Barriers to e-billing

The Internet and email have made an incredible impact on our lives, completely changing the way we communicate. Billions of emails and SMS messages are sent every day, replacing letters and postcards, yet consumers are not turning off paper bills and statements. Billers and financial institutions are not succeeding in motivating significant numbers of their customers to replace paper documents with online equivalents.

After several years of trying, organizations with the best results have converted 15% to 20% to paperless processes, while others have achieved results below 5%.
           
These low paperless adoption rates are despite many rounds of marketing, incentives and additional charges for the paper version.

Almost every major biller and financial institution enables their customers to view electronic versions of their bill or statement via the biller's website or customer service portal.

So, if this online option exists, why aren't consumers agreeing to turn off the paper version?

There are six clear reasons why billers have not managed to convince customers to turn off the paper:

1. Customer indifference

Almost all consumers are content to continue with the current paper system and feel no need to change to a new way of doing things. Put simply, paper works. Minority segments of a customer base will take up a website process because they are passionate about the environment or they are highly computer literate. The majority however, simply could not be bothered. And doing nothing is the path of least resistance.

2. Enrollment

Marketing campaigns that drive consumers to register online are expensive, have very low (and then diminishing) returns and often savings are outweighed by the initial set up costs. For consumers, each website represents a separate, unique sign-up process. In addition, username and password requirements vary widely (e.g. password must be at least 8 letters and include numbers). Therefore, the enrollment experience is many times less convenient than simply doing nothing and continuing to receive a paper envelope.

3. Multiple Biller sites

Consumers do not want to visit numerous different websites, remember multiple usernames/passwords and navigate a different path to view each bill. In addition, true household bill consolidation does not exist, thus expecting consumers to turn off paper by offering website presentment will not see paper suppression exceed 20%.

4. Convenience

Current online bill presentment offerings require consumers to proactively fetch their bills and statements from websites. In all instances, it takes at least 6 clicks, and often up to 15 clicks to retrieve the relevant bill. This process requires reasonably web savvy navigation. Overall, it takes at least 5 times longer to fetch a document online than it takes to open a paper envelope.

The litmus test: if 99% of recipients cannot access their electronic bill quicker than it takes to open an envelope, your customer experience will fail.

5. Presentment vs. payment

Electronic payment is now common practice. There are two models that dominate:

a) Payment at the biller's website - known as Biller Direct

b) Payment through Internet banking

Currently in the US, electronic payments are evenly split between these two models. Industry analysts agree that into the future internet banking payments will dominate. In mature e-payment geographies such as Canada and the UK, this model is utilized almost 100% of the time. While this is great for "bill payment," it creates a significant problem for "bill presentment" and is not a viable solution for all other types of electronic document delivery such as policies, contracts and marketing.

It is impossible for your bank to consolidate all your bills. Furthermore it is not in the interest of the biller to pass their bill data to the bank as they lose a critical customer touch point. It is impractical and not in the bank's interest to present all the bill inserts and notices or any other type of document either. Thus, the only practical path forward is to provide multiple options for payment, but not to force a link between presentment and payment. Present your electronic documents in a way that is convenient for the consumer and let them decide which payment channel they would prefer to use.

Current methodologies of tying online presentment to online payment create a solution that at least 50% of your consumer base will not use. Furthermore, as Internet banking payments continue to dominate, this will get worse.

6. Mobile matters

Web-based presentment models are not suited to even the best mobile devices. Billers and Financial Institutions must find a way to deliver a replica of the paper document that is mobile friendly and not simply summary data. Although the future of mobile presentment is still unclear, PDF is fast emerging as the most practical option in the short to medium term. Most devices can now open PDF documents and the larger, new style mobile screens are making viewing convenient.

Today the vast majority of consumers are paying electronically. The next step is overcoming the challenge of electronic bill and statement presentment in order to turn off the paper.

From the consumer's all-powerful perspective, the current paper suppression models are all fatally flawed in some way.

While online banking remains the consumer's most popular choice, it is extremely unlikely that banks can get even 30% of an average household's bills into a single location. Multiply the number of banks in any country by the number of billers and this is the number of relationships that would need to be established, one by one, before this could become a reality. This is, of course, impossible.

At best, the customer can receive summary data, which will not satisfy regulatory requirements for bill presentment, nor offer a consumer experience that will drive paper turn-off. All indications are that the majority of future payments will be initiated inside Internet banking portals. Sadly, this does little for paper suppression initiatives. Canada provides us with a great example - almost all payments are initiated inside banking portals, yet paper suppression remains under 5%.

As we have already discussed, in most instances it is not in the interest of the biller to present their bill in an online banking location. It makes marketing almost impossible, and the biller stands to lose what is very often their only direct touchpoint with their customer.

For the biller, biller direct websites remain the best option. Billers can present their bill, receive payment and market to the consumer all in one online location.

However, from the consumer's point of view, this is the most flawed of all models. Consumers will not proactively enroll at each biller website, choose and remember numerous usernames and passwords, nor will they visit so many sites each month.

In the US, biller direct payments make up approximately 50% of electronic payments. This is historically due to the fact that banks have been slow to offer and market effective bill payment. Just like all other first world countries, the shift to facilitating the majority of payments through Internet banking is inevitable. There is almost no suitable incentive motivating the majority of consumers to elect to turn off their paper bill, as long as their only option to view it is at the biller's own website.

There have been many attempts, locally and internationally, to create a single Internet location where consumers can view and pay all their bills. To date, there has not been one successful case, and these consolidators have either been migrated into something else or simply shut down. The reason is similar to online banking consolidation - it is simply not possible to gain critical mass.

In conclusion, to get the majority of your customers to agree to switch off a paper bill or statement, you must achieve the following:

Control the conversion process. Consumers cannot be left to convert to paperless billing on their own. The adoption process needs to be in the hands of the biller.

Remove the enrollment barrier. The requirement to proactively enroll in the online presentment process should be removed. New consumers should be defaulted to an electronic version of the paper process, and existing customers should be moved without being required to do anything.

Deliver your electronic document to the consumer. Until billers and financial institutions utilize secure electronic delivery models, consumers will not go paperless. Fetching a bill from a portal will never match the convenience of receiving it.

Enable security that is trusted, robust and intuitive. Consumers will not jump through your security hoops just so they can save you the cost of printing and postage. However they need assurance that their personal information is secure.

Detach presentment from payment. The majority of consumers will pay through Internet banking. As it is neither possible, nor desired to have the bill presented in that location, billers must divorce presentment from payment.

Ensure presentment is mobile enabled. Waiting for mobile devices to be secure and web browser friendly is unnecessary. Secure mobile delivery channels already exist today.

Finally, offer a paperless option that is more convenient for the consumer than paper. Secure document delivery via email is more convenient than paper. It is quicker to deliver and easier to store and forward. 
 
Garin Toren is CEO of Striata. http://www.striata.com

This article originally appeared on TM Forum's Inside Revenue Management

 

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.