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By Bill Broddy I once had a web site called e-statements.com. It was the late 1990’s, when the dot-com bubble was a couple of years shy from bursting. The buzz in the transaction document industry was Electronic Bill Presentment and Payment (EBPP), which meant many things to many people. The hype was that companies substitute their nasty paper statements with snazzy web-pages containing all the customer billing information. Here we are, 10 years later and the take-up rate for electronic statements has only reached the low teens. So what happened? What is a customer statement of account? To understand what went wrong, we have to remember what business purpose a statement achieves. First, it fulfills a fiduciary requirement to ‘present a contiguous accounting of all relevant activities and charges associated with the account’. Second, it provides the client with an irrefutable document (i.e. a presentment) that they can subsequently use within their financial affairs. Third, it commits the issuer to the information presented (the courts don’t care what you meant to mail, just what actually was received by the other party). If there is incorrect information, the mailer is either incompetent (see Sarbanes-Oxley for implications) or committing mail fraud. Finally, the mailer must prove 1) that the document was served to the client, or 2) that the document was put into the mail with the correct address (known as the mail-box rule).
Also, in consumers eyes, one of the important values of a customer statement was its longevity; you can throw them in a bankers-box until tax season and feel relatively secure that the information would be there.
What was the problem? EBPP was perceived as an enormous opportunity that could be solved using the Internet (which was true). However, the people designing the solution had no understanding of the fundamental business purposes of a customer statement.
The first mistake they made was to assume that delivery of transaction documents (like every internet solution) should be web-based HTML.
They also assumed that the recipient would only need the information presented for a moment in time while they paid their bill.
They assumed that consumers would commit themselves to a sometimes complex procedure to actually see their statement.
They assumed that courts, the taxman, loans officers at banks, and accounts payable departments would readily accept printouts of web-pages as proof of an expense or of an asset.
Their business cases were based upon the elimination of print, inserting and mailing costs; most of which could only be achieved when the organization printed their last transaction mail-piece.
Some even believed that consumers would pay a surcharge to get their statement electronically (as if no one could figure out that the mailer was actually saving money).
I wrote an article in 1998 describing the requirements mentioned, and the folly that many of the EBPP software suppliers were committing. However, the suppliers were too far down the road to change course and ignored the advice.
So what happened? Early adopter customers signed up for the service ( 1 – 3% of the client base) and used it for a while. And then one month, they forgot to go get their statement (which previously had found them via the post office). Many then requested to return to paper statements or to send both paper and electronic.
These early adopter also found that the information presented on the electronic statement was not the same as their previous paper statement. And in many cases, was not the same from one month to the next. The electronic statement was in fact an HTML file that was susceptible to format changes caused by either web-browser setting or by the version of the browser used. In fact, customers who had printed their HTML statements from previous months were shocked to find that when they re-printed that statement it could look very different from what they originally received on their display.
Finally, these customers found that the ‘presentments’ they printed out from the web-site were not widely accepted by third parties. Security and fraud specialists had educated their corporate clients on how easy it was to alter (or even fabricate) important information within an HTML document.
A few of us had suggested that the right way to deliver electronic transaction documents was by using PDF to format the document in an unalterable format, then electronically post the document through a trusted 3rd party (in a way that was compliant with the mail box rule). The 3rd party would then advise the client that the mail was available (this is known as invited pull) either via an email message or through a ‘gadget’ on the recipient’s computer. This process closely mimics both paper mail delivery and the permanency of the document presented.
Additionally, we forecasted that the core technology to generate electronic statements would be found in the next generation of composition software products. These products already format the documents for paper. We saw no reason that emitters could not be added to handle electronic (especially PDF) output.
And where are we today? We are finally seeing a significant increase in the number of consumers willing to accept electronically delivered statements. This is a result of:
1. The acceptance of PDF as the de facto standard for electronic transaction documents. This will only be further re-enforced as composition vendors deliver PDF/A emitters which can apply digital signatures.
2. Electronic statements that are faithful renditions of the paper versions.
3. The emergence / consolidation of trusted 3rd party post box services that provide proper notification and, in some cases, paper mail back-up when the customer fails to retrieve the document.
4. New legislation properly defining the evidentiary requirements for ‘legally significant’ electronic documents (such as UETA in the US, PIPEDA and CAN/CSGB 72.34 in Canada, and UNCITRAL Model legislation adopted in many jurisdictions). These regulations define what is (and is not) an acceptable transaction document.
5. The use of existing transaction document workflow to generate and distribute electronic statements.
These enhancements emulate the traditional statement presentation process, providing the comfort factor which was missing in the earlier implementations.
One thing to note is that most organizations have only focused on their largest transaction document applications. Although a bank may have implemented electronic delivery for their consumer statement and credit card bill, they still may have no plans for the hundreds of other transactions document applications they are running. As a result, the vast majority of paper-based transaction mail will be continue to be produced and delivered for the foreseeable future. |
