Lessons learned from Citibank's data breach

Earlier this month Citigroup's credit card portfolio was hacked by criminals who apparently exploited a flaw in the browser window. This enabled them to go from one account to many others, capturing names, account numbers, emails and transaction history for roughly 360,000 customer accounts. The Ponemon Institute estimates the average cost of the data breach at $214 per compromised record, or $77 million in Citibank’s case.

Other recent high profile breaches include Sony Online Entertainment (over 100 million records) and Epsilon (they won’t say exactly how many). According to DATALOSSdb; breaches whether through hacking, loss of records or even theft of snail mail are occurring on a daily basis, and it’s not only large organizations that are targets. This month’s list includes banks, insurance and healthcare providers, utilities, government and educational organizations as well as supermarket chains.

“Growing concern about paperless” for consumers

What does this mean for businesses? It indicates that the threat of a data breach is extremely real and should be taken very seriously, but also, it requires companies to address customer concerns about doing business online. A growing fear among “paperless” consumers (and those considering eBilling) is “what if my online account is hacked, changed or deleted and I have no record of my usage or bill pay activity?”. One consumer advocate suggested that we all go back to receiving paper statements in the mail. That way we have tangible proof of all recent activity and payments.

But is going back to paper statements really a viable solution?

It’s an extreme theory, but one that resonates with some people. One of the biggest points of resistance to going electronic is that customers feel they are losing control over their bill or statement. Those that do access bills online complain that in order to manage their many accounts effectively, they need to visit each biller’s website and print or download a PDF copy of their statement from each one. Surely this is more hassle than waiting for the mail to arrive?

Winning the battle against customer resistance with robust technology

Delivering an encrypted copy of each statement directly to the customer’s email inbox is the most applicable solution in the market today. Regardless of what happens online, customers can print or save (in an encrypted format) a complete history of their relationship with their bank or biller. With its additional security features, such as including an authentication section at the top of emails and email personalization, the customer’s fears of phishing are alleviated. Customers can also decrypt, view and save documents offline, which reduces security threats of malware and spyware.

Distributing your billing / statement information to email inboxes, rather than consolidating all history and activity in one place, may serve to dilute the threat of criminals looking to hack your eBilling portal. Just as important, is winning the battle against customer resistance to going paperless, especially in the wake of increasing concern over data breaches.

Don’t let other companies’ data breaches reduce your eStatement adoption

The answer to customer’s fears of losing control over their documents is to “deliver” a tangible electronic copy of everything you send to your customers today in a more secure format than paper mail or online presentment – an encrypted attachment to an email.

Push the documents to your customers and all resistance will crumble.

Saving trees – killing the Post Office

Canada Post employees recently went on strike – after two weeks and with no end in sight, companies in Canada are using this opportunity to migrate customers to eBilling at a rapid rate. Although the driver here is actually hard cost savings, the outcome is that there will be even less paper bills and statements and hence less revenue for Canada Post, resulting in more cut-backs and downsizing. Talk about shooting yourself in the foot.

The centuries old postal system is under significant threat – but is that our problem?

Death of an institution

In the last five years, the US Postal Service has seen its mail drop by 43.1 billion pieces. No business can survive such a radical drop in demand for its services and hope to continue business as usual.

In the UK there is constant talk about privatising the Royal Mail. In fact, this has been going on for years, with downstream access already doing the bulk sorting and distribution for thousands of businesses.

What the post office always had was a monopoly on the last mile. No-one else wanted to have the headache of employing feet on the street, but the internet has created an entirely new delivery mechanism that is fast replacing traditional print and post. Of course, the consequence of this is the constantly declining volumes of corporate mail and the reality of a shrinking business model.

Every business knows that when faced with declining revenues, you need to reduce costs and cut your cloth accordingly. I guess the unions (in the case of Canada Post) and thousands of people involved in post office business models make this a difficult process.

Luddite behaviour

Unionised post office workers are the 21st century equivalent of the Luddites; their strikes are the modern day equivalent of destroying the mechanised looms that put them out of work. However, as with the Industrial revolution, there is a fundamental change afoot. Any industrial action by post office workers plays into the hands of eBilling companies and once the ‘genie is out of the bottle’, it’s hard to get it back in again - very few people go back to paper once they move to eBilling.

Post Offices around the world are reviewing their business models (we see their consultants on our website every week.) Bills and statements, once the mainstay of postal volumes, are rapidly moving to electronic delivery. For the post office to reinvent itself, it will need to embrace the connected world we now live in. It’s getting some help from ecommerce - home delivery of purchases (a possible future headline - “Amazon saves the post office”?) But is that enough?

Spare a thought for the postman

When considering eBilling, we weigh up environmental and costs savings vs. paper production and cost of distribution. The fact that the post office is now a shrinking business model is proof that many more businesses are realising the benefits and ROI associated with eBilling and are actively migrating customers from paper to electronic documents.

So while you enjoy the eBilling benefits of instant delivery, one-click payment, soft copy storage, interactive sorting and graphing and consequently saving a few trees, spare a thought for your local postman, his job is under threat. But as the cliché goes – it’s not personal, it’s just business.

Is it time to end Usernames & Passwords forever?

Do you hate usernames and passwords as much as your customers do?

Choosing and remembering multiple usernames and passwords for eBilling and self serve portals is a poor customer experience and incredibly expensive for billers. It is furthermore one of the most significant barriers to paper suppression.

Uniquely chosen usernames and passwords are intended to make websites secure, but instead, billers are simply passing the responsibility of security onto their users. In many instances, this is accompanied by predatory terms and conditions (read this blog post: Check the small print, you assume all the risk)

In truth, consumers do an extremely poor job of securing their access:

• One in ten still regularly use the word 'password'
• One in four use their mother's maiden name
• 15% use a pet's name and 10% a child's name
• Only 3% use a random password
• 30% of users have forgotten their password

Source: TNS/OneVu 2007

Customers just don't want it!

Customers are constantly telling us that the username and password process is not desirable. The December 2010, InfoTrends eBilling Report showed that 61% of consumers surveyed said that remembering multiple unique usernames and passwords remains a barrier to paperless adoption.

Not convenient for billers either

One of the biggest complaints from billers utilizing self-serve portals is the thousands of phone calls to their call centres every month from customers who have forgotten their login details. Each call costs the biller an average of $3.50 to $8.00. Online self service was meant to be cheaper and more convenient. Unfortunately in many cases it is neither. This is particularly so in circumstances where the customer rarely visits the biller's portal. This includes utilities, insurance companies and telecommunication service providers.

To date, the primary reason for customers visiting a biller's website was to make a payment. With the trend moving away from biller direct to internet banking bill pay, even this reason is dissipating.

Does eBilling have to come at the cost of customer convenience?

If username and password authentication is a poor customer experience, expensive for the biller, as well as a security risk; then how does one protect sensitive customer information and deliver on convenience, while moving to a paperless eBilling solution? Is there a way to provide an eBilling solution that is secure, cost efficient and most of all – convenient enough for the customer to turn off paper?

While it is in the interest of the biller to pull customers to their website in order to cross-sell and up-sell other goods and services, inconveniencing the customer in the process seems paradoxical.

If billers could truly deliver the bill electronically (as opposed to creating a 'fetch' scenario), they would also have a way to market to that consumer intelligently, and most importantly, in a cost effective way that is actually more convenient for the consumer.

Should additional self-service be available on the biller's website, then you can always drive them there after satisfying the primary purpose of bill delivery.

Creating the best possible customer experience:

1. Gain consent from the customer to go paperless without requiring a website registration.

2. Eliminate website registration (the number one barrier to paper suppression) by auto registering the customer at your self-serve portal and let them know that you have done so.

3. Utilize two to three simple questions to authenticate their portal access (think about when you called your bank recently, chances are they asked you 3 to 4 simple questions about yourself that only you could logically know the answers to).

4. Only ask them to choose a username and password if they are going to access the website very regularly and the question process in point 3 above is too lengthy for daily use.

For example: If I'm only visiting my insurer's website a few times a year, then asking me 2/3 simple questions is far more convenient than asking me to remember a username and password I chose 6 months ago. If I am accessing my Internet Banking more than once a week, then of course in this instance a username and password is the more convenient option.

Customers will turn off paper as long as it's convenient to do so, and while redundant authentication processes remain, eBilling adoption just won't happen.

Let's end consumer frustration and expensive customer care phone calls once and for all.

10 eBill Presentment & eStatement predictions for 2011

Despite all the activity and market hype surrounding eBilling and eStatements for the past 7 years and in particular in 2010; we believe that 2011 will not herald anything really significant. Unfortunately we expect it to be a "more of the same" year.

Here's how we see it playing out:

1. Billers will yet again fail to suppress any meaningful percentage of paper bills: Over the past 3 years, billers in North America have managed to turn off an average of 2% to 3% of their total paper bills per year. This year will be exactly the same with the exception of those billers that have been driving paper suppression for 5 years or more, and are now approaching 15% paper suppressed, they will see a diminishing increase as they move beyond the innovator and early- adopter segments of their customer bases.


2. Banks will fail to turn off more than a few percent of paper statements: Unless banks come up with a way to electronically deliver statements; paper turn off rates will disappoint yet again in 2011. Read this previous blog I wrote on why 82.639% of internet bankers will not turn off paper statements.

3. Biller electronic payment will continue to migrate to internet banking: The trend of electronic bill pay migrating away from Biller Direct websites to internet banking bill pay will continue. The migration will not only continue here in the USA but will gather momentum somewhat in 2011 in other first world countries.

4. Banks will fail in their attempts to gain critical mass in 'presenting' bills within internet banking: The math doesn't add up and billers don't want it. For the same reasons why other consolidators of bill presentment will always fail, so too will banks that try to do the same thing. Which leads me to my next prediction...

5. eBilling Consolidators will fail to gain significant traction: I recently wrote a blog on why eBill consolidators will always fail. This coming year will be no exception.

6. We will see the first negative paper suppression incentives and a subsequent consumer push-back: As has been tried many times internationally, charging people for a paper statement / bill not only has immediate, vocal, churn inducing and dramatic customer push-back, it also has only minimal paper suppression success. Nonetheless we'll see some major billers go down this ill-advised path over the next 12 months.

7. Positive incentives for paper suppression will continue to have disappointing results: It has been proven time and time again that if your only paper statement / bill alternative is to view and download an electronic version from a website, then incentives will have little to no appeal to the mass consumer market.

8. New 'push' players will emerge in the US market: Being the only game in town is no fun. After hearing about it for ages, we really do expect one or even two new "push" players to launch in the US market. We are also hoping that the handful of billers who have told us repeatedly that they are developing push eBilling themselves will actually go ahead and go live this year.

9. Billers and financial institutions that rolled out email document delivery and email billing programs will enjoy another 12% paper suppression increase: Both the US and Canada will see the public launch of top tier consumer brands deploying a 'push' strategy.

10. Email will continue to clean up its act: Email has seen dramatic improvements these past 24 months with regards to inbox functionality, auto-organizing, spam control and deliverability. We expect this trend to continue and strengthen in 2011.

In conclusion

Perhaps the only noticeable occurrence in 2011 will be the lack of traction of the two new biller consolidators in the US market. We can therefore expect 2011 to be a foundation, building year for 2012 with consolidation amongst vendors, mobile strategies gaining some penetration and yet another 10% of 'me-too' billers building and launching self serve portals in the vain hopes of suppressing paper and postage.

And finally, Striata US grew by 40% in 2010 and we aim to exceed this considerably in 2011 with at least 40 new bank and biller clients.

Do we have it covered? What are your predictions for eBilling in 2011?

Garin Toren
Striata USA - Chief Operating Officer
striata.com

Who really pays the bills in this relationship?

Two things that have really been hot topics for me recently are "how many companies are truly listening to their customers?" and "how many look at the full lifecycle of customer communications?"

In terms of the first concept, I'm continually amazed by companies that make technology decisions based purely on "what other companies in the marketplace are doing", rather than asking their own customers what THEY want. After all, who pays the bills - your customers or your competitors?

Analyze this:

Total paperless billing adoption in the US averages less than 15%, yet more than 80% of the bill
paying population has access to email. Perhaps all those other companies aren't getting it right either.

At Striata, we spend a considerable amount of time and energy getting to know our clients and
their customers before any engagement. Very often we recommend conducting a customer survey on how they would prefer to receive bills, statements and other communications. Almost inevitably the team responsible for that client's eBilling / eDelivery strategy find the results surprising! .

Case in point: One of our largest telecom clients has offered online billing for quite some time. Customers have to click on a link in an email and log-in to view and pay each bill. However, in order to get over the adoption plateau that virtually every biller hits with this portal-based approach, Striata suggested augmenting their portal with PUSH eBilling. They liked the idea and decided to survey their customers. The Result: 50% more customers would prefer to receive their bill attached to an email, as opposed to an email with a link back to the portal. And, in another online survey, consumers were asked how they would like to receive their electronic bills. THREE times as many consumers said they would prefer to receive a secure email attachment of their bill as opposed to those prepared to log-in to the biller's portal.

What this should tell you is that email is your customer's preferred communication channel, which brings me to my next hot button, "customer lifecycle communication".

Think bigger picture

In my experience, most companies don't give nearly enough attention to how they can sync up all of their transactional, marketing and notification-type communications. The net result is that customers receive emails for some correspondence (like newsletters and marketing) and paper for everything else. Not a great customer experience.

Striata's core strength lies in our ability to not only deliver all communications electronically from a single system, but also to compile a profile on each customer and provide usable data back to each department (billing, marketing, customer service etc).

Gathering information on preferences for how customers want to receive correspondence, which products and services they are most interested in and which banners, buttons and other links they click on puts you in an infinitely stronger position. With this usable data you can sell more to
existing customers, reduce costs (such as paper and postage) and most importantly provide even better customer service (which leads to higher retention.)

What is the value of an email address?

Customers have been willing to provide their email address for years. But very few companies take this for what it's worth. Once you have permission to use their email address, it's critical that you leverage this extremely powerful and very cost effective medium for as many pieces of communication as you can, not just for bills.

If you aren't already using triggered communications or treating all customer interactions as part of a carefully mapped out customer lifecycle management (CLM) program, isn't it time you started?

Want to get more out of your billing relationship with clients? Talk to one of our eBilling specialists today

Barrie Arnold
Vice President of Sales - Striata North America
www.striata.com

Why 82.639% of Internet Bankers will not turn off Paper Statements

I love internet banking, I really do. Outside of email and general internet access it has to be the one application that has truly changed the way we interact with an organization. We actively avoid branches and even ATM usage is a grudge action. With the advent of mobile banking and iPhone ® applications, we now have everything we need, exactly when we need it.













Source Pew Internet 2009©

So if this is the case, then why is it that 75% to 95% of Internet Bankers still receive every paper statement and document that they did before the internet?

The answer is astoundingly straight forward – there is simply no incentive / compelling reason for them not to.

From a Jan 2010 Javelin report: “At least 7 out of 10 consumers receive paper statements – and a significant number are “double-dippers” who receive both paper and electronic statements.”

Every major bank has tried in vain to compel, entice & incentivize their customers to give up paper. Considering that 75% of North Americaninternet users are below the age of 55, and just on 90% of that group have home broadband access, the answer must lie in the customer experience.

Before we talk customer experience, let’s look at what I refer to as the“incentive disconnect”. For the customer, a once-off incentive of $10 may just be enough to get 30% of them to agree to turn off their paper statement. The current average hard cost (printing, envelope, postage) of mailing one paper bank statement is approximately US $0.50. By including marketing costs, a customer would need to be paperless for 24months for the bank to break even. So, financially, this is not a feasible option.

The consumer experience examined:
Today, with Internet banking, consumers can download PDF versions of their statements easily and quickly. This brings us back to our burning question – if this easy option exists, then why do more than 80% of US consumers still receive paper statements?

The answer comes down to 4 reasons:

1. Current convenience: "I don’t have to do anything to get my bank statement"
2. It’s an effort: The consumer has to act in order to turn off the paper. In most cases, the action required is a multi-step website navigation process – find the correct webpage within internet banking, navigate through very intimidating legal language and check multiple boxes (each with its own legal warning of some kind). All this to save the bank some money? Ask yourself, who would actually do this? The answer – only 5% to 10% of extremely tech savvy consumers will.
3. Keeping records: Consumers have been educated to keep their bank statements. Even though banks do offer a multi-year history online, most feel that it’s simpler to just file them (in many instances, unopened) when they arrive.
4. No incentive: There is no real compelling reason why consumers will elect to go paperless. ‘Why should I when I can have the best of both?”

My prediction is that unless financial institutions change their current paperless strategies dramatically, the number of consumers who will opt for electronic statements only, will plateau at less than 20% and even that will take another 3 years of aggressive promotion.

So what will work for the consumer? Logically it has to be a strategy that includes all of the following elements :

• The consumer does not have to do anything to go paperless.


• Going paperless is more convenient than not. The proof – will it take me less or more time to open my electronic statement than the paper one? (If it’s more than 5 seconds, it’s too long.)


• Their statement is delivered to them - they do not have to go and find it and it can be read with just a single click.


• It is delivered in such a way that it can be opened and read both on a computer and mobile device, without any technical knowledge, special software etc.


• It must be more secure than paper delivery and can be saved securely with just one click.

This might sound like an impossible scenario, but today, solutions exist and are very much available. Three of the top ten global banks, have deployed a secure electronic document delivery approach, with evidence of consumer paperless adoption rates exceeding 50%!


In conclusion – until financial institutions adopt secure electronic document delivery , paper statement suppression will remain an elusive goal.

Garin Toren
Chief Operating Officer
www.striata.com

Is your eBilling strategy REALLY focused on the "customer experience"?

I recently managed to upset a large, well-respected company by declining to respond to their eBilling RFP, following a specific request from their Executive Vice President for Striata to participate. Our decision to decline certainly took them by surprise. However, based on our 11 years of experience as an eBilling specialist, we feel this company is fundamentally not going down the right strategic path. While Striata has had a great deal of success convincing companies to broaden their thinking on eBilling, many RFP's are just too far off the "strategy" that we would advocate for their customer base.

Most procurement teams tasked with creating an eBilling RFP are in a very tough spot because the market information on successful EBPP solutions is limited and adoption results are mediocre at best. As such, the majority of RFP's request a thorough analysis of how to build an eBilling website. I'm not saying the portal model is completely the wrong approach. However, in our experience, if this is the ONLY eBilling option you're offering your customers - even with extensive marketing - you're unlikely to achieve critical mass. Without critical mass, all the rich functionality that your proposed solution will offer is wasted.

What most companies don't understand is that eBilling is not about systems and technology as much as it is about providing a customer-friendly replacement for paper communications. Striata has a growing base of more than 250 clients achieving exponentially higher adoption success than the industry average. Why? It is our ability to generate significant ground swell within the client's customer base by giving them an intuitive customer experience, rather than repeating the same mistakes of every other eBilling portal project. Many of our clients globally tried the portal model first (and failed) before enlisting Striata's help. Those who selected Striata achieved a rapid ROI, together with substantial ongoing savings, dramatically reduced payment cycles (DSO) and enhanced customer experience.

eBilling success is measured by adoption and resultant savings, not by features and functionality offered. The majority of your customers are always going to take the path of least resistance. They DON'T want a complicated enrolment, log-in and search process in order to "access" their bill. That just doesn't constitute a convenient replacement for the paper copy. In order to achieve maximum customer adoption, you have to make their lives simpler in terms of viewing and paying the bill.

Another key success factor is working with an eBilling specialist with a proven track record (like Striata) to develop a clear customer-centric adoption strategy that is specifically tailored to your audience.

As an organization, it's essential that you start thinking like a "customer" and adopt a customer friendly strategy and experience that drives the right paperless behaviour.

Barrie Arnold
Vice President of Sales
www.striata.com

Who ‘drives’ the ROI on your eBilling solution?

Over the past several months I’ve seen an incredibly positive shift in thinking, with far more companies not only looking at new technologies to help reduce operating costs, but also at how their IT departments can build these solutions in-house. This makes sense, with every job being scrutinized and IT wanting to demonstrate their value (and secure their jobs for the foreseeable future).

eBilling is again on the agenda as a potential cost saving, however it is NOT a solution you should be looking to BUILD without very careful consideration.

We see it time and again. There are two key components owned by two separate departments that every company with a “build mentality” underestimates. Implementing the right technology first time around (IT’s job) and having a customer adoption strategy to give you the quickest ROI and maximum savings thereafter (marketing / customer care’s job).

Let’s consider the following analogy for your eBilling solution. Imagine you could change to a more efficient fuel for your car that will reduce your cost at the pump by 60 - 90% and cut the cost of services and maintenance. Sounds amazing, right? What’s the catch? Well, there are two actually.

Challenge # 1:
This new fuel requires a new engine. How do you get this new engine into your car?
a. Do you ask your very good, but very busy local mechanic to build this new engine – either from scratch or from off-the-shelf components?
b. Or do you get the manufacturer to install the perfect engine for your car?

Challenge # 2:
To date, only a small number of filling stations have adopted this new type of fuel.
You will have to convince each filling station owner, one-by-one that this new fuel is better for the environment and that because it’s quicker to fill the tank for your new engine, it’ll make their lives much easier. Oh, and it’ll save them about the cost of a postage stamp each month to fill up your car.

Now let’s go back to your eBilling application.

Migrating your paper communications to electronic will save you 60 - 90% on print and mail costs, along with many other soft cost benefits, but how do you get customers to give up paper?

Selecting an eBilling solution that works best for your business and your customers is KEY.

Making sure it’s implemented quickly and professionally is just as important. With a solution that is fundamentally changing the way you communicate with your customers, are you happy to let your local mechanic (your IT team) build your eBilling solution by trial and error? In most cases, for the safety of your passengers and the longevity of your car, you’re going to put your trust in the experts. The same concept should apply for your eBilling solution.

Now on to challenge number 2 – Strategy:

Understanding how to get filling stations (your customers) to adopt this new concept is essential. How do you convince them to go green? Do you offer incentives? What’s the most cost effective way to drive enrollments? What is your goal for the next 3 years – 10%, 20%, 60% of gas stations (paperless customers)? These are all questions that require considerable experience, planning and strategy. And it’s likely that your strategy will need to adapt several times over the next 3 years. In today’s market, companies have neither the budget nor the time to experiment with customer adoption tactics.

IT projects tend to focus on the development and not the roll-out. More often than not, developing and implementing a customer adoption strategy isn’t part of the project. In addition, your customer service and marketing teams won’t know how to design their customer communication strategies until they’ve seen the technology in action and are comfortable that it works as promised.

So, before you decide that your business requirements are unique, that you have a complex or legacy system, or that your corporate culture is to build everything, don’t underestimate the intimate relationship between technology, strategy and experience when making a decision on whether to build or outsource your eBilling solution to the experts.

As Mark Lutchen, Head of the IT Effectiveness practice at PricewaterhouseCoopers puts it, the rule of thumb is to buy applications to the maximum extent possible to cut costs - freeing up resources for whatever really needs to be built in-house.