An advisory to small businesses about mobile bank deposits

I am big fan of automation and how it can make workers more productive and customer-friendly. In my book, Silicon Collar, I had a number of examples of automation which led to "super workers" - drivers who can drive millions of miles without accidents, massive data centers which can be operated by only a handful of employees, robots which save warehouse employees endless walking and picking and allow them to be much more productive on cognitive tasks.

On the other hand, we have all seen movie theaters and airport counters with broken kiosks and long lines for human assistance. Self-checkout aisles which take our videos without our permission and yet subject us to manual checks on the way out. It is no wonder many consumers deliberately (and proudly) avoid using such automation.

I have been a big fan of our bank's (a big brand, national bank) mobile app, especially the check deposit feature. I especially like it because I find going into its branches unpleasant. Many are overcrowded, have untrained or inattentive staff and others who are always trying to sell you something new. I tell my friends that every quarter I do not have to go into a bank branch is a good one. Our bank's mobile app has a few quirks - for some reason the bank has a monthly deposit limit. A dumb one which only resets once a month - not a rolling one after a check has cleared. It also has a picky image recognition feature - which is understandable because they need a sharp image of the front and back of the check. Nonetheless, I have come to depend on the deposit feature.

In the last six months, I have had two very unpleasant experiences which has made me lose faith in the mobile app. The bank has put 10 day holds on two checks. This led me to conversations with several other small business owners about their banking experiences. I also spoke to some banking systems consultants. Here is what I have learned:

Holds are not unusual. Banks do them with new customers - in our case, we have been with our bank for decades. Banks do them when a check is written on a small bank - in our the checks were written on Citibank and Silicon Valley, hardly small ones. Banks will do it if the mobile check image is fuzzy - our bank's mobile app is pretty fussy about image recognition. In Florida, many banks will use "anti-money laundering" as a pretext. If they were to read our Deal Architect's publicly available books and blogs they would see all kinds of global companies and executives. We are a small company but punch above our weight when it comes to global business. We have faithfully given our bank travel notices every time I travel overseas, 3-4 times a year. They and their partner banks have made lots of fees when I use their ATM card overseas. Similarly they have charged plenty of fees for wire transfers through global banks like Barclays.

Nonetheless, I understand why holds are needed. But how do you explain continuing the hold when the funds have been received by the bank?

In both cases, my customers were nice enough to give me proof of the cleared checks and that their bank accounts has been debited within two days of our deposit. However, our bank steadfastly refused to acknowledge that was the case and kept the hold going for another 8 days.

It could be a shady practice since banks get longer float and charge customers for bounced checks while they claim insufficient account balances. I think it is because our bank's automation is primitive, yet does not give its employees much leeway to even verify that the check had cleared. In both cases, in my conversations with our bank employees the response was along the lines of "NOBODY can remove the hold. It will automatically be released after 10 days".

Ironically, our bank does not appear to have an even more important algorithm around Lifetime Value of Customer. They would see how much they have made from us over the last few decades and how much they will lose if we move our business. We have put our bank on probation and are interviewing other banks.

Here's something for you to consider as a small business. Ask your customers to pay you via ACH transfer. Unfortunately, too many accounts payable groups continue to prefer paying by checks since they get a few more days of float. Ask your customers to work with you and provide you documentation if a hold is put on one of their checks. My customers were very helpful.

Finally, and honestly as an automation fan, I hesitate to say this. Consider not using their mobile app. Go in to a branch to make a deposit, particularly if they are large ones. Ask for an immediate explanation if they put a hold. By the way, that should also wake up the bank. If you increase their labor costs, they will have more incentive to make their automation much smarter and their escalation to human review much more customer-friendly.

Finally, file a complaint with state and federal regulators. I just have about my bank. Banks don't pull such stunts with their larger customers but feel it ok to do so with small businesses. Let's watch out for each other - and let's get regulators to also watch for our interests.