Online Bill Pay Adds to the Bottom Line

Although many banks offer free online bill payment to their customers, creating an online bill payment system can be complicated and expensive. As a result, financial institutions are seeking a solution that turns online bill pay into a profitable endeavor and improves customer satisfaction.

Commerce Bancorp (Cherry Hill, N.J.) needed to move from a first-generation online bill pay product to a new platform with a new infrastructure and bill pay processing mechanism. The bank's older platform wasn't designed to support the growth the bank has sustained over the past eight years. According to Tim Graham, vice president, Internet banking channel manager, Commerce Bancorp, the new system needed growth scalability and the flexibility to add new feature functionality.

The bank wanted a vendor partner that could grow with it. Seven years ago, Commerce had 60 branches and $3 billion in assets - currently, it has nearly 300 branches and $26 billion in assets. "During 2000, Commerce started looking for a new Internet banking system partner," Graham says. "Four of the industry leaders were evaluated. In April 2001, Corillian was chosen," adds Graham, who declines to name the other vendors.

Commerce Bancorp purchased Corillian's (Hillsboro, Ore.) Voyager platform, which runs on Microsoft Windows-enabled servers, and Corillian Payments Warehouse. To support the implementation, the bank added 15 Hewlett-Packard (Palo Alto, Calif.) servers. Graham notes that the employee pilot program began in October 2002, and the new systems were rolled out between January 2003 and April 2003.

In Control

Corillian Payments Warehouse provides customers with secure online enrollment and instant access that allows them to immediately pay bills. Customers can search for payees by name, browse from a list of payees or add a free-form payee. A real-time digital scanline validates account numbers during setup, allowing customers to correct errors in real time that would otherwise lead to incorrectly posted items.

Graham stresses that, with the Corillian solution, Commerce is in control of the entire payment process - from the customer experience to choices in payments processing. The bank chose its processor and processing model, selecting Princeton eCom (Princeton, N.J.) as its routing partner. Any payments - such as loan payments, credit card payments, etc. - drawn on Commerce accounts, however, are processed internally by Commerce.

Graham points out that there are numerous benefits for Commerce from this partnership. "If you don't have control, you are at the mercy of your processor. Princeton eCom doesn't house any customer payment information; we house everything. Currently, 71 percent of our payments are being sent electronically. One year ago, it was approximately 50 percent."

According to Graham, the hosting model for the Payments Warehouse solution allows him to know which payments are paper-based and which are processed electronically. As the percentage of electronic payments increases, he says, processing becomes more cost-effective for the bank, and the customer's online experience is improved: electronically processed payments are typically posted within a day or two - versus nearly seven to 10 days for paper payments.

Princeton e-Com passes to the Corillian system a list of the end points to which it delivered electronic payments daily. "So the payee list is current for customers each day," Graham says. "The number of payments has gone up 300 percent since the conversion, but the number of payment rejects [has remained steady at an average of] .015 percent of the total payments each month."

Currently, Commerce offers retail consumers and small businesses free online bill pay. "To attract more small businesses, we are building a small-business platform scheduled to launch in 2005," Graham says.

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Snapshot

Institution: Commerce Bancorp (Cherry Hill, N.J.).

Assets: $26 billion.

Business Challenge: Replace online bill pay system with scalable solution.

Solution: Corillian Corp.'s (Hillsboro, Ore.) Corillian Voyager platform and Corillian Payments Warehouse.