As far as we can see the user interface is pretty slick, but outside of that, it's seems to suffer from the same issues as all consolidators that we've seen before.
Let's start by defining eBilling success from the biller's point of view:
- Maximum customer satisfaction;
- Full control over the bill and delivery medium;
- A majority of electronic payment;
- Intelligent marketing capabilities;
- Mobile capable by default;
- Paper bill suppression
Every consumer biller we meet has these success criteria, and success is only achieved when these are all satisfied.
So why can't a consolidator model meet these requirements?
1. Attaining critical mass is simply impossible:
In order for a consolidation location to be successful, more than 50% of the consumer's bills should be there already when they arrive for the first time. In fact, 75% would be optimum. This is where the chicken and egg scenario begins. Billers won't come on board without consumers using the location and consumers won't sign up if the billers aren't there.
I live in arguably the most connected city in the USA and both my bank consolidator (BOA) and CheckFree can only offer me 2 of my 11 household bills. This is further exacerbated by the sheer size of the USA. A consolidator would need to literally sign up in excess of 10 000 billers to even get close to the 50%. This is quite simply impossible.
2. Registration / enrolment is a major barrier:
Approximately 55% to 75% of North American consumers are signed up for internet banking, have multiple email addresses and a Facebook account. As the biller direct self service portals have experienced, a maximum of 25% of consumers will register on their websites (and this takes 5 years to achieve). Of those, on average only a quarter will go paperless (5% to 9% of total customer base), unless paperless is a condition of registration-which does encourage paperless, but radically reduces enrolment.
What consumers don't want is yet another location to visit and register, as well as another username & password to remember.
Today, in the USA , most banks offer very efficient bill payment capability and as it takes less than two seconds to open a paper envelope to see my amount due or bill detail, what possible incentive could there be to make this experience 20 to 30 times less convenient?
3. Consolidators do not have biller control:
Bill delivery is directly linked to bill payment - most consumers will only pay their bills when they receive them. With paper,, billers have total control over the creation and posting of their bills. Similarly, by using their own websites along with notification emails, they achieve this (albeit to a much smaller audience). Having your bill available through a consolidation partner is 'outsourcing' this timing in many instances. Consumers may wait until they have more than one bill available at the consolidator website before choosing to login and view them.
4. The proof is in the end result - poor paper bill suppression:
Customer satisfaction is touted as the number one billing priority. Yet it is paper suppression that drives almost 100% of the eBilling cost savings. Without paper turn off you may as well not offer eBilling, as it then simply adds to your total billing costs. Consumers are happy to pay their bills through their internet banking.
In order to consider an eBilling program a paper suppression success, the biller needs to turn off a minimum of 10% paper per year, every year, up to 50% (it slows after this).
Consolidator solutions only achieve 3% paper suppression on average per year, and plateaux at approximately 12% at best (after 5 years).
5. Billers are not prepared to lose this key marketing touch point:
Unlike paper, inserting intelligent marketing into a self service portal is a significant challenge. Furthermore, it is only applicable to the minority of customers who choose to use the portal. This is even more so in the case of a consolidator website where billers effectively lose the ability to market to their consumers. As we all know, the bill is, in most instances, the biller's only touch point with the consumer. Are they prepared to lose this to go paperless? Over the past decade, all the billers that we have spoken to tell us they most definitely are not.
6. Not mobile ready:
The majority of consumers are not going to download an app or visit a mobile website just so the biller can turn off the paper bill. There is just no compelling reason for them to do so. So for any mobile strategy, to achieve paper suppression success, it has to be mobile ready by default: The recipient must be able to view their eBill on their mobile device without having to pre-register or download anything.
To sum up; it's not going to happen:
It is our view that no website based eBill consolidator will ever succeed in a market as large and diverse as the United States, no matter how large the hype or marketing budget. If the likes of Fiserv / CheckFree (after 8 years and almost unlimited budgets) cannot get it right, it's simply impossible that any start-up can, irrespective of a good UI and significant funding.
The only way billers (using the consolidator model) are going to get more than 30% of their customers paperless, is to make it mandatory and deal with the customer backlash - a strategy we strongly advise against.
The solution? It takes 4 fundamental changes:
1. Eliminate the registration barrier by offering intelligent one-click eConsent (no username & password to chose and remember).
2. Deliver the electronic bill directly to the consumer without requiring them to link back to any website, in a way that is also mobile device capable by default.
3. Include one-click electronic payment without the need to pre-register or visit any website.
4. Intelligently insert marking and regulatory notices - just like you do in the paper world, only at 95% less cost.
Most importantly... - do not ask the recipient to do anything to receive their eBill. If you think the above is impossible, ask a Striata expert today how it can be done.
