A perspective from James Stanley, Collections Campaign Strategy Manager, Anglian Water
The Request to Pay framework that launched on 29 May this year, provides a great opportunity for billers, Fintechs and banks to work together to develop innovative solutions to reduce customer effort and drive loyalty.
But what do we mean by customer effort and how can Request to Pay help with this challenge? In the Harvard Business Review article Stop Trying to Delight Your Customers, one of the critical findings was that delighting customers doesn’t build loyalty; reducing their effort—the work they must do to get their problem solved—does. In simple terms, organisations that make it easy for customers are more likely to retain that customer in the longer term. So how can Request to Pay help? Here are a couple of examples of how the new framework can not only reduce customer effort, but in some cases, the effort on the part of the biller and the banks to resolve issues.
I recently dealt with a customer complaint regarding an unallocated payment; the customer had made the payment using a traditional funds transfer, quoting the correct reference number on initiation, however by the time the payment had worked its way through the system to our account and finally to the billing system the reference was nowhere to be seen. Not a fault of the customer, the remitting bank, nor the biller, but a problem with the current systems for transmitting the funds and how the biller’s bank presents the transaction data.
However, this is not seen by the customer who then expended considerable effort contacting both biller and their bank on multiple occasions to try and resolve the problem at considerable cost to both biller and bank before the frustrated customer finally had their issue resolved.
A further recent example where a customer who paid a bill quoted a reference which was incorrect, so the payment remained unallocated when it arrived at the billers account. The payment remained unallocated for a period of time resulting in an overdue balance being reported to a credit reference agency thus affecting the customer’s ability to obtain credit when they potentially needed it most. This was resolved with the biller but only after considerable effort for the customer.
The classic annual bill payment reference continues to be used by customers resulting in unallocated payments, as seen recently where it resulted in a customer being chased for payment, so they paid it again in full but this time used an alternative channel (ecommerce) where the reference is controlled by the merchant, more effort for the customer to make an additional payment. This duplicate payment has only recently been identified by the biller, being months later, but there is no doubt that there will be an unhappy customer because of the amount of time the biller has taken to resolve the issue and generate a refund, as the customer was blissfully unaware they had paid twice.
These are a few examples where a payment made over the payment agnostic Request to Pay framework with the certainly of accurate referencing information would have saved significant effort and dissatisfaction for the customer and saved time and money for both biller and bank. Perhaps the customer’s sort code and account could be used as a proxy for the PID by doing so, making it easy for the biller to reach out to these customers to get the correct information?
If I think of one my own interactions with billers, I recently switched my energy providers to get a better deal. Looking back at the journey; I needed to find the new supplier, download a new app on my phone, make the switch at which point my previous supplier asked me for a meter read but had stopped me using their app, so I had to call.
The whole transaction left me thinking is was a little bit more difficult than it should have been and I am left with an app that I will probably not bother interacting with on more than a handful of occasions. How much easier could it be using simple messaging, bill presentation and payment request over the Request to Pay framework using a trusted app that I use regularly? There may even be a revenue stream in there for an app provider, with the learnings from customer behaviour and message content.
It is often questioned if Request to Pay is a replacement for Direct Debit; this is far from the case, in fact Request to Pay and Direct Debit can complement each other and work together to enhance the payer experience and help billers.
The uncertain financial situation consumers found themselves in at the beginning of lockdown led to a significant number of our customers cancelling Direct Debit arrangements as they worked out their finances and sought support and assistance. Only very recently has the number of active Direct Debit arrangements returned to pre-Covid levels.
But the cancelling of the Direct Debit at the bank by the customer is only half the story, there is still a bill to be paid so the biller needs to engage with the consumer to offer support and arrange payment.
However it is not quite that easy from a customer perspective, as contact centre hours were reduced as billers struggled with staff working from home, high call volumes and having to manage the impact of the pandemic.
An updated bill sent to the customer using the Request to Pay framework, would have enabled the biller to reach out to the customer to offer support, arrange payment and understand customer circumstances all at a time that was convenient for the customer, through a trusted app and in a way the biller could easily manage. The pandemic has left a number of consumers in a situation they may have never experienced before and were uncertain of what to do, digital messaging through a trusted app is a great way to open up conversations between billers and consumers.
The forthcoming development of the Interactive Active Notice (IAN) using the Request to Pay framework for example enables the payer to respond to the setup of the Direct Debit with an effortless step using their preferred app. For the biller this response, can provide certainty of payment, helping to reduce the number of indemnity claims.
The Request to Pay framework is much more than a request to pay, the framework will create significant opportunities to create a more convenient, easy and flexible way for consumers to make payments which in turn will drive loyalty and customer retention.
More importantly it will provide a trusted and effortless open communication channel between payer and biller which will become increasingly relevant in the forthcoming months with the ongoing uncertain financial situation for many who will need the support from billers and other organisations.