22 August 2017
Bo Harald

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Bo Harald - ZEF, Transmeri, Real Time Economy Program

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Pyramid upside down - finally

17 January 2010  |  4309 views  |  0

When we started e-banking back in -82 we saw it as a pyramid. A very broad base where customers do their everyday banking on PCs - checking balances, paying bills, getting notifications on direct debit  etc.

On this "habit" base and frequent traffic it was then possible to add tens of additional services - more seldom needed - all the way up to the most exotic. It became clear that the last service added more value then it represented itself - economy of scope for customers - and the bank. Some services became exclusive to the PC-bank - could not be delivered in a meaningful way in branches or contact centres. Then it was all offered also via the Internet - and it got more colors - but it was still the same service.

Now we are seeing an upside down pyramide. The base of it is potentially as wide as the number of payments - but the next layers are larger than the base - when it comes to value delivered to enterprises and society at large. The layers and the logic have been described here before  - but briefly:

Layer 1 -  the base is e-invoicing - transporting invoices, converting between formats, validating and presenting for easily automatable payment is producing a huge value in itself

Layer 2 - outgoing and incoming e-invoices and payments of them automatically generating cash flow estimates in real time is producing a higher value for the typical SME

Layer 3 - payments of e-invoices automatically performing the accounting by attaching a structured-form copy of the paid invoice to the electronic account statement is a higher value - not only for SMEs. This also serves as a base for full unification or reporting to the public and finance sectors

Layer 4 - payments of e-invoicing creating an automatic payment of VAT - instead of registering, reporting, then rembering and paying is of high value in transaction rich businesses

Layer 5 - e-invoicing copies being sent for approval to buyer and then for financing is creating big value both for sellers and buyers - especially these days

As tax payers we are of course pleased to take not that public sectors in many countries (how about your? - promote here)  are pushing hard for e-invoicing both to save costs in their own processes - and to further digitalization in the wide SME-sector - and save taz payers money in their own even more dramatic up-side down pyramid in layers 3 and 4!

Easy to see that this innovation stream should get the highest priority. The question we get is often "Wow - the only thing I do not understand is why we have not done already long ago!" The answer is that we have not been able to move earlier to XML based e-invoicing. But now we have - and even the most changeresistant should get embrace this wholeheartedly.

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