Costs Often Sideline Bill Payment Transformation in Consumer Finance

The great digital transformation may hit some speed bumps.

Andrew Sajeski, vice president of solution consulting at ACI Worldwide, told PYMNTS that consumer finance company execs are grappling with what it means to bring billing and payment capabilities more fully into the digital realm.

There’s certainly an awareness of what needs to be done. Joint ACI and PYMNTS research found that 94% of executives say digital billing capabilities are essential for growth, and 89% say having digital payment capabilities is important.

But there’s a gap between knowing what should be done and embarking on the journey. A true digital transformation, he said, represents a holistic undertaking.

“It’s not just around payments,” he said, “but around how they engage with their consumers.” Such a wholesale undertaking means a bit of soul-searching in the mix.

“In many cases, the reluctance is around, ‘Is this going to cost me more?’” Sajeski said. Many executives are looking at their internal teams and focusing on whether or not they have employees in place who understand what going fully digital means.

Regardless of these concerns, consumer finance companies will have to retool and modernize their account management, payments and collections activities to stay competitive.

Along the way, the challenges mount. The consumer finance enterprise that wants to offer a debit card as a payments option may have become used to tapping on automatic clearing house (ACH) for years — and now, there will be costs involved with embracing debit. There also remains the specter of cannibalizing at least some business: some of that ACH volume may shift to debit.

That digital shift needs to take consumer preferences into account. After all, as Sajeski noted, not many of us know our routing numbers — but most of us can rattle off our debit and credit card numbers with ease.

“We live with these numbers in our back pockets,” he said, “or in a digital wallet on our phones. If I want to make a payment to my lender, I want to be able to use the options that I want to use.”

Some consumer finance firms have been moving more swiftly than others to rethink and retool their operations. Apps and digital wallets and real-time visibility into transactions can go a long way toward solidifying customer loyalty and satisfaction, he said.

Ideally, he said, “if I make a payment right now, the system should be smart enough to know that I made that payment and reflect it, even if it’s pending.”

Meeting consumer expectations also means that consumer finance firms must close the generational gap, keeping in mind that Millennials and Generation Z consumers may not know first-hand how checkbooks work. Digital reminders and bill presentments can incentivize them to act and make timely payments to ensure late fees and arrears don’t snowball.

A positive ripple effect takes shape with digitization, Sajeski said, as consumer contact with call centers is reduced, and companies spend less time and manpower handling complaints.

Yet even accounting for all of the positives, 70% of executives state that they lack the technology to innovate digitally. To that end, partnerships with providers such as ACI are critical, he said, to set realistic goals (such as reducing the reliance on paper checks) and achieve them.

“It’s tough to go outside of your core business,” said Sajeski, “and many of these companies do not have the excess capital needed to handle the digital transformation all on their own.”