Reference data perils for the ordinary guy paying his bills

Bill paying. A monthly chore. One that is increasingly online and digital, well at least outside the continental USA where the local Luddites are still wedded to their cheques. A story in a Johannesburg paper inspired this week’s thought.

On guard after typo transfer” was the headline in the Jo’burg times. A local resident made an error in typing in some payment details for a bill she had to pay, of some USD 2’200 equivalent to an account with another bank in South Africa. But, the error was a plausible one and as a result money went to a valid account, except that account was somebody else’s entirely. A lot of painful calling around ensued and recovery was not certain. And it was a sizeable amount, making it hard to pay the proper beneficiary and sort out the duplication later. All caused by having to re-key reference data.

Now there are rules about so called “undue enrichment”; you have to give the money back. But, as this case proved, that does not mean things happen quickly or easily. To me this proved that even consumers are vulnerable to problems with what is called reference data.

This has me wondering why to date no great form of Electronic Bill Presentment and Payment (EBPP) has worked. Here in Switzerland, the utilities and medical insurers do love a direct debit. I could fill a few pages on the general incompetence around data and structures round at Swisscom, the Swiss telecom provider. Even setting up the paperwork for direct debit is a hassle. And frankly, I would much prefer to “pay as I go”, approving bills one by one.

So here is my idea, inspired by some work I have been doing with IBM on a Smarter Matching Hub for institutional cash flows. Imagine there was central service, let’s call it the Billing Hub. I register with the hub and get an account number, which is a bit like an institution having an LEI, a Legal Entity Identifier. Behind the scenes, similar to Uber, I add my bank account details. Once: they are there and I maintain them. When I sign up for a service, be it Swisscom, my medical insurer or even a subscription to the local paper. I tell Swisscom my account number with the hub. They submit a bill electronically: “We Swisscom expect CHF 150 from account X on day Z, attaching a bill with the detail”. That gets delivered to me; I approve and the transaction gets sent to my bank. Simples.

Now maybe that might lead to some more timely payment. Maybe I want to delay payment. My payment and agreement performance will be pretty visible to all. No bad thing. Just like Uber, where driver ratings are clear to all. A few variations on the theme might allow me to pay by credit card as an option even. Or have separate bank accounts. All my data though and all mine to maintain. If I have a query, I can simply send back the bill with some comments. I would not have to worry about getting the right person, signing and sending a document. Club, or rather, hub rules would govern service levels.

Lessons to be Learned: Reference data management is either the root of all evil or the fountain of all good. That is an 80:20 game, at best. Using central services would cut out the need for swathes of reference data management and eliminate lots of errors.

This would be as beneficial in the retail space as I am convinced the SMH idea would be in the institutional space.

Or perhaps, we have tried this before and I am missing something. Would love to know if that is true.

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