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Electronic Billing

Unleashing the p
g power of the online banking p
g platform

Barbara Roels – Fortis | 23 November 2007 | 1

Fortis Retail Banking - Pan-European Footprint
Net profit Fortis 2006: € 4.4 billion
Net profit Retail Banking: € 1.1 billion

Belgium Turkey

4 million active 737,000 customers
customers 226 branches
1.098
1 098 branches/343
agents Poland
Netherlands

1.6 million customers 280,000 customers
158 branches
1 8b h 220 sales points/
branches
Luxembourg Consumer Finance
Active in 7 countries
278,000
278 000 customers
t
4 million credit cards
37 branches
Postal banking
IRL: 1,384 post
offices
BE: 1,000 post offices
Operating in markets with GDP that is half of the Euro-area GDP
4 out of the 7 countries will experience GDP growth rates
significantly above the Euro-area average
f
Access to about 220 million potential customers


Strong multi-channel approach with more than 1,800
branches/shops and a presence in more than 350 cities …
Branch PC Banking / Fortis Website

> 1,700 branches
>1.3 mio internet banking
+
Newest branch concept users
in Belgium

Phone-banking /
Self
Client Service

Highly performing CTI
Largest self network
and Application
in Belgium, at par
platforms, as basis to
with ING
boost sales development
(
(2900 ATM))

Off-Premise
Shops
Innovative concept in
Leader in Belgium with
Germany
50% market share
(86 end September)


Electronic Billing
El t i Billi
Agenda

User centricity drives product innovation:
#1
the end-user’s perspective

Designing a two-sided platform:
#2
adding the sender s perspective
sender’s


Di it l di id at F ti R t il market l
Digital divide t Fortis: Retail k t lags one generation
ti
behind. Age and Wealth Pyramid inverse absolutes
Uptake in segments Absolute number of users

# users
Thousands
70%
120

60%
100
50%
80
40%

60
30%

20% 40

10%
20
0%
0
10-17 18-24 25-34 35-49 50-64 10-17
65-74 18-24
75+ 25-34 35-49 50 64
50-64 65-74
65 74 75+
Bottom Lower-middle Upper-middle Top

Top Upper-middle Lower-middle Bottom

T i l PC b ki use i f
Typical banking is frequent b t narrow
t but

Frequency Functional breadth

# sessions/ % act e
active
week users
2,5

80,00%

2
70,00%

60,00%
1,5
50,00%
50 00%

40,00%
1
30,00%

20,00%
0,5
10,00%

0,00%
0 00%
0 Daily Save & Save & Lending Protecting
2003 2004 2005 2006 2007 banking Invest Invest trx


M i di
Main driver of online b ki use i th b i money t
f li banking is the basic transfer and account
f d t
information. In these areas, a shift from paper to electronic has already taken
place.

PC banking usage
Transfers

# trx
million Millions

120
60
PC banking
g

100
50

80
40

Self 60
30

40
20
Paper
20
Branches
10
0
Phone banking
2003 2004 2005 2006 Q2 2007 2008
0
2007
2002 2003 2004 2005 2006
#s s
es ions # transfers

O
Once you use it, you love it
it l

User love it

1

2

3
Customer
4 0,5%
5 0,8%
6 0,4%
0 4%
7 5,0%
Satisfaction
8 27,2%
9 32,4%
10 33,7%
Score ≥ 8 : 93%

Source: Fortis Market Survey February 2006

It
Internet Banking is the preferred channel f receiving e-
t B ki i th f dh l for ii
invoices

Prefered channel to
– Mature market
receive e-invoices
– Second most used Internet
application
Internet
– ‘Comfort zone’ for our customers Banking;
91%
– The preferred channel
– Known and trusted environment

Biller;
6%
Other;
3%

Source: Insites Consulting – June 2006


N t l i l step: extending account i f
Next logical t t di t information and money
ti d
transfer


ti d
transfer


Wh customers will adopt
Why t ill d t

–E
Ease-of-use
f
– No need to subscribe or enroll
– One-click functions for payments and direct debts
– Import data in accounting software

– Convenience
– One single environment for payment and invoice
– 24/7 access to invoice details


Wh customers adopt
Why t dt

–C t l
Control
– Customer still decides if, how and when
– Reduced risks caused by late payment, instant clarity

– Trust
– Guarantees concerning availability, security and confidentiality
availability
– eInvoice has the support of their bank


Electronic Billing
El t i Billi
Agenda

User centricity drives product innovation:
#1
the end-user’s perspective

Designing a two-sided platform:
#2
adding the sender s perspective
sender’s


F
Favourable conditions f l
bl diti for launching an e-billing platform
hi billi l tf

Strong b
broadband penetration
db d Strong e-banking penetration
b ki Low di
direct debit penetration
d bi
S i S i L i

Denmark 32
Sweden 53 Spain 41

Sweden 26
Netherlands 44 39
Germany**

Belgium 23
Belgium* 30 28
Netherlands**

U.K. 22 U.K. 27 Italy** 22

France 20 France 25 U.K. 20

Germany 15 Spain 10
15
France**

Italy
Spain 15 10
11
Belgium

Barbara Roels – Fortis | 23 November 2007 | 18 Source: forrester, insites, pyramid, banca d’italia, press clippings, mckinsey analysis

P
Prerequisite f a successful e-billing solution: a common e-
i it for f l billi l ti
billing platform that taps the entire internet banking community

Large Enterprises
Large Enterprises

Info & Instructions Intern
et
bankin
g

Small &
Medium
Enterprise
s
Small & It
Intern
et
Medium
bankin
Enterprise
g
s
– 3.000.000 internet banking customers Small and
Home
Office
8.000 suppliers send domiciliation over Intern
et
Isabel bankin
g
1,2 billion invoices/year
, y
Individua
l
customers
(B2C)

B i payment and i
Bring t d invoice t
i together
th
Average on paper = 51 days

Zoomit
=
invoice + payment

Shorter cycle


C
Current payment and billi process fl
t t d billing flow of payments
f t
Outbound - Sender

Draw up Follow-up Solve Manage Financial
Reconcile
Prepare Send Archive
invoice unpaid issues disputes impact

Mail Payment
(post)
( t)
Inbound - Receiver

Process Make Manage
Handling Scan Archive
Validate
(k i )
(key-in) payment
t di
disputes
t

– Relies heavily upon human interaction
– Many risks for errors
– Slow, time-consuming and unsure process
– Effort does not always justify the gain (little or no value)
– Could trouble the relationship between sender and receiver
p


I
Improving the fi
i th financial cost chain
il t hi
Outbound - Sender

Draw up Follow-up Solve Manage Financial
Reconcile
Prepare Archive
Send
invoice unpaid issues disputes impact

Electronic
Payment
Inbound - Receiver

Process Make Manage
Handling Scan Archive
Validate
(key-in)
(k i ) payment
t di
disputes
t

– Increase operational efficiency
– Faster d i
F t and improved cash collection
d h ll ti
– Reduce costs
– Better treasury


A
Average i
invoicing cost S
ii t Supplier € 8
li

Total potential savings € 2.40
p g
€8 €2

€6 € 2.4

€4 € 0.8
€ 0.8
€2 € 0.5
€ 1.2

0 € 0.3

Source : Arthur D. Litlle


A
Average i
invoicing C t
i i Customer € 13 8
13.8
Total potential savings € 3.90
€ 15
5
€ 1.8

€ 12 € 1.5

€ 2.8
€9
€ 5.4
€6

€3
€ 1.4
0 € 0.9

Source : Arthur D. Litlle


Z
Zoomit increases financial efficiency of S d
it i fi i l ffi i f Senders

–Z
Zoomitit
– Delivery of digital documents
– Integrated with payment
– In the customer’s financial environment

– Result
– Optimized quality of payments and cash collection
– Accelerated and more efficient financial flow
– Straight-through processing of financial data (in and out)
– Reduced direct and indirect costs


Fi
Financial and operational efficiency
il d ti l ffi i

– F t and improved cash collection
Faster d i d h ll ti
– Automate payments by a single-click button
– Less customer errors
– Increased volume of Direct Debts (Domiciliation)
– Better treasury

– Increase operational efficiency
– Fast and reliable
– Automated and simplified reconciliation
p
– Decrease in issues and disputes

– Reduce costs
– Printer, paper, envelope, stamp, handling
– Improved operational processes


Th SEPA challenge… Th ti
The h ll The time i right
is i ht

–F
From national payment to Single Euro Payments Area
ti l t t Si l E P tA
– Implementation from 2008 to 2010

– Impacts financial administration of all corporations
– Belgian account number will be replaced by IBAN and BIC
– Transfer form will change
– Direct Debits (DD)
– Customer has 6 weeks to reject debit
– Mandates will be administered by the supplier

Payment is the essence of Zoomit
Zoomit facilitates and secures correct money transfer

“Due to capacity restrictions in paper-based and early electronic payment
systems, the data content attached to payments was considerable restricted.
Invoice data was transported separately between supplier and customer.

Today,
Today storage and communication capacity costs have reached such low
levels, that the invoice can be easily attached to the payment information and
thereby completely new benefits can be achieved.”
Harry Leinonen, December 9 2005 in “SEPA incentives
SEPA incentives”
by European Commission, Internal Markets and Affairs DG.


K success f t
Key factors

– Receivers and senders
– Already handling their financial transactions through Isabel
– Same channel will also deliver the business documents

– Receivers
– Internet Banking is their preferred channel for convenience and trust
–I t
Internet Banking contains fi
t B ki t i financial t
i l transaction and b i
ti d business reference
f

– Key differentiators
– No need for the receiver to enroll. It’s a service from their bank.
– Huge delivery channel for payers and billers. Over 3.000.000 accounts.

Convenience for the receivers and senders
Volume for senders

Mi b
Main benefits
fit

– Ti
Time and cost saving
d t i
– Free service for receiver
– Better treasury management for the sender

– Simple and efficient solution
– Trustful environment which meets privacy reliability and security
privacy,
– Minimised impact on Internet Banking and senders’ systems
– Improved efficiency of the sender’s processes

– Broad reach

– Increased customer service and cross-selling


Zoomit

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