked the following four questions.

1.1. How many customers are using the remote deposit capture product?
(Open ended question.) The following graph depicts the range of answers.

8%

13%
1 to 10
10 to 25
25-50
50 or m ore
17%
62%

©Abound Resources, Inc. and IBAT 2007 8

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

1.2. Do you charge for remote deposit capture?

5%

15%

Yes
No
Not sure

80%

1.3. How are you pricing remote deposit capture? (Please enter a figure for all
that apply.)

Monthly m aintenance 90%

fee Avg. $62

One tim e installation

62%, Avg. $383
fee

Per check charge 55%, Avg. $0.11

Per location m onthly

48%, Avg. $37
m aintenance fee

Per deposit charge 45%, Avg. $0.30

Other 31%

Respondents who answered “other” gave answers such as:

• $25 for each additional location

• Return item $5

©Abound Resources, Inc. and IBAT 2007 9

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

1.4. Please check all that apply regarding deploying scanners to customers.
(Respondents could choose multiple answers.)

The bank is responsible for scanner

48.6%
m aintenance
86.5%
The bank orders and deploys scanners
directly to custom ers
We allow custom ers to pay for scanners
43.2%
included in m onthly m aintenance charge

We do not charge custom ers for scanners 27%

We lease scanners through a third party 8.1%

We lease scanners to our custom ers and 8.1%

the bank provides the financing
We use a third party for scanner
45.9%
m aintenance

We use a third party to deploy scanners 16.2%

Other 2.7%

Respondents who answered “other” commented that customers can pay

for the scanners up front.

©Abound Resources, Inc. and IBAT 2007 10

 ABOUND RESOURCES, INC.

Status of Image Migration, Branch Capture

and Remote Deposit Capture Among
IBAT Members

WHO IS ABOUND RESOURCES?

Abound Resources, Inc. is a leading technology advisory firm for community banks that
helps you make the right technology decisions.

Whether you are purchasing remote deposit capture, evaluating a core processing
system, negotiating technology contracts, or starting a de novo bank, Abound Resources
offers advisory services that can meet most any need and budget for a variety of
projects.

Not simply a traditional consulting firm, Abound's methodology the RightTech™ Cycle, is
a proven process that has been used successfully in over 350 technology vendor
evaluation projects. Having been former COO's and CIO's of community financial
institutions, Abound's executive team has the first hand experience to lead you through
the process.

And rest assured Abound has no vendor affiliations, which is one of the many reasons
the firm is able to guarantee that you will make the right decision.

For more information please contact:

Abound Resources, Inc.

13740 Research Blvd.
Suite 2, Building T
512-231-1750 (p)
512-231-1752 (f)
www.aboundresources.com

©Abound Resources, Inc. and IBAT 2007 11