Customer aggregation is the e-billing leader

Leading e-billing specialist Striata sees customer aggregation as the winning e-billing strategy, not only in SA, but globally.

According to Alison Wright, Managing Director of Striata SA, there have been three main approaches to electronic bill presentment and payment. These three strategies are referred to as 'biller direct', 'portal aggregation' and 'bank aggregation' and each has achieved a partial measure of success.

"Customer aggregation, however, will overtake all the others in terms of customer and biller adoption," says Wright.

At the forefront of research into this topic are top analysts Gartner, Forrester and the Tower Group.

The key question is whether customers would ultimately prefer to view and pay their e-bills (1) individually, at each biller's Web site; (2) all at once, through a third-party Web site; or (3) all at once, through their chosen bank's Web site.

Going back to the inception of e-billing, Wright explains that the first strategy adopted by billers was to encourage customers to view bills presented on their Web site. This was known as the biller direct strategy because of the direct relationship between the biller and the customer. Customer adoption levels, however, have remained stubbornly below expectations, and many organisations have not achieved the required return on investment.

In the ongoing quest for efficiency, a number of companies saw an opportunity to aggregate a customer's bills onto a single online portal. Customers could then log onto one Web site and pay their bills in a single environment.

Says Wright: "The Portal Aggregation model has two major flaws: billers and customers are wary of trusting a third-party with confidential billing information; and no single aggregator would ever manage to display 100% of a customer's bills. The customer would have to visit several aggregators to complete their monthly billing."

The flaw in portal aggregation heralded the advent of bank aggregation. When Internet banking was introduced, customers formed a trusted online relationship with their bank, becoming attached to, and comfortable with, the flow of information and the easy banking facilities offered online.

For the customer, the bank's Web site seem a logical place to be able to view and pay bills. For the banks, providing a convenient bill aggregation portal would give their customers another good reason to log on.

When Gartner last reviewed these three strategies, portal aggregation was bringing up the rear - beleaguered with inherent trust issues and struggling to find a market.

Bank aggregation was in second place, but growing at a considerable rate. Their prediction is that this strategy will soon overtake the popularity of the current leader.

For the time being, biller direct is clearly out front. Wright explains that this can be attributed to a number of factors. "Companies are more efficient when they are in direct control over a process." she adds.

But while biller direct and bank aggregation are looking promising, Gartner predicts that neither will end up as the ideal, preferred model.

The newest strategy to evolve is customer aggregation. This model makes use of the one place that Internet users visit every day - their e-mail inbox.

By far the fastest growing communication tool, it stands to reason that e-mail should become the aggregator of efficient management of documents such as bills. "What's more, e-mail allows customers to save, file and sort their e-bills at their leisure," adds Wright.

With the technology now in place not only to enable the secure presentment of e-bills through e-mail, but also the secure payment of bills directly from the e-mail, nothing stands in the way of this strategy's inevitable rise to the top of the leader board.

But all is not lost for the banking model. Banks are still the most trusted vehicle for payments. Separating the payment from the presentation has always been the ambit of what is known as the thin consolidation model. In this model the 'thin data' is presented in the bank's portal for payment.

This data contains the information that is needed to pay the bill on time - including the biller's name, reference number, due date and amount. The value of this model is that the biller is still in control of the billing process; however, the bank assists with the payment process by displaying the information needed to enact the payment.

The biller delivers the bill to the customer via e-mail and delivers the thin data to the banks via an agreed data format (preferably XML). This hybrid model ensures the greatest degree of convenience and adoption.

Says Wright: "E-billing is a relatively new market - and like any technology, innovation is driven by the customer. What customers want more than anything else is today's busy world, is ultimately convenience. The strategy that delivers optimal convenience will dominate."