[I am in Las Vegas for the TAWPI Payments in Transition conference – these are my notes from one of the sessions. An index of all of the sessions and links to the rest of my notes is here. – EMc]
The Convergence of Payments & Forms Processing
Mark Fairchild, Chief Technology Officer, BancTec
[program blurb] This session will explore opportunities and challenges related to the convergence of document processing and payments automation. You will hear what’s driving convergence, what we can expect in the next five years, and how to position your organization to compete.
[presentation not available]
Turning attention to the OTHER documents – not just checks. What is driving convergence of forms and payment processing, what can we expect in next 5 years, and how can your organization position itself to succeed?
Why? Competition creates differentiated services and drives down pricing. Paper payments market is commoditizing – very difficult to differentiate, evaluated on price alone. Using new services to compete more effectively: RDC, forms technology.
Businesses always trying to improve efficiency. Paper is inherently inefficient. Whether application, letter, remittance document, invoice, etc.
Regulation and Legislation play a key role in enabling process improvement– payment truncation requires regulatory change (e.g. Check 21) but on the forms side, no regulatory governance. Unless requiring legal signature.
US Adoption – Check 21 is helping to remove the document/check barrier. Now processers can treat check just like other documents that have to be imaged. No longer two separate processes for checks and other supporting docs (application form, for instance)
Technology is another key enabler – network band width, more centralized IT (web, smart client), more computing power for lower price, both color and grayscale images for forms.
Forms technology is much better in last 5 years. Structured forms (always same e.g. tax forms) vs. unstructured (e.g. letter) vs. semi-structured (invoice, you know what is on it but unsure where) – continued improvement in management and processing of forms data.
A lot of paper out there. US far more than other countries, although declining. Businesses are trying to reduce paper-based transactions. But won’t be disappearing anytime soon.
Countries with high cost of labor are early adopters of technology. Scandavia (high) vs. US (medium) vs. India (low).
Fairly consistent evolution, regardless of country:
- Regulation – gov’t legislation that image is okay substitute – truncation okay.
- Technology investment – image
- Volume decline – businesses prefer electronic transactions, rather than paper.
- Outsourcing becomes prevalent
- Consolidation of processors
- Processors develop new services in order to differentiate
Norway and Sweden. 100% outsourced, were a handful now 1-2 processors left. Other markets, mostly outsourced, 2-3 processors left. But US is different. Thousands of banks (vs. dozen on other countries), volumes are huge (30 billion vs. France 2nd largest with 4 billion). Smaller countries legislated a time line. US “enables” and relies on market forces. Fairchild predicts that US will still trend toward consolidation and outsourcing like other countries. Outsourcers, processing fewer and fewer paper payments (volumes decline) and look to form processing to add value to services offered.
Globalization continues, greater competition, new payment types.
96% of B2B invoices are paper (per AIIM)
Continued blurring of form and payment processing. More forms automation with higher degree of accuracy. Full text search archives and by product of processing. Support costs drive centrally hosted systems that support capture and key anywhere for all doc types (SaaS); remote deployment via thin client/smart client.
Extend digital horizons – digitize at first opportunity FORMS too. Move toward STP. What you cannot read through CAR, use remote key (low cost locations). Reach out to customers and suppliers (integrate in order to reduce exceptions) – push automation throughout the whole value chain, not just one segment.
Fairchild suggests that rather than silo’d AR, AP solutions, companies should develop Shared Services Operations – essentially an internal outsourcer for document automation. Benefits include
- Aggregate volume from different parts of organization
- Consistent approach to planning, compliance and business continuity
- Foster best practices centrally vs. attempting to drive consistency and process improvements across a number of locations
- Can be complementary to outsourcing (peak volume outsourced, or outsource keying only to arbitrage labor costs)
- Similar processes in three areas: order input, receivables (payment + remittance), payables (invoices) – aggregate all docs/forms in one shared service with one archive, sufficient volume to outsource keying, one integration with ERP/host. Easier integration with supplier/customer (one interface vs. multiple)
Look for provider that can do forms + payment (eventually you will want to capture forms) where is the first opportunity to capture.
Network of common input and data entry devices – anywhere: mobile, regional headquarters, local offices, central corporate office, mail room, etc.
Shared Service Center provides central visibility, audit, control and prioritization of work.
Leverage payments technology and operational expertise to address forms. Higher levels of automation, cost savings, and new services.