Bob’s Ramble: A Time of Change in the Financial Service Industry

Published 4/6/23

We have been hearing a lot about the major, disruptive changes happening within the financial service industry. Some banks are struggling to transition from low interest to higher interest rates, due to thin spreads on loans they kept on their own balance sheet (instead of selling the loans to someone like Fannie Mae), the risk of holding long-term low yield investments (ex. Bonds or T bills), and the media creating nervousness which can cause a “run” on a bank. A run on a bank can cause a bank to need to liquidate long-term holdings, which would remain “whole” if they went to maturity but must be sold at a steep discount if sold early (because those investments are paying much higher yields now). Of course, the FDIC insurance cap of $250K is nowhere near adequate for many corporations and individuals – hence the recent crisis.

While the banking industry has been in some tumultuous situations of late, not all changes within financial services are concerning. The payments space, for instance, has been experiencing a time of digital transformation which is positively impacting billing organizations across many sectors. We have seen a major shift away from cash registers and paper checks to online credit/debit, ACH (Automated Clearing House), Venmo, Zelle, and PayPal in wide use for bill payment nowadays. Similarly, billing and remittance has shifted from paper bills, checks, and postage being dominant 20 years ago to the rapidly rising adoption of paperless billing and automatic payment (AutoPay) enrollment.

For billing organizations, this growing desire for digital billing and payment options should be embraced, no matter the industry. (Let us be honest, since we are all consumers ourselves: once you have made a one-click purchase on Amazon, that is your new standard for digital experiences.)

The more customers who use an organization’s digital, self-service options — like paying their bills online, signing up for paperless billing, or enrolling in AutoPay – the less time staff needs to spend on each of these items. This means there is more time and energy invested in higher-value projects, a reduction in costs associated with manual or outsourced processes, increased customer satisfaction, fewer overdue payments, and improved collection rates.

The InvoiceCloud team likes to talk about “billing nirvana,” the ideal end state for billing organizations who work with us, where billers eventually hope to achieve 100% paperless enrollment and 100% online payment adoption within their customer base. Although it may take years for this entirely digital state to become the norm (we have one customer who is already there – please ask us how), we are continuously asking ourselves: how can we help all our customers achieve their version of “billing nirvana”?

Happy Spring – hope you all are enjoying yourselves!