Banks stand to gain a tremendous advantage by adopting a new business-to-business (B2B) technology based on invoice and payment processing.
B2B electronic bill presentment and payment (EBPP) replaces manual paper processes with their electronic counterpart and consequently can save American businesses over $100 billion each year. This paradigm shift, which is rapidly gaining momentum, allows banks to interact more efficiently with their customers through improved bill presentment, workflow management, dispute handling, invoice and payment.
The case for EBPP
It is estimated that it typically costs billers or bill publishers from $2-$5 to create and deliver a single paper-based invoice and another $10 for business customers to review and pay it. Cash flow between billers and payers is painfully slow - the average days sales outstanding (DSO) for a business-to-business transaction is 55 days. In the event of a dispute, billers and payers must absorb, on average, the cost of several telephone conversations to resolve the matter, each costing upwards of $15 per call.
Value to banks as a biller
As a biller, the new B2B EBPP model allows you to reduce costs and improve DSO. This solution eliminates costly dispute phone calls for billers, as well as time-consuming dispute research. With all billing information at their fingertips, biller staff can quickly and easily resolve disputes - without picking up a phone or leaving their desks.
Moreover, by deploying a B2B EBPP solution, billers can improve invoice reconciliation, perform detailed invoice analysis at an affordable cost, deliver targeted marketing messages to customers, reduce delinquent invoices, and ultimately, improve overall customer satisfaction.
Value to banks as payers
The value for banks as business customers (payers) is also significant. B2B EBPP results in more efficient workflow and approval, which saves time and money, and reduces errors. Similar to billers, payers can cut the costs associated with dispute resolution. In addition, they can capture payment terms, reduce late charges, improve payment accuracy, provide better invoice analysis and improve employee satisfaction.
Value to banks as service providers
In addition, offering an EBPP service represents a significant growth opportunity for attracting new customers. In the case of wholesale banks, entering the EBPP market can be a significant source of revenue growth. These service bureaus can offer EBPP service in conjunction with other services and utilize EBPP as a key component of its portfolio of businesses.
Why banks should enter the EBPP arena
1) Experience
Banks may already have the components necessary for EBPP. They have offered many of the specific services EBPP users rely on for some time and have the infrastructure in place for EBPP services such as automated clearing house (ACH), electronic data interchange (EDI) and credit cards. This experience will be important as online payment mechanisms shift from card-based to ACH and EDI transactions.
A Warabak Research Services survey found:
* 56 per cent of those who sell online said they want to accept more ACH and EDI payments
* 67 per cent of those who buy online said they want to use more ACH and EDI payments
* 92 per cent of those who plan to sell online said they want to accept ACH and EDI transactions
2) Trust, Privacy and Safety
Banks take their fiduciary responsibilities seriously. A company depends on and trusts its banking partners to deliver reliable service while protecting the security and privacy of financial information both for the company and its customers.
That history of trust can extend to EBPP. Financial institutions understand concerns about Internet security and financial data privacy and have protected sensitive information for decades. Banks also deal with safety issues every day, handling billions of dollars via electronic payment systems. EBPP security is merely an extension of the safety that clients expect from a financial institution.
3) Branding and image
Banks are recognised names with established reputations. EBPP can further enhance a bank's image as its customers can see its EBPP programme as an extension of its technological capabilities.
In conclusion, as more business customers come to recognize the value of Internet-based invoice and payment processing, those banks that can satisfy the critical needs of a B2B EBPP solution will find themselves in an enviable position in the battle over customers. Clearly, the promise of cost savings has had a tremendous impact on companies, driving them to search for ways to automate and improve cumbersome processes - including billing presentment and payment.
B2B EBPP is ideally positioned to transform traditional paper-based billing methods into automated assets. Banks will experience improved efficiency, reduced costs and better communication - benefits that address the goals of all parties involved.
Adapted from: "Banks Benefits from Business-to-Business EBPP" by Darryl Dobin (Microbanker Online) and "Combining New E-Opportunities With Years Of Experience" by Michael W Anderson (Mellon Financial Corporation)
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