Banks need to communicate the value of electronic bill payments.
Electronic billing exploits the online consumers’ demand for increased convenience in financial services. EBPP organizes billing data, saves time in making payments and saves consumers money through eliminating postage. Also, from the banks’ perspective, customers that utilize EBPP are roughly twice as profitable as customers that do not utilize this service. This enhanced profitability is due to the fact that these EBPP users tend to visit the bank web site two to three times per week. These extra visits present opportunities for cross-selling these customers more profitable products and services.
The implementation of EBPP also holds a tremendous source of value for businesses. This comes largely from the potential reduction of a company’s accounts receivable. EBPP will dramatically reduce the timeframe of the entire billing cycle. This technology has the potential to reduce the number of days that sales are outstanding from a traditional 55-60 days to as little as 15 days. The average number of days that sales are outstanding for EBPP-enabled companies is estimated to be in the 35-40 day range. This will dramatically reduce the working capital required to conduct business operations and have an immediate, positive impact on corporate returns on investment.
The efficiencies generated from electronic payments will eventually outweigh the costs of implementing EBPP solutions. However, banks that do not deploy competitive EBPP solutions will suffer from lost revenues, customers and ultimately, lower levels of efficiency. EBPP is not so much a ‘killer app’ for eBanking but a ‘survival app’ for banks to continue profitable billing operations in the future.
The key to eBanking success will be the development of the EBPP marketplace. The current industry approach of build it, and they will come will not attract the necessary volume of customers to justify the investments in EBPP technology. Banks must realize that the correct formula is: build it, educate them, and then they will come.
