Stop and Smell The Market

In a way that central planning could never do, the market, that is, the persistent demand by clients, customers, and investors for us to do things better, faster, and more profitably continues to create product and service innovations that in many cases were not just unimaginable but were actually unimagined.

Some market-induced innovations – MP3 players and cell phones, for example – have gotten tremendous media attention because of the way they’ve swept consumer imaginations and buoyed the stock prices of the companies that have introduced or improved them. That’s hardly surprising: a small, lightweight device that allows you to carry the music library that used to take up a whole wall in your home and play what you want to hear in the order you want to hear it while you run five miles is worthy of more than a little awe.

But these days some of the most important innovations are happening where reporters don’t often look: in business processes that keep companies functioning with the higher productivity and profits that allow consumer product innovations like the MP3 player to be developed.

My company, RemitPro, is an extraordinary example of the way the market works in these hidden but critical ways.

When the planes were grounded on September 11, 2001, it became instantly clear that there was a significant need to change the way checks were processed in the United States. The existing system that required checks to be physically transferred didn’t work if the transportation system needed to move them was shut down. We responded to that need by creating a check imaging system that converts paper checks into electronic transactions and, therefore, takes away one of the ways terrorists can threaten our way of life. Today, not that long after we realized what the market wanted, eRemitPro is used by some of the largest and best known companies in the U.S.

You don’t, of course, see corporate financial professionals walking through the streets listening to eRemitPro, using it while they’re on a treadmill in a health club, or featured in sexy commercials on television. But that doesn’t mean it and other similar business process innovations are not just as pervasive in their own way.

And, just like what happened with MP3 players after they were first released, we and our customers discovered important additional uses for RemitPro that met other unsatisfied market demands. In addition to countering one important aspect of terrorism, eRemitPro daily provides companies with faster settlement, improved funds availability, accelerated notice of insufficient funds, and reduced banking and transaction fees. This is the eRemitPro equivalent of getting podcasts, movies, and television shows on an MP3 that you originally bought just to play music.

A second example is our RiskAlert product. It was created to deal with a problem that barely existed a decade ago and wasn’t even conceivable when most of us were born: identity theft. According to the Federal Trade Commission, the convenience and speed of on-line commerce and credit cards not only has fueled their growth, it has also exponentially increased identity theft-related business costs to about $50 billion a year. To put this in perspective, this is the equivalent of an 18 percent increase in federal corporate income taxes.

The market had some systems to choose from before RiskAlert was created, but they were slow and cumbersome and barely able to keep up with those intent on criminal activities. Our market-driven solution to this problem moved beyond the simple “pass/fail” judgment of what existed at the time and provided companies with the ability to drill down into a detailed record of the person being evaluated.

Here too the market has both adapted and adopted this innovation to meet new and additional needs. While preventing identity theft is still why it was created, RiskAlert is now also being used to provide detailed information on licenses, college degrees, and criminal records.

The challenge, of course, is never to assume that the innovative and responsive products and services we are offering today will continue to be wanted or needed by the market tomorrow. As our experience with eRemitPro and RiskAlert has amply demonstrated, the market is constantly changing, extremely demanding, and fickle. Just because it is using your product or service today doesn’t mean that it will have the slightest compunction about changing to something else if it better suits its new needs.

For me, this means that I can never allow either of these two products to rest on their laurels. They may be absolutely right for today’s market, but that can, and will, change.

Check processing and clearing will have to continue to get faster as businesses and financial institutions demand and need to get access to the funds more quickly. Check usage, which has been declining recently, could eventually disappear completely, be replaced with something else, or could reverse course and get more popular.

Identity theft could get more sophisticated and increase, or it could be eliminated entirely by an even more sophisticated RiskAlert-like system.

Impossible? Unlikely? Unimaginable? If you doubt that any of these could happen, ask yourself this: When was the last time you played a 45 RPM record, proudly displayed your collection of eight-track tapes, or played a cassette in your car?

www.remitpro.com