December 20, 2001

Banks will likely continue to back electronic bill presentment and payment (EBPP) technology despite slow consumer adoption rates, said Anne M. Brown, senior vice president of Internet payment strategy at First Union National Bank, now part of Wachovia, during a session at the BAI Retail Delivery Show, which was recently held in Anaheim, Calif.

Although Wachovia's EBPP service shows great promise in terms of competitive positioning, it hasn't been a simple proposition from a short-term profitability standpoint. "We have all learned the hard way that EBPP is a fairly expensive product to offer to our customers," said Brown. "It's a hard business case to make."

But other new ventures in banking have also faced uphill battles for consumer adoption, notably the ATM. "We had to sell it to them," said Brown. "It probably took eight years."

Even now, with ATMs on every corner, there are still people who find some value in using a human teller, and it's not divided cleanly on generational lines. There are just some people who would rather wait in line every other Friday to deposit a paycheck, instead of using direct deposit. "We can't figure out why they want the pain of standing in that bank line, but they do," said Brown.

Given the persistence of consumer behavior, Wachovia has relatively modest goals, at least compared to those who envision the end of the paper check. Right now, 2.4 million customers are enrolled at firstunion.com, comprising 15% of the potential online universe. "Penetration should be in the 30%-50% range to make us feel good about what we're offering," said Brown.

But enrollment of customers is only the first step. "Enrolling them is the easy part," said Brown. "Getting them to use it is the hard part."

The difficulty lies in getting people to enter their merchant data and payment data. "We haven't figured out the key to making it easy."

Still, 1.9 million customers are users of the electronic bill payment services, making the project a success from an adoption standpoint. However, from a revenue standpoint it's a slightly different story. "We aren't making any money on this product," said Brown. "We're looking at this as a relationship situation." Simply put, online customers tend to have more accounts, access their accounts more frequently, and provide an easier target for marketing and cross-sell opportunities.

"Our active EBP customers pay an average of nine bills per month," said Brown. "We see everything that goes into their account, and then provide them with appropriate products or counseling that makes sense at that time."

While it's hard to put an exact dollar value on that, the value of bill pay is "gigantic," said Brown.

One unanticipated problem has been that some customers have expected online payments to immediately post to the accounts of their billers, much in the way that an ATM withdrawal automatically debits the customer's deposit account. "We trained them to think that," said Brown. "We didn't tell them otherwise and they kind of got burned in the process."

Wachovia uses EBPP software from Metavante, based in Milwaukee, Wis., and is a member of the Spectrum bill payment and presentment switch.

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