Keywords: Susie West, sharedserviceslink.com, electronic invoicing, e-invoicing, Sibos conference, SWIFT

Do banks really want a big slice of the e-invoicing pie?

Susie West | Article | 7 October 2011

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You’re desperate to do e-invoicing. Paper’s drowning your accounts payable department and “Enough is enough!” you scream. You jump on the internet to start doing your research into service providers who can lend a hand. Up come the obvious contenders in your search findings – Ariba, OB10, Tradeshift, Basware. And then you have a blinding thought: “what about my bank? They deal with all the payments. Surely they must have an e-invoicing solution?”

So was my thinking as I opened up a debate at the Sibos conference in Toronto last month. For those of you outside-the-know, Sibos is a huge conference run by SWIFT catering to the needs of 7000 delegates from the banking sector. I was presenting to banks on their role in the emerging market of electronic invoicing.

It was 09.50 on Tuesday 20th September. The room in the convention centre housed 250 delegates. The lights went down and the microphones went on, and all I was thinking was – will this session confirm my thoughts that banks are too late to the e-invoicing party?

We were off. On the panel were experts from Fundtech, Bank of America Merrill Lynch, Bottomline Technologies and State Treasury of Finland. As the facilitator of the debate it was my job to interview the panel and throw the odd poll question out to the audience. 

The first challenge to overcome as facilitator was to define what e-invoicing was. You can imagine five learned people in the field of e-invoicing looking to actually agree on a single definition. Difficult! Did it include workflow? Did it include business rules? Was it from the accounts receivable perspective as well as the accounts payable perspective? We decided on the following:

‘An electronic invoice is where the invoice data file is feed via a legally compliant process from a supplier’s computer to a buyer’s computer, and received in such a way that no manual touchpoint is required. 

For e-invoicing to be attractive commercially it needs to contain the right information, so the existence of business rules is preferred to aid straight through processing. 

We are not prescriptive regarding the direction of the invoice and it therefore covers accounts payable and accounts receivable though e-invoicing is largely spoken of from the accounts payable perspective.’

With this all clear and communicated, I first wanted to get a read of the room. Who were we talking to? Who were these 250 faces staring back at us? A quick poll told us we had about 175 bankers in the room and 75 corporates. Okay corporates – stay with me. How many of you, I asked, are live with e-invoicing for more than 40% of your invoices? About 20% of their hands went up.

And now back to the bankers. “How many of you are actively promoting e-invoicing to your client base?” You may be in agreement that the key word here is ‘actively’. Surprisingly 70% of bankers in the room said they were.

Therein followed a small gear change in my opinion. Coming to this session I sensed that banks were not really promoting e-invoicing to clients. Perhaps, just perhaps I was being a little unfair. Let’s go on.

Questions to the panel followed. Chris Bozek from Bank of America Merrill Lynch is an advocate for e-invoicing and the seminal role banks have to play in this landscape. Energetic, vocal and eloquent, he flew the flag of ‘banks-being-a-major-player’ with passion and gusto. He and Eric Campbell, CTO of Bottomline Technologies, sat in perfect synchronicity with many of their opinions and responses. Ifor Williams, SVP Fundtech and Keijo Kettunen from the Finnish State of Treasury gave a European perspective on this debate and Ifor, being the co-founder of Accountis, had lived through the tight partnership of his e-invoicing service provider baby and a bank. Accountis (acquired by Fundtech) have a very tight partnership with Royal Bank of Scotland. 

Seventeen questions and sixty minutes later came the crystallised findings, some of which I have captured below:

The size of the opportunity

It’s still huge. In Europe less than 10% of invoices are electronic. The big opportunity though for banks is the SME market. The relationship already exists with them and SMEs might not have the business case to sign up to a stock e-invoicing provider.  Could banks be the guardians of electronic invoices for the SME market?

Collaboration

Interoperability is a topic that overshadows the e-invoicing space – in a dark way for some players and in an inspired way for others. Will banks have to buddy-up with other banks to make e-invoicing happen? The answer seemed to be ‘yes’. And do banks have the knowledge and skill set to do this without the help of e-invoicing service providers? The answer was ‘on the whole, no’.  The message from this session was to look out for tight collaboration between banks and service providers or actual acquisition of service providers in the next five years.

What can banks bring that service providers can’t?

It’s in the business case. Banks perceive the invoice as a means to an end. What they want is a number of things, firstly the supply chain financing opportunity. This would mean they could pay a supplier early and take a piece of the early payment discount. Some e-invoicing providers offer this, but have to liaise with a bank to liquidate this relationship. Banks are the liquid. So could therefore offer this in a different (more effective?) capacity.

Secondly banks are already cognisant of companies’ bank account movements. With visibility of invoices leaving or arriving adding a layer of information to their already established data set could allow them to strengthen their position as a more informed line of credit.

What is the role of SWIFT?

SWIFT is an established network lending itself to be the platform of choice that carries the invoices from sender to receiver. Incidentally the week of Sibos celebrated the e-invoicing pilot go-live of Bottomline Technologies interoperating with Tieto via the SWIFT network. It was agreed that the role of SWIFT is potentially significant. My observation is that service providers are so keen to take the market, that they are almost creating the market like warriors charging across the land eager to plant stakes and carve out their territory. Most of these service providers are flexible, decisive, sales driven organisations that are out to win deals. Does SWIFT have the ‘grit’ required to keep the pace up and compete for market share against these ‘deal brokering’ machines that win business and then ensure robust delivery? If they do, this could be a very exciting development for banks.

The clock ticked to 10.49 and as I wrapped up the session I harked back to my initial thought: are banks too late to this party. When I asked the room this same question, 85% of the audience said they didn’t think the banks were too late. All the evidence in the room suggested this to be the case. I do believe that banks want a big piece of the e-invoicing pie. However although I can see that the desire is there, they now need to back up this desire with resource. They need to find and arm the troops and get out there to ensure they own, or at least will own, a sizeable part of this market. 

The clock hand moved to 10.50 and our discussion was over. Our own party coming to a close. To be resumed again and again as this market becomes even more effervescent.