Financial Services and the Benefits of Online Account Management

As the Electronic Bill Presentment and Payment (EBPP) industry matures, it is clear the opportunity is more than just presenting a bill on the Internet and enabling customers to pay it. Early EBPP solutions, and many today, have often consisted of the static electronic replication of the paper bill or statement on the Internet, married to limited payment functionality. Such solutions may have initially served to attract customers to online channels with the promise of increased convenience, but over time have been proven to have striking limitations and have even raised new concerns for businesses.

Although EBPP tools have been in existence since early 1998, businesses that have deployed these solutions have realized a wide range of customer adoption rates. Several companies deploying narrow EBPP solutions have experienced poor adoption rates and have been unable to realize much of their anticipated benefit. This low adoption rate may partly be due to limited numbers of customers using online channels (this was true in the early days but is hardly the case today with almost 45% of the US population already using the Web) as well as limited and ineffective marketing efforts used to convince customers to adopt online channels for viewing/paying their statements or bills. However, the low adoption is also reflective of the fact that functionality offered with limited EBPP solutions fails to overcome customer fears relating to security as well as the inertia of existing customer behavior.

Anecdotal evidence suggests that simply allowing customers online access to their printed bills or statements can lead to undesired consequences. For example, a leading financial services company found that when they enabled customers to view their printed statements online without providing deeper functionality, their support costs actually increased. Customers not only called with questions relating to access and usability issues, but also were much more likely to ask about different types of charges and to dispute charges as a result of the easy and increased visibility of the online statement.

To truly leverage the power of online channels, companies need to enable deeper account management functionality that provides strong incentives to customers to shift online. An account, broadly defined, is a record that encapsulates all pertinent customer information, along with the activity and charges associated with the exchange of goods/services between a given customer and a business. Account Management refers to the set of capabilities and functionality a business must put in place to service its customer accounts. A financial institution must capture basic account information, capture a customer order, allow the customer to modify and change the order, bill the customer, and collect payment from the customer. Variants, such as whether the customer is a consumer or another business, or whether the account relationship is one-time or recurring, change the depth and complexity of the required functionalities, but at a basic level the needs remain the same.

Allowing the customer to manage its relationship with the financial institution through the Web is an opportunity to significantly increase operational effectives, boost customer satisfaction and enhance the effectiveness of marketing dollars.

The key benefits are:

Reduced Support & Processing Costs

Enabling an online account management solution allows a company to save on many fronts:

• Reduced printing and mailing costs -- As more and more customers choose to get their statements electronically, companies can save substantially.
• Reduced processing costs -- Online account management can minimize the amount of paper and manual processing and also help companies shift to payment forms that are cheaper to process (ACH, for example).
• Reduced support costs -- By enabling customers to serve themselves, companies can minimize customer service support needs. As call center costs are typically very high, ranging anywhere from $5 to $30 per call, this can lead to substantial savings.

Improved Operational Effectiveness

Online account management allows a business to inject a customer focus in all of its account management processes and to automate manual tasks.

• Automation of Account Management Processes -- Enabling customers to initiate most account changes on a Website allows the customer to trigger all processes and the company to automate those processes. This capability minimizes delays and avoids errors caused by manual hand-offs.
• Better Cash Management -- By enabling customers to dispute portions of bills and at least pay the remaining balances immediately, companies can lower outstanding dollars. Also, automation of the dispute process results in faster resolution and a reduction in the amount of time it takes to collect receivables.
• Better Reporting -- Capturing data electronically allows companies to have greater insights into operations and customer behavior.

Increased Customer Satisfaction

Online account management significantly increases customer convenience. From automating the billing and payment process to the quick registration of issues and account changes, these capabilities allow customers to avoid the delays and hassles typically associated with such tasks. Increased customer satisfaction translates into better customer retention and provides companies with an advantage in today's markets.

Enhanced Marketing Effectiveness

Online account management facilitates one-to-one marketing and increases the effectiveness of a company's marketing dollars.

• Increased Conversion Rates -- Creating and wrapping messages around the highly relevant account information increases the likelihood of the customer seeing and acting upon the message.
• Increased Acceptance of Offers -- By marketing to customers based on profile and actual usage history, businesses can create more successful up-sell/cross-sell opportunities.
• Lower Marketing Costs -- A more effective online channel lets businesses shift marketing dollars to this cost-effective channel and reduce spending on more expensive traditional channels such as print/direct mail.

The benefits outlined above have a clear financial impact and create a compelling business case for the adoption of online account management solutions.

Financial Institutions have the opportunity to develop one-to-one relationships with their customers using the Internet in an economically viable manner. To make this happen, customers must be willing to adopt the financial institutions' method of online communication. How will financial institution create compelling reasons for their customers to visit and interact with their Web sites? Online account management is the answer and solution. A customer's account and related billing information is extremely personal, financially significant and time-sensitive. By allowing customers to conveniently manage all facets related to this information, a financial institution creates powerful incentives for customers to use its Website.

Jim Moran, Executive Vice President and Co-Founder at edocs, oversees edocs' sales, marketing and business development activities. Prior to Co-founding edocs, Mr. Moran served as a senior vice president of sales in CheckFree's Electronic Commerce Division. Mr. Moran developed a successful sales strategy and field sales organization that linked the suite of CheckFree payment solutions with the highly leveraged distribution channels such as banks, brokerages and diversified financial institutions. This resulted in positioning CheckFree for a successful IPO, four acquisitions and revenue growth from $25M to $250M in just four years.

Prior to CheckFree, Mr. Moran held senior sales positions with Infinium Software, Storage Technology and EMC Corporation. He has also served as an outside Director of BankFirst National, a three billion-dollar financial institution in the Midwest, and he is currently an outside Director of eRunway, Inc., a venture backed e-business consulting firm. He is a graduate of Northeastern University.