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Evolving bill pay to meet consumer preferences

Good afternoon, and I'd like to welcome everyone to our April webinar focusing on the topic of evolving bill pay to meet consumer preferences, posted by your U.S. Bank Global Treasury Management partners. My name is Brianna Dunn, and I'm from U.S. Bank's Global Treasury Management learning and development team, and I'll be moderating today's webinar.

Before we get started, I'd like to introduce our speakers, Jake Barker and Lucy Diasio. Jake is a working capital consultant who works directly with internal and external partners, providing thought leadership to businesses around process optimization. He originally began his career with U.S. Bank as a working capital analyst and was responsible for analyzing data captured during those client conversations to help identify opportunities for increasing efficiency within business processes.

Lucy Diasio is our additional speaker today and is our receivables group product manager. In her role, she's primarily responsible for the strategy and development of our digital receivables services, helping to drive efficiency and convenience to both business to consumer and business to business customers. She has more than 25 years of financial expertise in treasury management, previously holding leadership roles in corporate treasury and banking product management, where she delivered solutions to improve customer experiences across our receivables and depository spaces.

We're excited to have both of you with us today. And with that, I'll hand it over to you, Jake.

All right, well, thanks, Brianna. Appreciate the introductions. So, Lucy, I'm sure most of us have purchased something online from places like Amazon or the likes. So we all know how easy it can be-- almost too easy at times-- to make that purchase. My wife will definitely tell you that I've gone down a rabbit hole or two of buying things that I probably don't need.

So is this what is meant by the consumer effect? Do our experiences as consumers really feed into our expectations of how any payment interaction should be?

I think they absolutely do, Jake. I feel like there are so many things that you do as a consumer that bleed over, for sure. And I get exactly what you're saying about buying too much online. I had a couple of boxes delivered to my home yesterday, and my husband said, what are you buying? And I said, it's like Christmas all over again. You get into this routine of oh, I need this. I need this. Before you know it, you've got a package coming every single day.

But it's so easy that you do definitely expect to have that same ease in every online experience you have, including paying a bill. So it really has a lot to do with providing customers integrated experiences and that whole ease of use. There's been a lot of different consumer studies being done across the industry. And the very consistent theme of all of them is finding that convenience and choice drive consumers' preferences and consumers' spend.

So whatever they're doing, whether it be buying something on Amazon or using Uber or any others, definitely feeds that whole idea of a consumer effect, and it's definitely impacting not only how consumers buy things, but also how they pay their bills. And in fact, analysts are predicting that by-- within the next five to six years, 75,000 brick-and-mortar retail stores will close.

Quite honestly, my opinion, I think it's going to be a lot less time than five to six years. I think it'll be more like two or three. I don't think it'll take that long because of how people are changing their behaviors.

Well, that's incredible. 75,000 stores really is a huge number. So what is the primary driver behind which stores will be a part of that 75,000 will close?

I think it will have a lot to do with the company's business model and how they look at what their brick-and-mortar stores will be doing, that they-- and how that then coupled with offering a frictionless experience for the customer, for the end user, technically. The business models will start to shift a little bit, because retail-- buying retail at a store has definitely changed, and it will continue to change.

So what will those stores become? Will they become fulfillment centers? Will they become return centers for things that you bought online? That will likely be more of what they'll do than actually selling merchandise, and mainly because people are online. A slow website is no longer acceptable. Clunky interfaces, no longer acceptable. They really are looking for an effortless experience, and especially when it comes to making a payment. That's the last thing they want, is to make a payment on a slow website, because then you're not sure did it go through. Did they get my payment?

And then that leads to a poor payment experience, and a lot of times, that will cause a client to switch in a heartbeat. It is so much easier and so much less costly to be able to do that nowadays. But on the flip side, a good payment experience can really create customer loyalty. And I personally have had a personal experience with this, with my cell phone provider. And over the holidays, I bought a few new phones. And I ended up returning one after Christmas, and it was-- it needed to be within a three-business day-- or three day return policy. And they were counting Christmas.

Well, I complained about that obviously, and they said, OK, yeah, you're right. We'll return it. But in doing so, I also signed up for paperless billing and online payment, automated payment, to get a discount. Right? Everybody wants a discount from their cell phone. So I did that. And meanwhile, I got the text that said, hey, your bill is coming due. Here's your dollar amount. It's $1,000 more than what I normally pay.

And I immediately was able to get to them and get on the app and look up what that $1,000 was. Turns out it was the cell phone I returned that they didn't do properly. And I got someone immediately to fix it all in within this app, was able to chat with somebody, was able to get the payment fixed. And she also gave me her email address, so I could contact her later in case it didn't get fixed a month later. So it was a really good experience, and I thought to myself, wow, this is really great. And I have so much more loyalty to this company now, even though they may not be the cheapest one out there. They definitely had the best consumer-- or the best customer experience.

Well, what a great story, because it really illustrates that even if your customer has had a bad experience, and let's be honest. All businesses encounter this from time to time. Even with that, you can still make it right. And even like in your case, turn that person into a loyal customer, depending of course on how frictionless you make that follow-up experience for the person. So all is not lost with one bad customer experience. I think we get into that mindset nowadays, just because reviews are so prevalent and we know how easy it is for each customer to move and shift, like you mentioned.

But with a good follow-up, you can restore that relationship. So what a great story. So before we jump into our next slide, we want to look at some poll results from a poll we conducted previously. But the question we asked our clients was, within what time frame does your company plan to invest in your bill-- in your online bill and payment presence?

And we got a mixed-- some mixed results there. We got a good portion that said, it's really not in our current plans. And then we got some that said, really within the next two to three months. So that was what we saw from our clients. And you can see here on the screen, from a larger perspective, we can see that one, 81% of executives believe that by 2020, they will compete on the basis of customer experience.

So that goes to what Lucy was saying. It certainly is based on the customer experience. And then the next point, 75% of companies are investing heavily in their online presence and design to differentiate themselves and build their brand. So for those customers and clients who maybe are not currently investing in their online presence and online bill pay and resources we understand that that's certainly-- you're operating with a lot of competing demands on your limited resources.

So Lucy, what can some of these companies who maybe aren't planning to do that currently, what can they do to get started?

Well, I think there's a number of considerations that they should be looking at. And first and foremost, you really need to ask yourself a few questions about what are you trying to solve for today in your business? And what are you looking to do? Are you trying to lower your costs and grow your business? Like that's probably every company in the world wants to do that, right? Controlling your operating expenses is probably one of the biggest things that everybody looks to do on a daily basis, really.

And when you look at your paper processing and billing and check processing, all involve a lot of cost. All involve a lot of time. And in fact, sellers are anticipating that move from paper to electronic billing could save them $2.2 billion in expenses. So that's a lot of expense just to be able to save from a company's perspective, and it really is an important thing that you need to look at, if you are still doing some paper processing, why? And how can you move it to an electronic process instead?

Secondly, look at your online strategy, and do you have one? Do you need to define one? Do you need to dust it off and look at it again and look at maybe additional strategies that you can implement that maybe weren't available to you a year ago or two years ago or even six months ago, for that matter? Technology is changing so quickly that there could be new things that are out there today that could help you improve your business and that are new.

And then lastly, how does automation play a role here? So looking at your manual processes, and what are you doing from a manual perspective? Are you still receiving all of-- and processing all those paper checks? We know that that's five times more expensive than the cost of an ACH, for example. And not to mention that it takes more time to process, right? So it takes more time to get you that check than it does to get you that ACH. And online collection is definitely faster and less expensive to process.

So looking at the answers to those questions, reviewing those answers, and then strategizing around them is really something that everyone should be doing.

So those are some great things to consider from the business needs perspective, and how those should be looked at, and how an action plan can be developed with those in mind. So now let's talk a little bit about how to align your business needs, as you talked about, to those needs of your customers.

So in another recent poll that we conducted on what our current clients are demanding-- or what our clients' customers are demanding, excuse me, most of the responses that we saw were pretty mixed. And so the question, again, because we asked, was what are your customers demanding the most? The options were to see their online bill, to see their bill online, to have more payment options, to pay via text or virtual assistant, a more self-service option to communicate with you, or was it all or none of the above?

And like I said, the results were pretty mixed. We saw a little bit more focus from the poll results on providing more payment options with all of the above being something that we saw as well. So how can we use that, and how should businesses use that to align those needs of their own needs and the customers' needs, Lucy?

Yeah, I mean, you should look at yourselves and evaluate your business from your customers' perspective. So I mean, who are they-- who are your customers and what's important to them? And look at it from their point of view so that you can truly evaluate what you need and how you need to change maybe, what you need to add on. It definitely depends upon what type of business you are and the demographics of your customer.

If you think about a utility company or a waste management company, something to that effect. A utility company runs the gamut with regard to demographics of customer. Could be a 90-year-old resident that owns a home, or it could be an 18-year-old who is renting an apartment and is paying a utility bill. And they both pay very, very differently. You would think so, anyway. That's the assumption.

So how can you provide an online presence for both of those types of customers, yet still meet everybody in between? So you really need to look at where is your current state. It's that old saying that says, you can't see where you're going if you don't know where you've come from. And I think that really rings true here, with what has worked in the past may not always continue to work. It may not still work for you. It may not work again. So you really need to look at that, reviewing your clients, finding out what's important to them, interacting with them, and then see how they respond to that.

Well, what a great point. What's worked for you in the past may not work for you in the future, but also what you think might work for your business needs might not work to meet the needs of your customers, right? Like you're saying, finding out what are the priorities of your customers. Is it the ease of use? Is it they want the bells and whistles? They want the text alerts and things like that. Or is it just an easier view into what they have to do as far as reporting?

Using this data from your customers, you can strategize to help meet your needs as well as theirs. And that will also help you know if what you currently have, as far as a system or online presence, is sufficient or if maybe you need to look at potentially upgrading to meet those needs.

Yeah, I mean, it's easy to say that consumers want online options. But how can your online strategy match up with those needs? They want options. Well, what options do they want? I mean, we know that they are paying bills online. 53% of consumers are doing that, and bill pay, in fact, is the most important mobile banking function that they're performing. The other statistics here, bill pay transactions make up 30% of consumer spending.

And 31% of consumers have paid bills from their mobile phone. 28% received their bill directly on their mobile device. So these are options that weren't around five years ago or more, so how old is that strategy that you have? How old is what you're using? And does it need a refresh? Given the current environment today, looking at your online presence and your-- a review of that is definitely necessary to everyone as we navigate through this time.

And it's much more important now. People are doing a lot more things online. They're finding new things to do online, in fact. And if you haven't done this in the past, then you're definitely likely to be doing it now, from an online perspective. So looking at what you offer is definitely really, really important, especially now.

So we kind of looked at what businesses should be doing. Now what are some businesses doing to keep up with changing environments and the changing demands of their customers?

I think for sure, first and foremost, they're looking at their online capabilities and what can they do? How can they become more efficient when it comes to their interactions with their clients online? If they can't do it face-to-face, they can't do it personally, physically, then that online site is their only window to their customers. So I mean, that's pretty powerful when you think about it. If you have no other way to communicate with your customers, that's your only way.

Are you satisfied with that, with how you are perceived from that perspective? And if you are, well, then you're in that camp that doesn't need to make any changes. But if you're not, even if there's the slightest piece that isn't something that's satisfying to you, even just the different payment types that are out there and the new and emerging payment types, like real-time payments and Zell and Apple Pay and all these buzzwords that we hear, those are the kinds of things that customers are looking for. And you need to be open to that.

Well, and like you mentioned, for some companies, the only interaction that they're able to have is the online presence. But others are seeing that they can broaden that communication form and include things like text alerts, reminders, offering the ability for those customers to pay by text, or even using the digital assistants that are becoming more ubiquitous within all of our homes.

But really leveraging the things that are fairly ubiquitous, within like cell phones and getting those reminders to your client-- customers to help them maybe pay more on time and have a better experience. And all of those things really go toward providing that good customer experience, like you had with your cell phone provider that helped solidify your loyalty, right?

Meeting those customers' needs of the communication piece, but also having something online and mobile that allows them to pay those bills.

Yeah, for sure, and then being able to attract more users. You need to offer the right technology. I think that benefits that customer that's using your online site, in order to attract them there and offer them more options. I mean, we talked about payment options a bit ago. But there are new and alternative-- those new and alternative payment options that people want to use. They want real-time payment.

A lot of workers here in the US today are working paycheck to paycheck. So if it's due tomorrow, and maybe they forgot about it, text alert. Great, now I can pay my bill. But I can't get it there by tomorrow, so some of the more immediate payment types can help them get it there. Using Zell, using real-time payments, those kinds of things can help those customers get that payment to you. And quite honestly, it helps you as well, because you're getting that payment quickly, exactly what's being paid, and you don't have to go looking for it. You don't have to worry about it being late, or is your customer not making their payment on time.

It's really being able to offer that, a bill pay platform that's capable of offering all these services. And some of the ones that have been around a long, long time just are not able to do so. And up until this point, we've been talking a lot and speaking much in generalities about different technology techniques and things like that. But I wanted to bring it back a little bit to be more specific to how we can use these techniques to review your online bill pay platform, because there's a lot of opportunities out there today that if you don't have the means to collect online, then you should be looking at those needs now.

And there really are some obvious benefits into doing that-- accelerating cash flow, increasing payment rates, alerting clients-- your customers to pay you on time, et cetera. If you have one already, it may be time to dust that thing off and take a look at it and maybe spend some time since you reviewed it last. If it ain't broke, don't fix it kind of a mentality isn't working here, because there are so many new things coming out, so many technologies.

The systems today are much more sophisticated, user friendly. They're much easier to use and much more efficient as well. So putting those kinds of things in place can help you improve your cash flow and your payment rate, as well as some of the partners out there that offer the service also offer complimentary consumer marketing. So you don't have to go and have a marketing-- a full-blown marketing department go tell your customers, this is available to you. You can be provided some of this material and easily turn it around and use it for your own good and to getting your customers to use your online services.

And in addition to that, you also have the security of knowing that it's a secure system, that the data is protected. It's PCI compliant, HIPAA compliant. All those things that are very worrisome to consumers today, you are able to offer them without worrying about it.

Well, and there really are so many benefits to like you just mentioned, to the biller, but also to the consumer in the form of different payment options for where, how, and when to make those payments. You have different channels that they can choose from, different payment methods, even different payment frequencies that they can choose with some of these bill pay-- online bill pay services.

And then of course, you've got the self-service websites, which help provide a fast, simple, and secure experience for your customers. They can enroll in the paperless billing option that seems to be so desired now. They can get those email and text billing and payment alerts to help them keep on top of what bills they have to pay, and maybe like in your case, alert them to maybe something that's not correct. There's just so many benefits to not only the biller, but also the consumer in really exploring some of these online bill pay options.

So before we head out today, I'd like to provide a quick plug about some of the resources that we've made available to you. First, we've launched a COVID-19 web page on USBank.com to keep you informed on COVID-19 information, as well as links to help you transition to remote banking, payment fraud prevention tools, market news, and information as it's provided by the Centers for Disease Control and Prevention.

We have also have our financial IQ web page that includes articles, podcasts, and even videos on COVID-19 specific topics, along with other resources to help you manage your business. So we certainly want to encourage you to take advantage of those resources, and also we want to invite you to reach out to your treasury management consultant on how to create a more digital-first approach for your customers.

Certainly those treasury management consultants can help you identify ways to transform your process and create a more seamless experience, so we want to make sure that you reach out to them. And then also we want to invite you to our next month's webinar on redefining your business with technology. And lastly, I want to thank Lucy. Appreciate all of your help on this webinar.

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April, 2020

Evolving bill pay to meet consumer preferences

U.S. Bank leaders share their insights into the evolution of consumer payments

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