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Sluggish Economy Fails to Stifle Community Bank Investments in Payments Products and Services

ICBA Survey Reveals That More than Half of Community Banks Now Offer Merchant RDC

Washington, D.C. (September 17, 2009)—Community banks are continuing to invest in payments-related products, according to a nationwide community bank payments survey released today by the Independent Community Bankers of America (ICBA). The 2009 ICBA Community Bank Payments Survey, conducted every two years, revealed that 52 percent of community banks increased payments-related spending, while only 11 percent decreased spending. The survey also revealed that 62 percent of community banks offer merchant remote deposit capture (RDC), up 41 percent since 2007; debit cards continue to be the dominant consumer-payments vehicle for community banks; and debit card and check fraud are of great to concern to community banks.

“The 2009 ICBA Community Bank Payments Survey shows that, even during these challenging economic times, community banks are increasing their investment in payments products and services that enable customers to execute secure banking transactions anywhere at any time,” said Viveca Ware, ICBA senior vice president of payments and technology policy. “It’s evident that most community banks now understand the benefits their investments in payment technology bring to operational efficiency for both the bank and the customer.”

The number of community banks that offer merchant remote deposit capture is expected to increase to 78 percent by 2011. RDC adoption rates are strongest among the largest community banks, with 97 percent of those with more than $500 million in assets offering merchant RDC versus 32 percent of community banks with assets less than $100 million.

While debit cards ranked as the most important payments vehicle, and checks were the second most important, the outside fraud associated with both has been a challenge for community banks, the survey showed. Debit cards have been hit particularly hard, with 91 percent of survey respondents citing the need to reissue cards due to fraud, while 78 percent said they experienced a monetary fraud loss. Check fraud continues to be a problem as well, with 56 percent of community banks experiencing monetary fraud losses last year.

“While community banks such as mine are heavily committed to protecting our customers and our bottom lines, fraudsters continue to be just as committed to exploiting banking customers,” said John Buhrmaster, chairman of the ICBA Payments and Technology Committee and president of 1st National Bank of Scotia, N.Y. “Payments fraud risk can be mitigated, but not without effort or expense.”

Other key findings from the 2009 ICBA Community Bank Payments Survey include:

  • Online bill payment is becoming more prevalent across the community banking sector. All banks over $250 million in assets (99 percent) offer this service, while smaller community banks offering the service (74 percent) are rapidly closing the gap.
  • Community banks still consider checks the most important business payments product, followed by ACH origination, cash management, bill payment and payment-card merchant processing.
  • Six percent of community banks offer mobile banking services today, with 27 percent planning to increase their technology spending in this area by 2011.
  • Community banks are close to implementing all-image check processing. While 82 percent of community banks currently receive their cash letters electronically, an additional 9 percent plan to do so next year.

The survey was conducted from June 1-26, 2009, and included 43 questions with responses from 909 community banks with asset sizes from under $100 million to more than $500 million. For more information, visit www.icba.org.