How RDC Convinced Me to Switch to Branchless Banking

Despite a lack of nearby branches, technology fills the gap and lets me stay with my old bank

When our family moved to Southern California recently, I got a rare chance to experience firsthand one of the long-time marketing slogans for remote deposit capture: It “expands your bank’s footprint” and “allows you to reach customers outside of your service area.” I’ve been a loyal Bank of the West customer for at least 15 years (their “Free Checking for Life” promotion when other banks began charging $20 and $25 per month couldn’t have come at a better time for a broke college student), but from our new home, the nearest Bank of the West branch was 12 miles away, and there wasn’t an ATM nearby either. So my choices were to switch to a bank that was closer, or take the plunge into all-electronic banking.

Since I’d been hearing these slogans passed back and forth for years, I figured, what better way to see if they’re true than to try it for yourself? There were basically three reasons that used to bring me to the bank: getting cash from the ATM; depositing checks at the ATM; and getting change for the laundry machines. Since the third need has (happily) gone away now that we have our own washing machine, that left cash – which is easy enough to get using your debit card at the grocery store – and depositing checks.

I had long known that I could use mobile RDC to deposit checks, but I’d never tried it until recently. How was that possible for someone working at a company in the RDC business? Simply because, once upon a time, Bank of the West used to charge a 99-cent fee to download its mobile banking app, so I never downloaded it, and simply forgot about it and moved on.

When I checked again this time, I discovered that the app was now free, so I grabbed it and used it to make my first mobile deposit – a $1.00 mail-in rebate check from Budweiser. Since then, I’ve used it about a dozen times, and managed to avoid going near a bank branch even once in the past three months.

This might be old hat to customers of banks like Ally, ING Direct (now Capital One 360), or USAA, which have been conducting online-only banking for years. But for me, and probably a lot of others who have never made the transition to full electronic banking, it’s a little bit of a leap of faith. But having landed safely, here are a few things I think I’ve learned from the experience that I think could help banks that are struggling with the do-we-or-don’t-we of balancing online against brick-and-mortar.

1. Inertia is a powerful, powerful thing. I know I could find a closer bank simply by taking half an hour to go to the shopping center up the street, walk into one of the four or five banks and credit unions there, and open an account. But I don’t.

   Why not? Partly because I’m lazy and don’t like filling out paperwork any more than you do. But also because I haven’t had anything to complain about with the bank I’m using now – and who knows whether a new one would change their rules, or start sneaking in this fee, and that fee, and this other fee without me noticing, and then I’d have to go looking for a new bank all over again? I’ve been burned before at other banks, and I’m sure other people have too.

   The polls show that customer trust is hard to come by in banking, so once you have it, making it stick is huge.

2. It may be possible to do everything online, but there’s really no BENEFIT to not having branches around. While, yes, it’s kind of neat that you can go fully online, I only did it because I fell into the situation. If I were starting from scratch, I wouldn’t go actively seeking out a bank with no branches nearby. A certain percentage of customers are probably drawn to online-only because of the cool factor, but once those people are spoken for, I would say customer retention is a far more likely use for things like online banking and mobile RDC than customer acquisition.

   I’ll give you an example: Since switching to online-only banking, I tend to carry less cash, and sometimes don’t carry cash at all. Now, some tech enthusiasts might say, “Good for you – you’re throwing off an archaic vestige of last century,” but some day, I’m going to find myself at a business that only takes cash, or where the credit card readers are down – and since getting cash takes a little more foresight, I won’t have thought to replenish it ahead of time. It’s usually a good thing to have 20 bucks in your pocket.

3. Services as a moneymaker or a customer perk: Choose one or the other. Banks are falling all over each other to offer the latest technology and the most convenience. They spend millions of dollars a year on this. Yet Bank of the West came about an inch away from losing me over a 99-cent app download fee.

   Now, there are all kinds of possible reasons for that fee – for example, many banks farm their mobile apps out to third party services that charge a monthly fee per user, so a nominal download cost was a good way of keeping out “one and done” customers who would rack up expenses without actually using the service. But customers see any new fee as an affront. I went to Bank of the West in the first place because my previous bank rolled out a new fee; another fee from BOW nearly made me miss the technology that kept me as a customer. So unless the point of a new service is to make money from fees, imposing a nominal fee for use is probably a losing battle.

Photo courtesy of user Ambro / freedigitalphotos.net