After a period of sluggish growth, electronic bill presentment and payment (EBPP) is poised for accelerated expansion as more financial services institutions get into the game, according to research from TowerGroup.
A new study conducted by the Boston-based company finds that commercial banks, credit unions and other financial institutions may soon give non-bank competitors that have previously dominated both the business and consumer EBPP landscape a run for their money.
TowerGroup projects that roundtrip electronic bill volume (which means bills or invoices both delivered and paid electronically) will equal less than one per cent of total bill volume in 2001. However, this share, which includes both the consumer and business-to-business billing markets, is expected to increase to nine per cent by 2005.
While currently only one per cent of US depository institutions offer some form of electronic bill presentment services, TowerGroup expects that number to rise to seven per cent by 2005. The research company predicts the growth will be powered by large institutions investing an annual average of 20% to 25% of total information technology (IT) expenditures on electronic billing initiatives.
Results of the study show more than 90% of the institutions presently involved in the EBPP market offer a consumer service provider (CSP) capability to provide their retail customers with front-end services to receive and pay bills electronically. However fewer of these institutions are presently offering EBPP services to their corporate customers, or are converting their own bills to electronic formats.
Financial institutions stand to reap handsome financial rewards if they press ahead with developing their EBPP services, says TowerGroup. In the business-to-consumer (B2C) market alone, TowerGroup projects that the ultimate conversion from paper to EBPP processes will generate a net revenue gain of $1.4 billion for banks.
Beth Robertson, author of the research and a senior analyst in TowerGroup's e-banking research and advisory service, says: "Banks and credit unions are well positioned to encourage both biller and payer adoption, while simultaneously creating a significant transition in billing practices as they convert their own bills and statements to electronic formats."