Doxo Provides the Missing Login at Small Billers

image I dropped by doxo’s Pioneer Square (Seattle) digs this morning to get an update on their latest news, payment capabilities added to its mobile app. That’s potentially game changing for smaller billers who still struggle with online payments, let alone the nuances of mobile delivery. We’ll get back to that later.

But what opened my eyes this morning was the website of one of doxo’s smaller clients, the Lake Stevens Sewer District, which serves 10,000 customers in a community a half-hour north of Seattle.

The utility, like 54% of the billers in doxo’s database, had no online account info available prior to adopting doxo Connnect. Now, customers visiting the utility’s homepage are directed to login in to doxo to view AND pay their bill online (via ACH), for free. Previously (note 1), customers could use an online form to pay via credit card. But this required filling out the form every month and paying an extra 3% to 7% convenience fee.

Not all customers are going to like the requirement of creating an account at a third party. But considering the alternatives, mailing a check or filling out a form and paying a $5 fee (note 2), it’s pretty compelling. And as more people get used to logging in at various sites with their Facebook or Twitter credentials, the doxo Connect option for bills makes perfect sense. You could even say it fits the bill (sorry).

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Lake Stevens Sewer District offers doxo Connect login on its homepage (link, 4 June 2012)

doxo payment at Lake Stevens Sewer District

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Notes:
1. The credit card option is still offered, see "Pay Here" link in the middle of the homepage (under the photo of the lake).
2. Of course, a number of the utility’s customers will continue to pay their bill via bank billpay systems, generally free of charge. But that’s not really a choice for customers visiting www.lkstevensewer.com looking to make a payment and/or review their account info. 
3. For more info, see our report on paperless billing and banking (Nov. 2010, subscription).

Payments Innovation: doxo Adds "Autopay with Limits" to Ebilling

image Digital ebill storage and payment startup doxo announced an important new feature to its service today, the ability to automatically pay ebills that fall within preset maximum values. For example, as long as my family’s wireless bill is under $250, doxo will automatically pay it and send me a confirmation message. If it’s more, I get an alert advising me to take a look at my bill before it’s paid.

That feature would have saved me more than $1,000 two years ago when I gave an old mobile phone to a new employee without thinking to upgrade the calling plan. I ended up paying $400 to $500 monthly bills for several cycles before I noticed it on my credit card statement. I was using estatements (which I never look at) and had no idea the charges had mushroomed from the $40/mo I’d been paying. 

image Doxo also announced the addition of AT&T to the service, perhaps the biggest biller in the country, with nearly 100 million accounts. That should provide momentum that hopefully leads to more major billers supporting the platform. The only other national biller currently participating is Sprint.

Bottom line: Payment limits should help convince more consumers to enjoy the convenience of autopay, while still maintaining the control/peace of mind they are accustomed to when paying manually.

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Notes:
1. Doxo added payments in February this year (see post) and demo’d at FinovateSpring 2011 (watch video here).
2. Hearst-backed Manilla is another ebilling & filing contender, with an interesting partnership with Citibank that could jump-start its service.    
3. See our recent Online Banking Reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel, for more info.

Launching: Hearst’s Manilla Wants to be Your Online Hub for Bills, Statements, Rewards and Subscriptions

image Manilla, a new account aggregation service from Hearst Corporation, launched today at Demo. Here’s the official announcement and its demo video is embedded below.

Manilla currently aggregates accounts in four categories (more are on the way):

  • Household for keeping track of bills
  • Finance for keeping track of bank accounts and credit cards
  • Subscriptions for keeping track of magazine subscriptions
  • Travel for tracking mileage programs

In the first screenshot below, I’ve added an account in the finance category (American Express, which is shown as pending) and one in the travel section (American Airlines, which displayed the account balance immediately). I have yet to add a household bill or a magazine subscription.

In the second screenshot, you can see what it will look like after the account has been populated with many accounts (this is an example directly from the Manilla website).

The service will not show third-party advertising. Like Doxo, it will display marketing messages only from participating billers. And also like Doxo, billers will pay the freight, sending the company a small fee for each electronic bill it sends through Manilla (more on its business model here).

Analysis
As I’ve mentioned in several posts about Doxo, there is a huge need for a secure, easy-to-use hub to help households organize their bills and statements. While Doxo is currently focused on delivering bills only from participating billers, Manilla allows users to aggregate bills and statements from virtually anyone supported by its Yodlee-powered aggregation engine.

So, if you are willing to sit down and enter usernames and passwords, the service can begin delivering value immediately. Consumers have been reluctant to do that unless they trust the company. But with Hearst Corp. backing it and with the credibility of two major billing partners, Comcast and Citibank, Manilla may be able to get over the trust hurdle.   

1. Initial Manilla homepage prompts new users to add accounts in four categories (28 Feb. 2011)

Hearst's Manilla aggregates accounts in four categories (28 Feb 2011)

2. Manilla homepage after the user has set up accounts
Note: The icons are for bills, statements, notices and offers

Manilla homepage

3. Reminders area

Manilla reminder

Demo video (link)

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Note:
For more info, see our recent reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel.

Ebilling Update: Doxo Adds Payment Capabilities

image Striata and AcceptEmail delivered two of my favorite demos this week at FinovateEurope. Both are working on ways to help move consumers away from antiquated and wasteful (but easy to use) paper billing and into the 21st century with interactive PDF versions delivered via email (also see ActivePath’s FinovateFall 2010 demo video).

Unlike certain personal finance products which have more intangible benefits, ebilling stands to drive tens of $ billions of wasted expense out of the system while at the same time making consumers’ lives simpler. That’s worth paying attention to.

And I like the Striata/AcceptEmail/Activepath approach. Migrate consumers to an interactive email bill which is far superior to its paper ancestor and is aggregated within a familiar interface, the email client (see note 1). This is the most likely method of gaining mass adoption.

Ebilling hubs
But email inboxes are notoriously messy and over-crowded making it easy to overlook emailed bills (note 2). So I really like the idea of an ebilling hub, a place where all my bills are stored so I can review the history, communicate with billers, and make sure everything was paid on time (note 3).

That’s why I’ve been following the developments at Doxo; Volly from Pitney Bowes; and Zumbox, which all have very different ideas on how to pull this off. But one thing they’ll all need is payment capabilities. It’s not enough to just view a stack of ebills, you have to be able to complete the task with payment. 

So it was good to see Doxo add payments to its ebilling hub this week. The Seattle startup, which moved into public beta late last year (see previous post), now allows users to pay any bill received into the hub (currently only Sprint and KCPL).

Users press the Pay button displayed by the bill in the “to do” section (see first screenshot). A popup screen is used to schedule the payment.

Bottom line: There’s plenty of opportunity here for multiple approaches. Email bills are a pretty safe bet, while the ebill hub is a longer shot. But ultimately, we believe there’s a place for both models. 

Doxo’s ebilling hub now includes a Pay button (3 Feb. 2011)

Doxo's ebilling hub now includes a Pay button

Popup payment-scheduling screen

Doxo's Popup payment scheduling screen

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Notes:
1. See our recent reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel.
2. Also at FinovateEurope, Yodlee demoed a clever solution to help organize bills. It’s new app will automatically search your hard drive to find downloaded bills and statements and automatically upload them into the Yodlee PFM where they can be aggregated and stored in the cloud.
3. You can do this with individual billers by logging into their sites, but that is a time-consuming chore best avoided.

New Online Banking Report Published: Paperless Finance, Banking & Billing

imageWhen I first began writing about online banking in 1995, there were many unknowns. But by the late 1990s, most people were pretty sure of three things:

  • Online would trump the ATM, call center, and branch for routine information queries and simple transactions.
  • Alerts would keep users informed of account activity and status.
  • Bills would be paid online and delivered the same way.

Most of this vision has come to pass. The only holdout is bill/statement delivery, which has remained stubbornly paper-based, despite a decade of trying to coerce consumers to do without the paper security blanket.

imagePaper bills and statements are an enormous waste of resources, costing $40 billion or more annually in paper and postage. Plus, there’s all the time customers spend storing, sorting, and rummaging through paper statements. And there’s the tens of thousands of calls to customer service that could have been avoided with better organization.

But consumers will continue to cling to the paper until there are:

A.) Clearly better alternatives
and/or
B.) Tangible incentives to turn off the paper

Both of these themes are addressed in the latest Online Banking Report (link). Financial institutions, situated at the intersection of the bill and the payment, are in a great position to drive paper out of the system. But so far, it’s not happening as fast as it should.

Doxo, which launched an ebilling hub last month, could be the catalyst for change, at least on the billing side. It’s encouraging to see two billing innovators, Sprint and Kansas City Power & Light teaming with the startup, even before the service gets out of private beta (see previous posts).

So what can you do to take part in the inevitable movement away from paper? Read our latest report for 34 ways to convince customers to part ways with paper.

About the report:
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Paperless Banking & Billing (link)
Cloud computing combined with mobile capture mark
the beginning of the end of paper statements

Author: Jim Bruene, editor & founder

Published: 26 Nov. 2010

Length: 40 pages

Cost: No extra charge for OBR subscribers, $495 for others here

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Ebilling Startup Doxo Launches First Client: Sprint

image A few weeks ago, I wrote about Doxo, a newly launched startup, building what Microsoft, Checkfree, and others were unable to achieve a decade ago: an ebilling hub that consumers actually used. A number of the comments, and private emails I received, were skeptical given that history.

But today the startup put itself on the map with the launch of its first biller, Sprint, with nearly 50 million customers (press release). Interestingly, Sprint has been relatively successful in converting customers to paperless billing with 23% adoption (note 1). But that still means the company generates around a half-billion bills annually.

Because Doxo charges Sprint a fraction of what it saves when its customers turn off the paper statement (a requirement to use the system), the telecom giant has little risk in partnering with Doxo.

Co-branded landing page for Sprint customers (link; 9 Nov. 2010)

 image

Note:
1. Many billers have found it difficult to drive paperless adoption beyond the 20% to 30% mark.

Launching: Will Ebilling Startup Doxo Become a Household Word?

image The Internet has already yielded some great solutions for a number of modern-day consumer problems.

  • Finding info: Google
  • Purchasing and organizing music: Apple iTunes + iPod
  • Keeping track of your friends: Facebook
  • Booking travel: Expedia and others
  • Getting rid of stuff: eBay and Craigslist
  • Paying for it: PayPal
  • Tracking your money: Online banking

But despite all these advances, does anyone feel like they are more organized today than they were 10 or 15 years ago? Most of us still deal with stacks of paper bills, receipts, statements, privacy notices, along with emails, alerts, and the occasional voice message from our service providers. And if we forget to pay someone, the financial consequences can be huge. So, it’s no wonder we decide to keep the paper statements coming to help us remember to pay each bill. 

The company that solves the paper-based “organizational mess” could be the next big thing online. While it’s way too early to project a winner, a Seattle-based startup launching this week has as good a chance of taming the paper beast as anyone I’ve ever seen. The company is Doxo, which I wrote about briefly this summer (see note 1 for invites). The company’s DNA is Qpass, an early billing and payments company sold to Amdocs in 2006 for $275 mil. Co-founders Steve Shivers, Mark Goris and Roger Parks all worked at Qpass.

Here’s Doxo’s service in a nutshell, using the Facebook metaphor:  

  • Create a secure place online where bills can be stored; let’s call it Facebills.com
  • Allow authorized biller “friends” to communicate directly to their customers via Facebills.com, this includes sending the bill itself, plus customer service and marketing communications
  • Once the biller and end-user are friends, turn off the pesky paper statements and store everything forever, for free, on the platform

The business model:

  • Consumers pay nothing
  • No advertising (other than marketing message from biller “friends”)
  • Billers pay for the entire platform since it costs them a fraction of what they pay today sending paper bills and processing payments

Why would billers pay for it?

  • It’s a fraction of the cost of paper + postage
  • Adoption of estatements has stalled at 10% to 15% of consumers even for billers who’ve worked relentlessly to get rid of paper; and the easy way to get adoption, charging for paper statements, gets both consumers and politicians all worked up
  • The Doxo platform provides a direct, secure communications path to end users, including marketing messages
  • No advertising from competitors makes Doxo more desirable than other third-party systems where billing info might end up residing (e.g., Google/Gmail, Mint, etc.)
  • The network effect; managing multiple bills in one place is the carrot to get consumers to give up the paper

What’s missing?

  • Billers are not yet on the system in this private-beta release (note 1). Users can set up pages for each biller and populate it with their account info and uploaded statements. This is a temporary limitation; I’ve been assured that some big-name billers are on the way.
  • It’s currently a read-only system, meaning there’s no way to pay the bill. Eventually, it makes much more sense to allow customers not only to receive the bill, but also to pay it from within Doxo.

Why it could be huge: This is a classic “network” play. The more billers on the system, the more the consumer benefits and vice versa. Whoever gets this system to scale first will enjoy an enormous “eBay” network effect which will be difficult to dislodge. CheckFree/Fiserv and others have been down this road but have not achieved critical mass, leaving the door open for an aggressive startup to fill the void.

I like what I see at Doxo. And not just its slick UI. I’ve interviewed company execs several times and they have this thing nailed, at least in theory. The user-experience is great, assuming the startup brings in the billers. And the biller’s business case is a no-brainer, if Doxo scores the end-users. We’ll know it has a good shot when a half-dozen big-name billers come on board.   

Why it could lose: Consumers are absolutely not looking for another place to manage their bills. And very few care enough about it to do a lot of work populating a website with account info. Finally, until the portal develops a recognized brand, users won’t trust it. It’s critical that a few big billers endorse Doxo to get it jump-started. Even then, end-users may simply not be willing to spend the few minutes it takes to get set up on Doxo. 

Bottom line: I love it and want all my bills to go here now. So here’s to being able to “doxo” statements to me sometime very soon.    

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Electronic biller page at Doxo for fictional Goliath Bank (21 Oct 2010)
Note: The “To Do” tab is where account statements are delivered

Electronic biller page at Doxo for fictional Goliath Bank

Doxo inbox for receiving statements and other communications

Doxo in-box for receiving statements and other communications

Doxo storage area for filed statements
Note: Users can upload their own electronic documents to supplement (or in lieu of) those received through the Doxo platform

Doxo storage area for filed statements

Note:
1. The company has tweeted that it will hand out invites to its followers on Twitter.com/doxo. Update: Doxo sent us some invite codes, use “netbanker” as your access code. 

Launching: Doxo Looks to Dramatically Improve the Ebilling Experience

image Two significant Seattle-based financial startups are gearing up for launch, something I haven’t been able to say since the bubble days. We looked at location-based transaction monitoring company Finsphere last week. Today, we take a peek at Doxo, which is looking to disrupt the ebilling market and bring transactional paper mail into the 21st century.

I met with CEO Steve Shivers and Marketing VP Kevin Frisch last week in their new Pioneer Square office, a nifty location recently vacated by Microsoft. While public details are limited, I’ve had two briefings with the firm and can say that if it works, it could be one of the biggest financial plays in many, many years. Like Finsphere, Doxo is backed by Mohr Davidow Ventures and Bezos Expeditions.

Of course, the ebilling space is littered with failures including many well-funded ventures that pretty much all ended up being acquired by CheckFree (now Fiserv): MSFDC/TransPoint (Microsoft, First Data, and Citibank), Spectrum (Wells Fargo, First Union, and Chase) and Integrion (IBM and 17 banks) to name just a few. And the ebilling service at Fiserv isn’t exactly blowing the doors off, delivering 320 million bills each year (2009), just a sliver of the 40 to 50 billion sent annually in the United States.

All I can say about the startup is that they are creating an online hub where billers can send bills and communicate with customers in a much better way than through snail mail. It’s put together in a way that could really speed estatement adoption. And it’s funded by the billers, who save money immediately by eliminating paper statements to participants.

As demonstrated by the history of failed ebilling ventures, there are huge obstacles to overcome. But the time may be right for ebilling to finally take off. Billers are frustrated with low levels of estatement adoption, consumers are fed up with redundant email and paper communications, and no one wants to waste natural resources (and money) if there’s a viable alternative.

No one has yet figured out how to solve it. Doxo may have the answer. Stay tuned.

Key Bank Runs Timely "Pick Your President" Promotion

imageOverall, most major financial institutions do a good job with website design. But one thing usually lacking is timely tie-ins with events and holidays. Google is famous for doctoring its logo dozens of times each year to coincide with the national holidays and other big events. For example, for today’s big presidential election, the logo has been changed into a voting booth.

Those efforts, while not always directly driving new business, keep the website fresh and show that the bank is paying attention to the events that impact users day to day. And the best ones can increase sales. By leveraging well-hyped events such as the Olympics or Super Bowl, financial institutions can gain valuable PR and attention from customers.

image I looked at 3 or 4 dozen large U.S. bank and credit union sites today and found just one riding the election hysteria to make a point. Key Bank’s Pick Your President promotion (here) has nothing to do with McCain vs. Obama but is actually a clever way to convince customers to switch to electronic statements. Customers get $1 (George Washington) for every account switched to estatements and $5 (Abe Lincoln) if they take bill pay with that. The bank is also throwing in a pair of $1,000 sweeps prizes to add a few Benjamins to the mix.

Nice job, Key; our vote is with you.

Key Bank homepage with small banner for the Pick Your President promo
(4 Nov 2008)

image

Key Bank Pick Your President landing page (4 Nov 2008)

image

CheckFree/SunTrust Link Ebill Usage to Profitability

Graphic from SunTrust ebill pageimageIt comes as no surprise to anyone that online banking and bill pay customers are more profitable than non-adopters. This correlation, driven by the favorable demographics and lower attrition of online adopters, has clearly been established since the early days of the Web.

What's far more difficult to prove is causation. Does online banking/bill pay actually lead to more profits? The main hypothesis: by locking customers into an electronic service, they are not only less likely to move their accounts, they will also consolidate deposits and other financial activity at the provider of the online services. We'll get back to that.

It's not surprise that ebill users are more profitable
But first, here's some new correlation data from SunTrust that can help you benchmark your own performance or serve as a proxy for your business case. The study was released in late 2007 and was underwritten by ebill provider, CheckFree. The research company, Aspen Analytics, published a short white paper on the project here. And Forrester's Cathy Graeber published a research note three weeks ago here.  The two companies presented their findings in a webinar this week (replay here).

One interesting aspect of this study is that ebill customers were segmented into casual users that viewed one or two ebills per month and heavy users that looked at 3 or more ebills each month. The heavy users owned 5% more SunTrust products and were 20% more profitable to the bank (see chart 1 below).

image
Source: Aspen Analytics/CheckFree, Nov. 2007
Projections based on 13 months of SunTrust data captured between Feb. 2006 and Feb. 2007

Even more dramatic was the correlation between online product usage and attrition, defined as the closure of the primary SunTrust checking account. Offline customers were six times more likely to close their accounts in the six-month observation period
than heavy ebill users (see note 1). image Source: Aspen Analytics/CheckFree, Nov. 2007

The bottom line: 5-year NPV for heavy ebill users was 36% higher than those that used bill-pay only and nearly double the online-banking-only population (no use of bill pay
or ebilling). 

image 
Source: Aspen Analytics/CheckFree, Nov. 2007

But does ebill use CAUSE profits to increase?
The correlation data above illustrates the importance of taking good care of bill pay/ebill customers. However, to justify incremental investment, you need to know the expected payback, i.e., how much more revenue/profits can you expect by moving customers into ebilling.

This study made a concerted effort to determine if the use of free ebilling services can leads to more profits. The researchers normalized the population across hundreds of product, tenure and demographic variables drawn from SunTrust's own CRM files and from appended Equifax info. But absent full before-and-after interviews with the subjects, it's still just a model it hard to fully test. There could be important factors outside the SunTrust/Experian datasets that account for lower attrition. For example, perhaps the well-heeled online banking customers who closed their primary SunTrust checking account in late 2006 stayed away from ebills because they had a sense they would be moving in the near future, so why bother setting up ebills.

But with these caveats in place, it does appear this study demonstrates that moving customers into the heavy ebill category causes them to be more loyal, at least in the short term. Cathy Graeber, the Forrester VP participating in the webinar, certainly thinks so.

The following chart shows that about half the decline in customer churn (36 points) has nothing to do with ebill usage but should be attributed to the favorable customer profile of ebill users. However, the remainder of the decline (32 points), is attributable to being heavily involved in ebills (viewing 3 or more per month). Put another way, ebilling decreases the expected attrition of this type of customer household by almost 50%. 

 

image 
Source: Aspen Analytics, The E-Bill Effect:  The Impact on Customer Attrition from Banks that Offer E-Bill, Nov. 2007
Note: Ebill customers in this example are heavy users looking at 3 or more ebills per month.


Bottom line
If those results hold true for other banks' customer bases, it could justify significant investment in ebilling activation programs. For example, if you value an active checking account at $200 per year and it costs $100 to convert them to ebilling, and you achieve a 33% reduction in attrition, the net gain is $230 per new ebill account over five years. Convert 10,000 users and the NPV would be more than $1.5 million (see note 2).

Even if you discount the results due to research bias (it was after all underwritten by the leading ebill provider) or you take issue with the methodology, it does appear that the companies have proven a material reduction in attrition by frequent ebill usage.

And to give it the final "co
mmon sense" test. It does seem logical that someone who's taken the trouble to set up online banking, online bill pay, and register three or more bills for delivery, would tend to be less likely to ditch their checking account for that sexy deal across town.  

Notes:

Definition of customer segments:

  • Overall = Entire SunTrust customer base
  • Offline = SunTrust customers that do not use its online banking or bill pay/ebills
  • Online = SunTrust customers who use online banking but NOT bill pay/ebills
  • Bill pay only = SunTrust customers who use its online bill pay system, but NOT ebills
  • E-bill = SunTrust customers who use its ebill service and view 1 or 2 bills per month on average
  • 3+ E-bills = SunTrust customers who use its ebill service and view 3 or more bills per month

1. Attrition was defined as anyone who closed their primary SunTrust checking account between Sep 2006 and Feb 2007 and did not open a new one during that period. It's a pretty short window, so that's one limitation of the findings that you should be aware of. Over a two or three year period, their could be much different results.

2. $200 saved x 5 years x 33% attributed to the ebill program = $330 gain less the $100 cost to convert to ebilling = $230. Across 10,000 customers the total net gain would be $2.3 million. Discounted at 12%, the NPV is more than $1.5 million.