Effecting digital change in the smokestack economy is a bit like steering a battleship.
Nothing changes on a dime, in other words.
ACI Worldwide Executive Vice President of Digital Payments Sanjay Gupta told PYMNTS’ Karen Webster that utility and consumer finance companies are at a crossroads, especially when it comes to bill presentment and payments.
Burdened with decades of legacy infrastructure and paper-based processes, the way it’s always been done is bumping up against what their consumers want, which is an easy way to see what they owe, when it needs to be paid, and the ability to make the payment — through mobile, digital means.
A few stats jump out. More than 50% of these firms can offer electronic billing and can take a broad range of digital payments, but only 12% do so. And a third of companies surveyed by ACI and PYMNTS have digital transformations on their long-term roadmaps but won’t be making the leap anytime soon.
The disconnect, and the hesitation, said Gupta, come with worry over what it all will take.
“A lot of executives are worried about the difficulty — can they do it with the resources on hand, and will it be complicated?” he said.
The availability of payments platforms (ACI’s included) offer plug-and-play functionality for these companies to embrace plug-and-play means of offering digital payments and alternate payments such as PayPal and Apple Pay. That simple integration can boost low penetration of the “Pays” where only 11% of utilities accept Apple Pay, 9% accept PayPal and 8% accept Google Pay.
The advantages are plain to see. The overwhelming majority of utilities see improved operating efficiencies when offering digital payments, as well as reduced collection times. As many as 62% see increased revenues from existing customers (through cross-selling, say, new energy efficiency products and services).
The reliance on paper is not one sided. As Gupta noted, many consumers are still dependent on paper too. Roughly half of them are sending paper checks even though they would actually prefer a digital option.
“Many of these consumer finance firms and utilities recognize that there are opportunities here,” he said.
The solutions providers seeking to hasten the great digital shift face requirements of their own when it comes to helping client firms recognize the value and returns on investment in short order, he said.
“Solutions providers need to speak the ‘utility language’ — the needs of electricity companies are different [from] other companies,” he said.
Track records are important too, and providers need to demonstrate to would-be clients that they have the technical know-how to ease the complexity of embracing digital payments.
What the Consumers Want
Younger consumers, especially, want a simple way to interact digitally, preferring that bill presentment and payment be done across mobile devices. Conventional wisdom may hold that switching costs are high enough for consumers that the utility and finance firms need not make the digital leap.
But as Gupta noted, many of these companies are measured on their customer experience — through JD Power scores — which in turn impacts the regulatory, and even pricing, environment.
For the consumer, he said, digital interactions with electricity providers and auto lenders done via mobile phones takes on the ease of, say, ordering on Amazon, or catching a ride with Uber.
“You can click through once or twice and the bill gets paid,” he said.
The transparency of the transactions helps eliminate the guessing game of when checks are sent, arrive and are posted (and hoping that there are “good” funds in the account). Improving the billing process also opens up the conversation between the enterprise and its end user in a way that paper bills and checks, passing one another in the mail, cannot.
“The end user gets to be in charge and state that ‘This is the type of communication that I want — these are the new services that interest me,’” he said. “It’s not just a ‘push’ from the company.”
As a result, he said, digitization also offers “tremendous efficiencies” to these forward thinking, formerly old-economy firms, as cash collections improve.
Looking Ahead
As of right now, mid-sized and smaller utilities are looking for the changes that will help them gain market share against the larger incumbents.
“These firms tend to be faster adopters, but in all cases we are seeing at least a strong and ongoing review of digitization across the board, whether they are small firms or larger ones,” said Gupta.
Looking at the utility and consumer finance companies that have digital payments on the longer-term roadmap, he had a simple observation of the transition: “These firms are going to be left behind if they don’t do this and do it right.”