Steve Baseby’s - Deputy Treasurer, Severn Trent Plc, owner of Severn Trent Water(STW), UK - presentation at the Association of Corporate Treasurers Cash Management Conference last month provided a fascinating insight into the problems and opportunities in collecting and making payments in a highly regulated utility. STW looks after water mains as well as sewage, and bills 4.2 million customers (average household bill £335). Payment technology is important to STW because customer service quality is a Regulatory KPI, ease or difficulty of payment methods can impact on bad debt levels and cost/accuracy of payment processing reduces end-to-end transaction costs.
Current STW payments and collections
Currently STW and the group’s other UK companies process 22 million revenue collection transactions per annum and make 300k payments per annum: 70k cheque payments for customer refunds and to low volume, irregular suppliers; the remainder as ACH (BACS) payments (60K to staff, and remainder to 1,500 established suppliers). They also use purchase cards for low value supplier payments.
Use of current technology
A key driving force for STW has been (and always will be) the need to make sure that the correct customer reference comes with the money. For electronic payments, using internet banking ‘drop down’ menus helps, but only if the customer uses them and then picks the correct name, and new payment systems such as Faster Payments have the same problem. New technologies have to fix this. Steve’s comments and conclusions on the current solutions and their experience are important:
- direct debits: achieving a 60%+ penetration of domestic customers may be the maximum they can achieve (meets peer standards) as some customers will never accept direct debits
- the use of Quick Response codes on their web-site and on their bill to enable consumers to catch reference numbers has started;.
- refund payments: cheques are no use for mailing a refund to a customer who has moved outside STW’s licence area, but some customers will not pay any other way.
A fact of life for STW is that customers want, and the UK Regulators would expect, STW to keep a wide range of payment and collection options open. They have also found that:
- some customers are wary of being required to hand over their bank information to set up direct debits but they’ll give us a cheque, and give use their debit card data
- many want the human touch:
- at bank counters and at our offices;
- they ring our call centres to read out their debit card to a person
- they like going to the Paypoint agencies (collection points) which help as bank branches retreat, and they have the added advantage you can’t buy a sliced loaf at a bank
- younger-to-middle aged segment are taking up smart phone payments, but, perhaps at the expense of Internet banking payments
- contactless payments - there are some security concerns: people take comfort from the process of inserting a card and typing a PIN.
The driving force for STW in collecting payments and making refunds to utility customers is improving the customer experience and achieving customer buy-in to processes which are mutually more efficient. This requires asking: do our objectives and the banks’ match the customers’? which technologies will the customer switch to, e.g. is the smart phone more of a toy rather than a tool?
Another important question was: By “customer service” do we risk talking ourselves into meaning that we want the customer to adapt to save us money? The process must suit the customer as well as the service providers: bank or utility.
In his closing remarks, Steve reviewed the possibility of the next new payment technology - biometric initiated payments, e.g. by fingerprint or iris recognition, for people who will not use the swipe card. The problem is that this is further technology for the retailer and another registration process for the customer. Companies have to keep in mind that the reality is that customer satisfaction means different things to different customers, e.g. your gran may prefer a human voice or a counter. Finally, he reminded us all that in payments and collections it is not just about sending money, but also the information about the money.
CTMfile take: The important questions and disciplines described here are applicable to all types of organisations world-wide.