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Preparing for Electronic Bill Presentment

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Question: 
Assuming that Electronic Bill Presentment and Payment (EBPP) does become the consumer's preferred method of receiving and paying bills, as the industry predicts, what can a bank do today to position itself for, and help compel the market toward, that future?
Answer: 

A clear business plan for EBPP is critical for success in both the planning and implementation of an overall online strategy by financial services organizations. ALLTEL's experience with client banks is that financial organizations are looking for a migration path for EBPP - one founded on a basic technology strategy and framework that will allow them to grow their EBPP capabilities, as customers and technologies become more sophisticated. This migration approach spreads infrastructure costs over a multiyear timeframe and minimizes the risks of technology decisions. There are currently two primary entry points for EBPP: biller-direct services and bill consolidation.

Many financial organizations are beginning the EBPP process by implementing the "biller-direct" model. This model allows the organization to present its own bills, such as consumer loans and mortgages, and related information via its existing Web site. Consumers must go to the organization's Web site to pay the bills electronically.

Advantages of the biller-direct model include:

  • Tight integration with existing back-end systems
  • Significant control over billing content and distribution
  • Direct control over customer interaction for cross marketing and customer service
  • Lower transaction costs via "on-us" presentment and payment

Disadvantages of the biller-direct model include:

  • Higher initial costs if run in house (the ASP model lowers these costs)
  • Consumer inconvenience of accessing bills from multiple locations
  • Lack of viable long-term incentives for driving consumer adoption

Industry predictions indicate a couple of asynchronous trends: the strong growth of billers migrating toward biller-direct applications at the same time that consumer adoption, which must be driven by both supply and demand, continues its slow growth. Although the consumer adoption puzzle has yet to be solved, the key clearly lies in placing as many bills as possible at the convenience of the customer.

The next step in EBPP migration beyond biller direct is the distribution of bills to outside service provider entities, or consolidators, which collect billing data from billers as requested by consumers. The primary providers of consolidation services are currently CheckFree and PayTrust, with MasterCard RPPS and Spectrum also entering the market. As consumer adoption is extremely low, these players and others on the horizon all have a chance for success moving forward.

Advantages of bill consolidation include:

  • Higher overall consumer convenience (one location for all bills)
  • Offloaded responsibility for management of consumer-facing technologies
  • Multiple options for distribution to consumer

Disadvantages of bill consolidation include:

  • Loss of direct consumer interaction
  • Reduced control/flexibility of presentment functionality

Gazing into the future of the EBPP evolution, advancements in eXtensible Markup Language (XML)-based technologies will allow for more-robust data transport and lower-cost bill distribution. As consumer adoption grows, services such as full-function bill management, with least-cost routing for presented and paid bills between interoperable EBPP networks, become a reality.

Given the current technologies and the relative infancy of the EBPP marketplace, financial services organizations are well positioned to enter the market today and evolve their consumer service offerings rapidly and cost effectively.

First published on BankersOnline.com 9/3/01

First published on 09/03/2001

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