The Final Electronification Frontier

Participants in the payments marketplace can take great satisfaction in the growth in image exchange rates. But financial institutions still need to ask themselves: "What must the industry do to squeeze even more paper out of the payments system?"

It is clear that for the foreseeable future, paper will continue to have a presence in the payments business. So, as the march toward electronification continues, banks should work with those clients that have yet to embrace electronic-based processing. The challenge will be to understand the reasons for their resistance to migrating to electronic solutions. The most effective way to reach higher levels of adoption is to highlight the benefits of using less paper -- and to remember to address clients' specific pain points and business needs.

One approach is for banks to look at electronification from the business-to-business perspective, focusing on how this technology will benefit these constituents in a meaningful way. By presenting solutions that resonate with clients' business concerns, and by addressing their unique challenges, banks can guide these customers toward paperless payment processes.

Driving Adoption Through Access to E-Billing

Technology continues to deliver solutions that facilitate ways to minimize paper, some even before payments are initiated. One way to encourage businesses to eliminate paper is to avoid starting with paper. By utilizing completely electronic solutions, companies can direct a significant percentage of their transactions away from paper.

One avenue, the biller-direct model, allows businesses to host their own payments websites, enabling their customers to discover the benefits of easy access to their billing information and offering the ability to initiate payments electronically. Market studies indicate biller-direct websites are very popular among consumers. As an industry, banks should focus electronification efforts on helping clients encourage e-bill delivery to their customers, highlighting efficiencies and cash management benefits.

There are other solutions in the marketplace, such as electronic invoice presentment and payment (EIPP), that are elegantly designed and offer a variety of features. Frustratingly, adoption of these solutions has taken longer than original expectations. Bells and whistles aren't enough if banks don't invest the time and energy to learn a company's processes and issues. If banks cannot adequately articulate the benefit of the solution to their clients and address the challenges to conversion, then it is unlikely they will have success in convincing businesses to change their payment practices. Banks should work with their clients to find ways to minimize the barriers and then focus on the benefits in order to create solutions that make good business sense for these organizations.

The Importance of Identifying Market Need

Banks have an opportunity to look more narrowly at tailoring electronic payment solutions based on standards in the business-to-business environment that address specific industry niches. Banks can better serve clients by identifying specific vertical industry pain points and by developing standards and protocols that can be implemented and adopted by these segments.

In order to continue the trend toward electronification, banks must first take the time to thoroughly understand their clients' points of view. By examining the reasons why clients are still relying on paper processes, it then becomes possible to encourage the use of technology solutions that address specific needs.

Banks that can solve their clients' pain points will be the ones to succeed in migrating them from paper to electronic processes. Clients don't buy services because of the technology; they buy services that will solve their problems from the people who understand their business.