e-Finance Trends: About EBPP systems
Regional banks have started providing us one consolidated statement of account for all our relationships. This has so many benefits for every one. One can see all one's positions in one statement, and use less filing space.
Banks spend less money and effort on posting the statements. If one does not find all the accounts in one place, one gets back to one's bank and corrects the situation so that all the accounts are properly aggregated.
Let us extend this situation at governance level. Imagine all our service providers informing us that henceforth we will receive one common statement for all their services, be it telephone, electricity, entry visa for relatives and friends, municipal services and so on.
Imagine more private service providers and merchants joining the service. What if we are able to make one single payment for twenty-five different services, leaving the task of allocating the fund to computers? What if we do not have an option any more to register under an electronic bill payment and presentment (EBPP) system, receive the above statements or making payments?
Instead, it becomes mandatory, and we have one common e-mail address, with the assurance that all our service providers will send statements to this common address.
As we can see, there are three key components in any EBPP system. The key and most challenging component for an EBPP system is perhaps unification of the customer authentication system. Each service provider maintains its own numbering system for its services. The entire customer cycle, from providing the service, measuring, billing, collecting and reconciling revolves around this number.
The next important component is the ability to aggregate and present the bills to the customer. That is the bill presentment mechanism. This means we need to provide a common delivery address, in addition to authentication, across all service providers. We need to have a mechanism to pull the bills from respective systems of service providers and synchronise the presentment with their billing cycles.
The third component is the ability to collect the consolidated payment for bills, irrespective of where funds are.
From the governance point of view, it is a paradigm shift. We are talking about a shift from department-centric governance to a citizen-centric governance model. E-governance and EBPP initiatives are the first steps of this vision.
It is, indeed, heartening to note that government support to EBPP services is getting stronger and stronger. Electronic bill presentment and payment is a core part of any e-government initiative, where the government would like to consolidate, present and collect all its dues from a citizen, be it a national or an expatriate.
In an ideal government EBPP model, one customer must see all his relationships in one place in a single portal. The customer should be presented all his bills automatically. The above two activities should not depend upon a customer initiative to join any EBPP portal. On the other hand, it should be enforceable.
The portal needs to have ability to move funds from any bank in the country to its government account, based on customer instruction. This requires linking to a payment system, which can have access to all bank accounts in the country. The success of any EBPP would depend solely on the ability to move funds from a customer's accounts online via direct debit facility.
Connecting to individual banks may help in having a functional model faster, but will seriously limit the coverage. It makes better sense to provide connectivity to banks in line with ATM network.
Department-wise breaking of collected funds can be a consolidated daily activity. Bills paid by customers will get back to the billing systems of respective service providers for routine reconciliation and updates.
Where do we stand as compared with the above mentioned ideal situation? Different countries in the region may be facing different issues. Typically, all organisations in a country are not at the same level of efficiency in terms of payable and receivable management.
Organisations having a profit and expansion objective will invest heavily in payable and receivable management systems, have multiple collection channels, and immediately disrupt the service if payments are defaulted beyond an acceptable point.
On the other hand, organisations with social or regulatory focus will normally not invest heavily in receivable or payable manage systems or collection points and exhibit much higher tolerance for non-payments. This results in anomaly in terms of preparedness and priority of different organisations.
Any EBPP system must be flexible enough to link to the two extremes. It should be able to pull bills electronically for presentment, it should also be able to accept payments without electronic presentment, it should be able to send payment confirmation to billing sources online or off-line depending upon the preparedness of the billing systems.
This decade can be considered the decade of Internet models. With the power of the Internet as a medium getting accepted by all entities, a lot of business models got evolved. We have B2C, B2B, B2G, C2B, C2G, and G2G models and so on.
A comprehensive EBPP system will have most of the above features. The governments in the region have started sponsoring the project on a very large scale. The potential for success is huge, if pursued properly towards its successful implementation.
The author is Assistant Ganeral Manager of Doha Bank.
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