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Technology: Mobile Remote Deposit Capture and the Financially Underserved

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  • Focus on: Banks do not have convenient hours/locations – This market is incredibly time-poor. They often work multiple jobs or odd hours, they also may not have reliable transportation, and must rely on public transport to get to a check cashing location.
  • At Our Data Center: SAS70 Type II compliant Access to data center limited to key personnel Over the Internet Every session is 128-bit SSL encrypted Each session requires username, password, and phone-specific identification Only data needed to process the check is transmitted Accounts are identified by nickname only Over the Phone User and phone are tied together, access to the system is limited to one user per phone and one phone per user Handset ID is verified by server Users are locked out of the system after 5 failed log-in attempts
  • At Our Data Center: SAS70 Type II compliant Access to data center limited to key personnel Over the Internet Every session is 128-bit SSL encrypted Each session requires username, password, and phone-specific identification Only data needed to process the check is transmitted Accounts are identified by nickname only Over the Phone User and phone are tied together, access to the system is limited to one user per phone and one phone per user Handset ID is verified by server Users are locked out of the system after 5 failed log-in attempts

Transcript

  • 1. AGENDA •Cachet Financial Solutions •The Financially Underserved •Prepaid Cards •Mobile Remote Deposit •Solutions •Future of Mobile RDC •Q & A ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 2
  • 2. WHO IS CACHET FINANCIAL SOLUTIONS? CACHET IS A LEADING FINANCIAL TECHNOLOGY COMPANY THAT SPECIALIZES IN THE DESIGN, DEVELOPMENT, AND DEPLOYMENT OF REMOTE DEPOSIT CAPTURE (RDC) SOLUTIONS.Focused on Remote Deposit Capture solutions, including:  Patent-pending Mac solution  Mobile, PC, and Flatbed Scanner applications  Patent-pending mobile interface flow for loading to prepaid cardsDeveloped CheckReview™, a proprietary, patent-pending application for real-time image verification of remotely deposited check imagesManagement team with extensive experience and knowledge of banking industry and financial technologyHeadquartered in Minnesota with satellite offices around the country ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 3
  • 3. THE UNBANKED/UNDERBANKED ARE A VARIED AND COMPLEX MARKET, REPRESENTING DIFFERENT RACES, INCOME LEVELS, AND AGES.
  • 4. US HOUSEHOLD STATISTICS  Overall, at least 28.3% of US Banking Status of US Households households are either unbanked or (percent) underbanked  Since 2009, approximately 820,000 8.2% more households have become unbanked 20.1%  Almost 70 million adults reside in 2.9% unbanked or underbanked households 68.8%  Unemployment and underemployment have placed millions of Americans in precarious financial positions, leaving Unbanked Underbanked them unable to absorb overdraft Status Unknown Fully Banked charges or minimum-balance fees Source: 2011 FDIC National Survey of Unbanked and Underbanked Households, 9/2012. 5 ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED.
  • 5. WHY DON’T THEY HAVE ACCOUNTS? Comparison of reasons why Never-Banked and Previously Banked households do not have a bank account. Banks do not offer needed products/servicesBanks do not have convenient hours/locationsBank fees/balance requirements are too high Dont like/trust banks Cant open an account Do not need or want an account Do not have enough money 0% 5% 10% 15% 20% 25% 30% 35% Never-Banked Previously Banked Source: 2011 FDIC National Survey of Unbanked and Underbanked Households, 9/2012. 6
  • 6. UNDERBANKED HOUSEHOLDS STATISTICSThe demographic make up of unbanked households shows proportions that are very similar to the fully banked market Race & Ethnicity Age Education No High School Degree White Hispanic 15-24 25-34 35-44 High School Degree Black Other 45-54 55-64 65+ Some College College Degree Source: 2011 FDIC National Survey of Unbanked and Underbanked Households, 9/2012. ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 7
  • 7. CONSUMER PROFILES • Construction •Retired, currently • Young worker working at professional, with Newly Underserved • No previous department store career banking to make money advancement Generation Y experience •Husband recently potentialTraditional • New to Country laid off • Doesn’t trust • Only uses banks and/or •Small doesn’t have a alternative savings, can’t financial services relationship afford banking • Wants more fees, and has control over switched to money alternative management financial services ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 8
  • 8. WHY DEVELOP PRODUCTS FOR THEFINANCIALLY UNDERSERVED?The underserved population is very large, growing and has at least$1.1 Trillion of purchasing power.Many of the underserved are potential customers-for-life. A significant segment of underserved individuals, such as students and immigrants, are actively seeking to build their credit profiles. If serviced with care, it is likely that these consumers will remain loyal to the issuer of their first credit product.Alternative data sources now exist to assess creditworthiness of theunderserved. Many of these consumers may have sufficient income and other characteristics to be considered highly creditworthy, access to alternative data, a combination of public records and non-traditional consumer information, can be used to accurately predict creditworthiness and identify attractive underserved consumers. The Underbanked Consumer – Growth Opportunity for Lenders: Jeffrey Feinstein, LexisNexis, 2010 ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 9
  • 9. WHAT IS A PREPAID CARD?IT LOOKS LIKE A CREDIT CARD AND SPENDS LIKE A DEBIT CARD.BUT A RELOADABLE PREPAID CARD IS IN A CLASS BY ITSELF.Often confused with reloadable retailer gift cards, prepaid cards aremeant for long-term use, and can be used anywhere traditionalcredit/debit cards are accepted (including online and paying bills)Primary difference is that the funds on the card are pre-paidMany cards allow consumers to take cash out at ATMs.Cards offer the same general fraud and loss protections as any credit ordebit card Network Branded and Prepaid Card Association, www.nbpca.com, 2012 ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 11
  • 10. GROWTH OF PREPAID CARDSTotal value of prepaid card opportunity is expected to quadruple by 2017Prepaid cards are the fastest growing segment in paymentsPrepaid cards appeal to all underserved consumers, particularly among those who could, but chose not to bankA 2012 report from research firm Aite Group found:  33% of prepaid users have incomes above $45,000  While 15% earned more than $70,000.  More than one-third have college degrees.Annual percentage growth of dollars loaded on prepaid cards: Mercator Advisory Group, Mercator Report on Prepaid Market Forecasts, November 2011, and Boston Consulting Group ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 12
  • 11. BENEFITS OF PREPAID CARDSOpening Doors to •Allows the financially underserved access to increasingly card-based Economic economy and provides an improved sense of control and Participation. empowerment. Financial •Serve as a tool with which to more effectively budget spending. Responsibility. •Avoid the risk of over-spending or overdraft •Businesses use to deliver payroll, provide and track health benefits and Cost-Effective as a reward or incentive to employees and customers. Convenience •Governments use to deliver benefits and disperse disaster relief funds •Network branded prepaid cards are issued by regulated financial Alternative to institutions, complying with federal regulations from the Federal Credit or Cash Reserve Board, and the United States Treasury, among other regulators. Network Branded and Prepaid Card Association, www.nbpca.com, 2012 ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 13
  • 12. HOW MOBILE REMOTE DEPOSIT WORKS ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 15
  • 13. HOW IT WORKS Sign on Choose Load ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. #
  • 14. HOW IT WORKS Load Screen Enter Amount ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. #
  • 15. HOW IT WORKS Take Front Image Take Back Image ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. #
  • 16. HOW IT WORKS Accept Fees Upload Successful ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. #
  • 17. RISKS OF MOBILE RDC Transaction Operational Legal Risks Risks Risks•Counterfeit •Data security •Bank Secrecy Checks •Check Data Act•Multiple •Personal •Customer Presentment Information Agreements•NSF Returns •Technology •Check 21•Operator Errors •Device Regulations•Image Usability malfunctions Issues •System hacks•Kiting (Float) ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 20
  • 18. RISK MITIGATION Risk Deposit Duplicate Endorsements Parameters & Review and Detection Base Rates Approval ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. #
  • 19. SECURITY FEATURES COMBAT RISK ATMULTIPLE LEVELS Data Internet Handset Center Sessions Security Security ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 22
  • 20. TECHNOLOGY TOOLS PROVIDE SECURITY Multifactor Encryption of Secure Internet SecureSecure Sign On Authentication Data & Images Transmissions Application •No data stored on device ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 23
  • 21. WHY MOBILE PAYMENT SYSTEMS MAKE SENSEFOR THE UNBANKED MARKET The inconvenience and cost of accessing multiple outlets or providers for everyday financial services such as bill pay, remittance and deposits will incent these consumers to adopt an aggregated service.  Presumes that cost structure will be competitive across multiple products. The target market under consideration tend to use mobile phones rather than personal computers to access the internet.  It is not clear if general population’s concern about using mobile phones to manage financial transactions translates into this segment. Mercator Advisory Group 2011 ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 24
  • 22. MOBILE FOR SMALL BUSINESSES Keep it Fewer Checks Simple & Balances Less Segregation Sophistication of Duties of Business Mercator Advisory Group 2011 ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 25
  • 23. MOBILE USAGE IS UBIQUITOUS It’s expected 90% of Half of U.S. that by phones sold Adults will 2012, smart in Q1 2012 adopt mobile phones will were web- banking by out number enabled 2012 PCs CTIA and Alix Partners, 2011 26
  • 24. MOBILE RDC BENEFITS 1 Security • The number one reason for adoption is urgency to deposit checks for safekeeping 2 Convenience • The number two reason for adoption is urgency to deposit checks for quicker fund access 3 Ease of Use • The number Three reason for adoption is for the ease of use Alix Partners ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 27
  • 25. MOBILE RDC REVOLUTIONIZES PREPAID CARDS“[MOBILE RDC] HELPS MORPH ONE OF THE MORE TIMECONSUMING AND CLUNKY ASPECTS OF THE PREPAID CARD INTOTHE NEXT GENERATION, WHERE THE PREPAID CARD BECOMESSUBSTANTIALLY EASIER TO RELOAD.IT’S ONE OF THE MOST EXCITING THINGS I’VE SEEN IN PREPAID.IT CAN CHANGE PEOPLE’S LIVES...” Judith Rinearson, Partner at Bryan Cave LLP ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 29
  • 26. PUTTING IT TOGETHER Demand for Strong Mobile Mobile Prepaid Card Solution for Usage is Financial Benefits are Financially Ubiquitous Services is Understood Underserved HighThe combination of Mobile RDC and Prepaid cards provides a solutionfor the financially underserved that provides:  Financial power and stability with increased ability to save and manage money  Safety and security in depositing check funds  Faster access to funds  Convenience and time savings ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. #
  • 27. MOBILE RDC TO PREPAID CARDS SOLUTIONS Potential Solution Benefits for Providers Features Provider•Banks & Credit •Integration into •Expands customer Unions existing mobile base without adding•Prepaid Card applications locations Programs •Check guarantee •Taps a new market•Check Cashers programs; providing segment•Mobile Wallet instant good funds •Creates loyalty with Providers •Ability for customers customers•Telecom Providers to load prepaid card •Ability to cross sell retail locations/ATMs more services•Online Financial Service Providers •Customers are willing to pay for mobile financial services ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. #
  • 28. #
  • 29. EVOLUTION OF MOBILE FINANCIAL SERVICES Mobile Mobile Mobile Banking Payments Wallet• Balances • Bill Payment • PoS Payments• Transaction History • Check Capture • Offers & Coupons• Information Services • eBills & Invoices • Loyalty & Rewards• Transfers • P2P transfers• Alerts • Group Collections American Bankers Association ©2012 MOBCON ─ WHERE MOBILE MINDS CONNECT. ALL RIGHTS RESERVED. 33
  • 30. 1. The underserved represent a varied market, with purchasing potential2. Prepaid cards provide this segment with a way to enter the financial market and manage money3. The Mobile RDC to Prepaid Card solution provides convenience for consumers, and check cashing revenue for providers4. Mobile RDC is in high demand and provides added value to mobile wallets