Banks and billers face a muddled environment of electronic and paper-based processes. The latest technology merges mixed payments and streamlines conventional transactions.

Mainstreaming Payment Automation

According to the T. Houston Technology Group, Alvin, TX, half of all banks in the United States now have in-house check imaging systems. Yet far fewer water companies, tax collection agencies, cable television companies and other smaller concerns have this technology.

"Community banks have got to start learning to sell the services they have mastered so well," says Houston, principle of the eponymous bank consulting, marketing and training firm.

Banks are taking advantage of these opportunities, says Patrick Koster, marketing director of WankWare, a remittance systems and services firm in Birmingham, AL.

"Many community banks are beginning to reach out to [help local companies] process their payments," Koster says.  "Over the next 18 months, you will see the big  [billers and banks] trying to work out all the issues [involved in EBPP]; at the same time, local community banks will be putting remittance solutions into place."

While image-enabled remittance systems are more affordable for smaller banks, some institutions are making a bigger leap into the EBPP world, according to Houston.

"The key to pulling this off at a smaller bank is to pool resources with other like-minded institutions," Houston says. "The cost for implementing EBPP ranges from $350,000 to $750,000 - too expensive for most community banks. Because of the enormous start-up costs, most banks will turn to service bureaus for these services. Another alternative is creating a co-op of similar size banks to share expenses. It costs about $3 million to implement [EBPP] for 100 banks, but the cost per bank drops to about $30,000. In this range, most community banks can afford the technology."

JOSEPH DEVLIN (Joe@Armadillosoft.com) is a consultant based in Half Moon Bay, CA.