e-Finance: Quo Vadis
2.ELECTRONIC BILL PAYMENT
From the point of view of Banks, Electronic Bill Payment (EBP) represents something of a threat, in that it could lead to customer attrition and reduce revenue. Among other revenue streams, the following sources of funds for the banks could be affected:
· Float associated with processing in the physical form,
· Cash Management Services
The Banks can protect itself by providing this service to their customers.
But EBP also has an important strategic dimension, as it can become an integral part of a bank's portfolio of services. EBP can attract customers to the bank by making transactions more efficient and enabling customers to access their financial information more easily. Moreover, online interactions allow use of such tools as e-CRM to create a more intimate relationship with the customer and promote and deliver other online products and services.
If the Banks do not establish control on EBP, they are likely to loose customers to the new providers of financial services, thus affecting other sources of revenue.
In India, HDFC Bank, ICICI Bank and Citibank are trying setup an EBP portal. ICICI has already started a portal called BillJunction.com. Banks are planning to use the Net for payment of utility bills. They are entering into tie-ups with utilities like MTNL, Airtel, Orange, and BPL Mobile etc. Right now, a customer who's received a bill in the physical form logs into the network in order to make an online payment. In the future, these bills will be sent to customers through the Net.
Consumers and Businesses can derive economic benefit on account of reduction in transaction costs and a reduction in the float resulting from physical processing of the Bills. In addition, many are likely to adopt it mainly for the convenience. They can pay bills electronically in the same way they do today, but by consolidating their bills, they can reduce the effort involved in the whole process. They can also access their account at the same time. They can conveniently access all billers from a single portal that also provides them banking facilities. This would enable them to view their account balance while paying bills. For portals or the intermediaries that consolidate bills from multiple billers at a single online location EBP is a tool to acquire customers and provide them other financial services also. Dominance of the EBP market can lead to an entry into other financial services markets such as credit or debit card payments, or indeed into a much broader range of e-commerce markets, such as payments gateways.
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