EasyAccount for Private Companies

Acronym of the case:

EAPC

Web address of the case:

http://www.nemkonto.dk/

Country of the case:

Denmark

City/region:

National

Posting Date:

8 January 2010

Last Edited Date:

11 January 2010

Author:

Rasmus Jensen (Agency for Governmental Management)

Account | Payment | easy

Type of initiative

Project or service
Strategic initiative

Case Abstract

For a number of years now, the public sector in Denmark has used digitalization to improve the efficiency of the public administration and the services offered. Digitalization today is a renowned way of improving efficiency, reducing administrative tasks and easing the interaction between citizens and public authorities.EasyAccount is a prime example of all the above.
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EasyAccount is a normal bank account to which all payments from public institutions are transferred directly. This means that each individual citizen appoints one of their already exiting bank accounts as the one they want all payments from public institutions to be transferred to - this being their EasyAccount. Since its implementation in 2005, Easy Account has facilitated all public payments to the citizens of Denmark.
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Technically speaking, EasyAccount is a database that matches each individual citizen's Social Security number with the bank account chosen, by each individual, to function as their EasyAccount.
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A typical example of a public payment is for instance the tax-refunds. Before the implementation of Easy Account, the state had to issue over 3 million checks annually to its citizens, who then had to show up in person at their bank in order to cash the check. The banks then had to use extra resources to handle all the checks;Â all this is now digitalized.
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The instant success of EasyAccount quickly spawned suggestions and enquiries from the private sector who wanted access to the EasyAccount database in order to reap the same benefits as the public sector.
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In 2007 the Danish parliament passed a law permitting the use of the EasyAccount database to facilitate payments from private companies via EasyAccount directly to their customers, employees etc.
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Since EasyAccount for Private Companies became operational over a year ago, the private companies have asked to connect to the database, either directly or through their existing private payment intermediary, depending on the size and number of payment transactions from each individual company.
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The Danish public sector has been offering the use of Easy Account for Private at irrelevant costs, charging the companies only what strictly necessary to cover the expense imposed from the system supplier.
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Furthermore, in line with the Danish E-government Strategy, the main goal of EasyAccount for Private Companies is to use digitalization to ensure a better service for all citizens in Denmar; cashing checks is time consuming and with the diffusion of EasyAccount into the private sector has drastically reduced the time waste as the checks have been replaced with digital money transfer, directly to each individual citizen's EasyAccount. Examples of companies that already reap the benefits of EasyAccount are major Danish banks, the largest pension companies and the biggest insurance firms. These are all companies that most Danish citizens are used to receive check from

Description of the case

Domain

eGovernment

Topic

Efficiency & Effectiveness, Benchmarking | Services for Businesses | Services for Citizens

Sector

Internal market | Procurement | Tax | Travel, Transports and Motoring

Start date - End date

May 2008 (Ongoing)

Date operational

May 2008

Target Users

Target Users Description

The target group for EasyAccount for Private Companies is basically self explanatory; private companies across all sectors of Denmark have been granted legal permission to use the EasyAccount database.
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The target groups can roughly be divided into two sections:

Large companies with many regular payments that previously used checks as a payment method. These are typically large companies where the core business value is payment transactions.
Smaller companies that connect to the EasyAccount database via a larger company, most likely a company functioning as a private payment intermediary. These are typically companies where the payment transaction is not the core value, but a significant part of their business.

The distinction between the two ways of connecting to the system depends on the volume of payments each individual company handles.

The Danish Agency for Governmental Management hasÂ marketed the EasyAccount service to the different sectors of the Danish industry in order to promote the benefits for the companies and thereby living up to the task of eliminating the use of the checks, not only in the public sector but also throughout the entire private sphere.

Scope

Local (city or municipality) | National | Regional (sub-national)

Status

Operation

Language(s)

Danish

Policy Context and Legal Framework

Better Digital Service, Efficiency and Collaboration.

These are the three main focus areas for the Danish E-government Strategy for 2010. A primary aim of the E-government Strategy is to raise the level of ambition and set new standards for the development of citizens' services and cohesion across the public sector. The new strategy will entail better and more binding cooperation and emphasizes that implementation of specific digitalization measures will continue to be anchored by the individual public authorities.
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With the new strategy, the Danish Government, Local Government Denmark and Danish Regions will be joining forces for the third time to set common objectives and targets, and to take joint initiatives as a move towards increased and more efficient digitalization of the public sector up to 2010.It is within the confines of this strategy that EasyAccount operates.
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Granting private companies access to the EasyAccount database is in line with the overall e-Government Strategy of increasing the use of efficient digitalized solutions. The service itself is managed by the Danish Agency for Governmental Management, under The Ministry of Finance.

Project Size and Implementation

Type of initiative

IT infrastructures and products

Overall Implementation approach

Partnerships between administration and/or private sector and/or non-profit sector

Technology choice

Proprietary technology | Standards-based technology | Mainly (or only) open standards | Open source software

Funding source

Public funding national | Private sector

Project size

Implementation: €500-999,000

Yearly cost:

€500-999,000

Implementation and Management Approach

Contrary to EasyAccount for Public Institutions, the demand for this solution came directly from the potential users, i.e. the private sector. This of course is an indication of the success of the existing EasyAccount solution and the fact that it derives from a request from the private sector - the users of the system - is obviously a good starting point for a successful solution.
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A large Danish IT-company is facilitating the technical aspects of the solution in close cooperation with the Danish Agency for Governmental Management.Â This company is the same as the one facilitating EasyAccount for Public Institutions; this is advantageous since experiences from the first implementation have been made available and offer a solid background for the new solution. Close cooperation with the IT system supplier is essential and team members of EasyAccount are in daily contact with the supplier.

Technology solution

Early in the scoping process of EasyAccount for Private Companies it became clear that two different technical solutions had to be offered to the private companies, both for financial and technical reasons.

EasyAccount is a database, so the technical aspect deals with how the private companies gain access to the database that connects their customer's social security numbers with their preferred bank account.
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There are basically two ways a company is able to access and use the benefits from EasyAccount:

A company can connect to the EasyAccount database directly. This demands a process of technical integration with the system itself.
A company can be connected to the database using an already connected private payment provider as an intermediary.

Â The main difference between the two ways is financial. The first solution is primarily designed for larger companies who handle large scale check payments and who use resources on updating their customersâ€™ current bank accounts in order ensure designated payments.

Impact, innovation and results

Impact

The overall benefits - and goals - for EasyAccount for Private Companies are in line with the overall Danish E-government Strategy of reducing expensive administrative burdens by an increased use of IT, not just in the public sector, but across all sectors.
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By legally allowing the use of the EasyAccount system to private companies, Denmark has established an incentive for the private companies nationwide to avoid issuing physical checks helping the companies to work more efficiently and decreasing the number of checks issued, thereby also responding to environmental needs.

The main beneficiaries are of course the users of the system, the private companies and the Danish citizens; EasyAccount benefits the private companies of Denmark for two main reasons:

The estimated average cost for a company to handle a single check is roughly â‚¬6 Euros. The cost for a company, connected directly to the EasyAccount database is â‚¬45-50 000 as a one time fee and an annual fee of â‚¬3 500. Each transaction processed through EasyAccount costs the company â‚¬0.05 Euros.

A concrete example of the financial benefits the use of EasyAccount has on a private company can be illustrated by looking at numbers from a large Danish bank: From May 1, till May 31, the bank processed 185 000 payments at a combined cost of â‚¬9 250. Without the use of the EasyAccount payments system, the cost would roughly be a staggering â‚¬1 100 000 in check handling. Taking into account the monthly fee of â‚¬3 350 - the financial impact of EasyAccount is quite evident

Besides the direct savings on the large check expense there is also money and resources to be saved on the account of maintaining customersâ€™ bank accounts, a job automatically managed by the EasyAccount database.

Â EasyAccount benefits the citizens in that it heightens the service level by replacing checks with digital money transfer, directly to each individual citizen's EasyAccount.

Track record of sharing

EasyAccount for Private Companies is a prime example of how a successful public IT project can be modified to accommodate the same needs of the private sector, helping to reduce costs and lighten heavy administrative burdens.
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The Danish website, www.modernisering.dk (modernization) is a portal for public managers, promoters and others who work professionally with the modernization and digitalization of the public sector. It has been used to share information about the original and now also the new EasyAccount solution. Modernisering.dk is a forum based on the idea of knowledge sharing and has over the past years it has become an institution and a main portal for activities involving new digital initiatives.
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EasyAccount for Private Companies serves as a class example of how to gain value from a well founded and successfully implemented IT project. This is of course a valuable knowledge for other public IT initiatives that may face similar challenges.

Lessons learnt

Examples of lessons learned and experiences are:

If a digital idea, solution or concept, created and implemented in the public sector can benefit the overall expansion of digitalization, including the private sector, it should be pursued and if deemed profitable for both the public and the private sector, initiated.
Re-use of a successful system. The technical alternations from the original EasyAccount for the public, to the new EasyAccount for Private Companies are few and the process of scoping EasyAccount to fit the new needs where smooth. Lessons and findings from the original system where cast into light, evaluated and integrated into the concept-description of the new system; this ensured that the benefits of having a similar project running successfully since 2005 where harvested and thereby ensured the team not to stumble on previous obstacles.

With the original implementation of EasyAccount, it was mandatory for all public administrations to use it, and all adult citizens where given an EasyAccount. This is not the case in regards to EasyAccount for Private Companies. This has meant that the time scope for ensuring enough companies would adopt EasyAccount was longer than initially anticipated. The lesson learned here is that when marketing an optional IT system, not all the financial benefits are reaped instantly and therefore demands quite a lot of direct communication to the target group.

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