I’ve been working with Debbie Wilson on what the role of banks should be with EIPP. As banks and payment processors increasingly look to make payments more strategic through value-added services, EIPP is becoming an attractive option. Banks and processors are looking at EIPP as an opportunity to drive new revenue streams and customer intimacy with corporate customers. But is EIPP a good idea for banks?
Banks are not well-positioned to provide the EIPP services that corporate customers need, particularly process integration, ongoing community management, and enhanced visibility of corporate cash and liquidity positions. Instead, corporate customers are looking to supplier portals from ERP vendors, procurement networks and specialized IaaS providers for these services.
We believe two things need to happen for EIPP to be attractive to corporate banking clients:
- EIPP should be linked to the order-to-cash and purchase-to-pay cycles. For example, EIPP should be integrated with short-term supply chain financing to enable better management of capital and liquidity. Banks must therefore enable integration-as-a-service (IaaS) and process-based application support along with other important capabilities, such as supplier onboarding services and supplier community management.
- Banks should partner with established EIPP vendors. Established EIPP vendors already have IaaS, process-based application support, supplier onboarding and supplier community management. Banks will need these capabilities in order to link to order-to-cash and purchase-to-pay cycles.
To the extent that banks do these two things, corporate customers will view EIPP as a service that’s worth paying for.
4 responses so far ↓
1 Juha Häkämies // Mar 17, 2009 at 8:21 am
Interesting article. So far we haven’t yet seen any of the banks approaching us with a co-operation proposal.
Until now banks have simply been missing all processes to support the above painted alternatives. To make this step now is simply much too big step for banks. I feel the banks have lately had enough of challenges in their core business, making them less willing to explore these new options with their corporate offering.
So – still waiting for my first bank co-operation request in this field !
2 Kristin Moyer // Mar 17, 2009 at 9:18 am
Thanks for reading, and thanks for the comment Juha. A recent SWIFT study shows 97% of banks have plans to offer EIPP (”SWIFT E-invoicing Consultation,” October 2008), though the sample size was small (n=29). Despite this high level of interest on the part of banks, one thing that we’re definitely seeing in these market conditions are slower decision cycles.
I agree that some banks have enough other challenges that embarking on EIPP at this point and time probably doesn’t make sense. However, payments is becoming very strategic to many banks, particularly in Europe with the SEPA. Banks need to modernize their payment systems, and, among other strategic initiatives, I think more and more they will start looking at EIPP as a source of new revenue.
3 Heidi Pollack // Sep 1, 2009 at 4:57 pm
It makes logical sense that EIP providers should have strategic partnerships or for that matter be acquired by banks. However having some experience with banks has shown my company that banks have the relationships to drive EIPP revenue but the sales force of a bank lacks experience in delivering the value proposition to the client solely due to the fact that they are bankers and not process consultants.
4 Kristin Moyer // Sep 1, 2009 at 6:15 pm
Thanks for the comment, Heidi – and great point. A few banks have recently partnered with EIPP firms, perhaps partly due to this point you raise. A joint sales team (leveraging the EIPP firm) may be part of the attraction.
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