Contrary to popular opinion, digital mail isn’t dead. But it has been in hibernation for the past few years as innovation in the space remained stagnant. Call me a contrarian, a dreamer, or a hopeless optimist, but I would argue that its next surge is not only inevitable but also right around the corner. While everyone benefits from digital mail including consumers, businesses, and payment processors, the current model poses challenges. That is, until now.

Consumers and Life Simplification

For consumers, digital mail equals life simplification. If something is better, faster, and easier, consumers aecomail1re in.
Consider Amazon’s simplification of shopping, LinkedIn’s simplification of networking, iTunes’ simplification of music purchasing, and Netflix’ simplification of movie viewing. This phenomenon also drives adoption in banking innovation – from online bill payment to photo check deposits. If digital mail isn’t well adopted by consumers, it’s because it’s not simplifying their life enough – yet.

So how could digital mail simplify life enough to attract consumer buy-in? The greatest hurdle is demonstrably improving the existing process, i.e. the physical mailbox. Today, consumers walk to their mailbox to retrieve all of their mail. This is why the biller-direct model hasn’t taken off even with billions of web pages and emails pleading: “go paperless”.  Nobody wants to hunt for their mail; all of their mail should instead find them in a single, consolidated, convenient, and trusted destination. Manilla and Zumbox had good intentions and got the consolidation piece right, but they both lacked market trust and critical content mass. They also disintermediated banks, albeit unintentionally, which I’ll examine later.

Once those last essentials are solved and physical mail receipt is easier than walking to the mailbox, everything else falls into place. Further, with digital mail more mobile, automated, and organized than the physical stuff, we could manage our lives while commuting to or from work, in those wasted few minutes waiting, or just about anywhere.

Businesses and Revenue Growth

From a business perspective, the value in digital mail is basic economics. How much could one business save with a shift from paper to digital mail? In variable costs alone for postage, paper, printing, and transportation, we could conservatively estimate a savings of 65 cents per envelope or $7.80 per year per customer for a business that sends monthly mailings. This savings only increases when fixed costs are added to the equation.

Companies know this. Just look at the abundance of requests urging consumers to “go paperless” and you’ll see just how badly they want their customers to adopt digital mail. Businesses know digital is a huge potential cost savings and that every dollar they save on postage or payroll is another dollar in profit.

But the delivery model matters. While consumers don’t like the biller-direct model businesses currently offer, they do appreciate the value in digital mail. So how can businesses get consumers to adopt the digital format?

Payment Processors and Market Share

For payment processors, digital mail expands market share and reduces cost. But legacy payment processors haven’t historically been involved in the digital mail discussion. This is because every innovative “Digital Mailbox” solution aims to be the consumer’s destination, and a natural extension of this includes consumer payments from their mailbox. Consequently digital mail innovators attempting to disrupt the USPS inadvertently disrupt payment processors as well.

So who are the legacy payment processors, and do they matter? “Payment processor” is a synonym for “bank”, and they matter significantly. In fact, in addition to their role as payment processor, the largest banks are also some of the largest first-class mailers responsible for credit, checking, mortgage, auto, and student loan statements. The content of their mail is of utmost importance to consumers. Therefore, without their participation, it’s challenging for any digital mail solution to achieve critical mass.

Still, given the right solution, banks should be strongly motivated to participate. This is because their online bill payment service is chiefly driven by paper statements that arrive in the mail. These statements drive a sizable component of online banking, a service that makes the website “sticky” and increases website traffic. But online banking is an expensive cost center for banks. While the service is given away for free, banks absorb average payment processing fees of approximately $0.30-0.40 per payment driven by the high percentage of payments cut and mailed as physical checks. 

The ideal digital mail model offers the potential to become the Holy Grail for banks. A solution that allows them to be the consumer’s mailbox destination would also help them maintain or even build market share, loyalty, and time-on-site. When all payments can be made electronically through a digital mail model, payment processing cost also drops. And the largest bank mailers could reap the greatest savings once their own customers “go paperless”.


The Win-Win-Win Digital Post Office Model

There is a model that meets, and even vastly exceeds, expectations of all three stakeholders. It’s called the Digital Post Office model.

The Digital Post Office model has a singular focus on improving the efficiency of moving mail from mailer to recipient. The Digital Post Office model eliminates the need for the USPS by eradicating the paper medium and the need for the legacy infrastructure built for moving that paper from sender to recipient. The Digital Post Office’s sole focus is to disrupt the USPS, an expensive holdover in today’s digital world.

The name “Digital Post Office” also differentiates this model from previous “Digital Mailbox” models, which idealistically focused on consumer requirements without addressing the unintended consequences of disintermediating payment processors and the impact that might have on implementing a successful execution strategy.   

In our next blog post, we’ll delve further into the four primary models including biller-direct, consolidator, secure email, and the Digital Post Office.

Jay Maller
Jay Maller
Jay Maller is the founder and CEO of Eco-mail. He has 30+ years of management experience leading the design, development and implementation of financial products: prime brokerage, hedge fund, portfolio accounting, and fixed-income derivatives trading solutions. As Managing Director at Morgan Stanley, he led the development of the business’ industry-leading client facing applications, proprietary multi-currency portfolio accounting system, and complete re-engineering of all client management workflow systems.

Eco-Mail is a secure, scalable, Digital Post Office system that transforms incoming physical mail into powerful digital assets – at their point of entry to your business. We enable clients to streamline their operations, increase response times, improve their controls and compliance – and, by the way, save a huge amount of money. We’re already helping one of America’s three largest banks. We love to talk about digital mail, so email me direct if you like at [email protected]