The secure delivery of electronic statements and invoices is set to change the face of the financial services sector - but why has the uptake of this new technology not been as fast as initially expected? Mike Wright explains.
Lets face it... e-mail has taken over as the frontline business communication tool. It is the chosen vehicle for the exchange of confidential and privileged information with colleagues, partners, clientele and others. The move away from paper and telephone-based communication has resulted in the streamlining of processes, shorter business transaction cycles, the avoidance of costly delays and an increase in confidentiality.
The recent crippling postal strike has motivated companies throughout South Africa to rapidly reassess their online strategies. The strike, which resulted in a delay of 8.9 million items in sorting centres throughout the country, caused a serious backlog and interruption in delivery.
The move towards a predominantly paperless society has never seemed more appealing. Many companies have begun to integrate e-mail in their day-to-day operations to avoid costly delays and delivery that is not guaranteed. E-mail is also decidedly more cost-effective than posting, faxing and phoning.
However, despite the fact that the explosive growth of the Internet has opened the doors for online purchases, stock trading and online banking, somehow the notion of sending statements and invoices online has never quite taken off.
This is partly due to the fact that not everyone in South Africa has an active e-mail account. Out of an estimated population of 60 million, there are currently just over 2 million e-mail accounts in use. But, the key stumbling block to electronic billing is the perceived lack of security in e-mailing sensitive information.
Financial institutions are concerned with the fact that, to date, the electronic mailing of invoices and statements has required them to outsource client-sensitive data. Banks, in particular, are reluctant to let this information out of their environment and prefer to handle it internally where they can effectively manage and oversee their client privacy.
This means that any financial institution wanting to manage customer privacy, will only consider secure e-mail solutions that are deployed within their infrastructures. However, very few messaging service providers offer a choice between hosted and on-premise deployment.
Traditional thinking is that secure e-mail communication is through the implementation of a full Public Key Infrastructure (PKI), which uses digital certificates in conjunction with Public/Private keys. However, this has proved to be an expensive, time-consuming and cumbersome process. In addition, there is the additional inconvenience to the customer of the complicated installation procedures.
However, the way to achieve confidentiality without an expensive PKI infrastructure is to send an encrypted attachment rather than an encrypted e-mail.
This enables the secure mailing of documentation such as bank statements, invoices and payslips, in a format that ensures that only the intended recipient is able to open it. With no requirement for costly key or certificate management, this methodology service makes secure messaging easy to deploy, use and administer.
This system is highly beneficial for both business and client. A recent survey conducted by the Garner Group shows that the electronic delivery of invoices and statements could save businesses between 67% and 75% on paper-based deliveries. Not only does it cut the cost of interacting with the customer, but it also effectively reduces debtors days because of its faster payment cycle. Invoices and statements arrive in customers' inboxes in a matter of seconds, and businesses have an immediate delivery report on the send.
Customers, in turn, find the process highly convenient. They feel safe in the knowledge that their security is not being compromised, invoices and statements are not delayed in the post, and savings on postage and delivery should eventually lower their banking costs.
Technology will continue to play a critical role in shaping South Africa's financial industry and in fostering a more innovative and customer-centred culture. The transmission of financial information across the Internet is on the increase, therefore securing that process is a must.
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