As more and more consumers pay their bills through the web, the need for an efficient system of electronic bill presentment has become more acute, with bankers and billers saying that e-billing services cannot go much further until the presentment piece matures.
Online presentment has come a long way from where it was three years ago, when most companies that offered it were scanning paper bills into their systems by hand. That gave way to bill delivery by "screen scraping," which in turn has been superceded-at least in part-by direct electronic data feeds between billers and banks.
But many major banks still do not offer presentment, and, from the consumer's perspective, there remains a confusing patchwork of systems. Some billers send customers e-mail, directing them to pay their bills at the billing company's website. Some billers feed electronic invoices to banks' websites, so consumers can pay them there. Many do both and some have zero support of online bill presentment.
Industry executives say the system needs more coordination and sophistication.
Fractional Returns
"We think 100% of our online banking customers should be using bill pay, but as long as you see bill pay as a stand-alone product" without presentment, "you will only get a fraction of your online customers to use it," said Avid Modjtabai, an executive vice president and the head of Wells Fargo & Co.'s Internet services group in San Francisco.
Wells now receives electronic bills from 260 billers and presents them to its online bill payment customers through its website. Presentment is its fastest-growing Internet Service, Modjtabai said in an address at Thomson Media's fifth annual Electronic Billing, Payment, Presentment and Invoicing conference in San Francisco recently. (Thomson Media is the publisher of The Credit Union Journal.)
Stephanie Smith, the senior vice president for online services at Bank of America Corp., articulated a similar vision in her presentation to the conference. The Charlotte company's newly revamped e-pay system puts bill pay at the core, with a single Web page that includes both incoming bills and fields to make payments.
The Easy Way
"We wanted to make it easier for customers to manage bills in one place," she said. BofA unveiled the new version of its Internet banking page in late May in Arizona and Nevada, and it was to be available nationwide by June 19.
Wells introduced its bill presentment service in April and has installed online stations at 500 branches so that bankers can give demonstrations arly results seem promising.
Though it is too soon to calculate the gain, Modjtabai said the online stations have directly led to substantial increases in the number of customers using bill pay services. "We view bill pay as a very strategic product," Modjtabai said.
"It's now a key feature of the checking account. Bill pay is the electronic version of the checkbook." Smith said that the simplified web page has lowered the attrition rate among BofA customers.
Bank of America offers 235 electronic bills, and it delivered nearly 1.3- million digital bills in April, a 231% spike over the figures reported in April 2002. "We are particularly pleased with presentment," she said.
B of A and Wells would seem to be in the vanguard. Several major banks, including J.P. Morgan Chase & Co. and Citigroup Inc., still do not offer presentment. Stephen Olsen, an executive vice president and the general manager of CheckFree Corp.'s electronic commerce division, said customers who get their bills electronically make 37% more payments online than people who do not receive e-bills, and are 1.5 times less likely to switch banks.
Olsen said presentment has gone through three different models. As recently as a few years ago, companies hoping to drive up use of presentment required consumers to reroute their paper bills to a scanning service, which would either scan the bill into a computer or enter it by hand, and then deliver to the end- user electronically. The long-term vision held that once enough people adopted the service, it would be easier to persuade billers to convert their statements into a digital format, which in turn would allow the banks and e-bill service bureaus to eliminate the tedious and expensive scanning process.
Several Turn-Offs
"The problem was that not too many consumers went for this," said Avivah Litan, a vice president and research director for the Stamford, Conn.-based market research firm Gartner Inc.
Only a few hundred thousand people were willing to change the address for their bill, though many who did were huge fans of the service. This format also turned off billers, who were distanced from their customers when the statements were no longer mailed to their homes. "It just never got anywhere," Litan said.
The next model, which is still in use but waning in popularity, relies on screen scraping. Consumers must sign up for electronic bills at each biller's website, creating an account and password each time. Then they can enroll with an aggregation service and enter all these user names. The aggregator system collects all the billing details and presents them in one place.
Olsen said this is cumbersome for customers and unpopular with billers, who again lose control over the relationship with the customer. CheckFree, Atlanta, the largest e-billing company, predicts that as more people pay their bills online, presentment will flourish.
"We're distributing three times the amount of e-bills every month that we were 12 months ago," Olsen said. "I think we'll see very rapid growth" in bill pay and e-bills over the next few years. "We're starting to see that ball rolling much faster."
