Consumers in the U.S. will receive more bills through the online channel in five years than they will through traditional channels, and the average number of monthly household bills paid online will more than double, according to a recent report by JupiterResearch. The increase in online bill presentment and billpay offers banks an opportunity to build stronger relationships with customers, says Bruce Cundiff, lead analyst on the report.
Darien, Conn.-based JupiterResearch forecasts that 6.4 billion U.S. bills - 50 percent of all U.S. bills - will be presented online by 2009. The growth is due to the convenience offered by the online channel, explains Cundiff. "The two drivers of consumers moving to online are convenience and time savings," he says. In addition to the convenience, customers who pay bills online also benefit from a reduced lag time between payment and account crediting, the report states.
The growth in online billpay is an opportunity for banks to improve customer retention, notes Cundiff. "The online channel drives retention," he says. Once banks get customers to utilize the online channel for billpay, those customers are less likely to change banks, he contends. "Consumers are more reluctant to switch banks based on the relationship they have established," Cundiff explains.
In addition to the lower processing costs, Cundiff points out, increased online billpay provides banks with a means to cross-sell to consumers who already utilize the Web. Banks should continue to enhance online bill payment products, he says, because consumers who regularly visit a bank's Web site to pay bills are more likely to use the channel to search for and browse other financial services products.
Despite the projected growth in online bill presentment and billpay, however, many customers remain reluctant to use the Web for other transactions, such as account transfers. According to Cundiff, 31 percent of consumers who pay bills online do not bank online because of security concerns.
But banks are reviewing technologies to increase online security and migrate online bill view and billpay users to more online banking services, Cundiff notes. "Banks want to allay fears to allow for continuous use of the online channel," he says.