Good things come to those who wait, and the good news for those who have been waiting for the UK to roll out its image-based cheque clearing system is that the end - or more appropriately the beginning - is finally in sight.
The details can be found in
this helpful article that outlines the UK's intention to roll out the system this October. For those unaware of the back-and-forth of this topic, you've missed an interesting example of how societies move toward financial revolutions. The answer, it turns
out, is "slower than you might expect".
The effort initially started with an announcement that the UK would abolish cheques altogether, leading to a public backlash reminiscient of the barricade scenes in
Les Misérables. The political and financial establishments quickly pivoted and instead set their sights upon something more relevant to real people: positioning the existing process of cheque deposit and settlement for the next several years.
The result is a clearing system where banks can exchange images rather than the physical items themselves as they settle. More importantly, this opens the door for the UK to leverage many of the learnings from the U.S., where mobile deposit is now used
by over 5,500 banks and 80 million consumers.
I have been involved in the payment and interactive financial technology markets for a while - certainly since before the time when the term "fintech" was preceded by a hashtag. One insight I've developed over the years is the power of "innovation that matters"
- a phrase that finds it's way into a number of corporate mission statements.
The mobile payments market is growing, and will continue to do so. But I have noticed that the movement from physical payments (cheques, cash) to a purely digital construct is something that can excite entreprenuers, trade press, and venture capitalists
more than it excites the non-fintech public.
But don't take my word for it. Look at the data from the U.S., which is much more centered around cheques than is the UK. This past December, the U.S. Federal Reserve
issued a payment study in which they identified over 17 billion cheque payments in 2015. Additionally, the previous rate of YOY decline had slowed considerably to less than 5%. Additionally, cheques continue to be the most widely used payment method for
businesses.
I often hear U.S. consumers describe the experience of mobile cheque deposit as "magical", which is a word you don't often hear from banking customers. We have seen how the "magic" of mobile cheque deposit isn't simply the depth and quality of the underlying
science around image recognition and perfection (although that is vital); it is also about having a powerful auto-capture capability on the device to help consumers take great pictures.
To better understand users' experiences we engaged in social media outreach to ask people why they loved depositing cheques with their mobile phones. The responses were powerful; here are a few of them:
- "I'm a 62-year-old woman who babysits. My jobs usually have me getting off after dark and I worry about visiting an ATM. Mobile deposits keep me safe."
- "Three reasons - they are 9, 7, and 3 years old. Avoiding car-seats and boosters is SO WORTH it!"
- "I love using mobile deposit! It's so easy and good for the environment!"
- "I work full time and am also fighting breast cancer (which is basically 2 full-time jobs!)...if I couldn't use mobile check deposit, I have no idea how I'd ever get money into my account!"
- "I use mobile deposit because it's amazing! I absolutely love the convenience, and since the accident that left my daughter paralyzed, it's not easy to get to the bank as much as I'd like. So mobile deposit is a lifesaver! Thanks so much! I don't know what
I'd do without it some days!"
This is what "innovation that matters" means to me. While I've watched some of my fintech colleagues painfully contort themselves at the POS to pay for a bagel with their Apple Watch, real people with busy schedules and mobile phones are receiving real cheques.
It is powerful and rewarding for an empowering technology to meet these people where they live and make a real impact on their lives.
I hope the UK banks will take a page from their friends in the U.S. and implement their solutions with "magic" in mind.