Consumers increasingly are turning on their computers before opening their checkbooks, according to the 2007 Consumer Bill Payment Survey. Electronic bill payment and presentment (EBPP) surpassed paper check usage across Internet-connected households for the first time, the survey reports, noting that banks hope to spur further growth in EBPP by educating consumers to the service's opportunities and integrating EBPP with other online banking services.
According to the survey -- which was sponsored by Norcross, Ga.-based CheckFree Corp. and conducted by Harris Interactive (Rochester, N.Y.) and The Marketing Workshop (Norcross) -- online bill payments made up 39 percent of the total volume of bill payments among online households, a 4 percent increase compared to December 2005. The average survey respondent paid 11.5 bills a month -- 4.5 bills were paid online, while 34 percent (3.9 bills) were paid by paper check. Further, approximately 74 percent of consumers pay at least one bill each month online. The survey polled 2,018 online respondents in the U.S. who are responsible for household bill payments.
For banks, the trend represents an opportunity to lower processing costs while retaining valuable customers. In addition to eliminating more-expensive paper checks, EBPP creates customer "stickiness." Fifty-eight percent of surveyed consumers said they were likely to switch banks if they could receive and pay bills through a competitor's online banking site. Meanwhile, 39 percent of e-bill users said they were less likely to switch to a competitor's service.
While the popularity of EBPP continues to grow, the industry still struggles with how to educate customers about EBPP benefits and earn their trust, according to Jeff Weikert, SVP and GM, consumer service provider business unit, CheckFree. "The best way to educate the consumer about EBPP is through the bank branch," he asserts.
Still, as broadband penetration increases and younger generations of consumers begin to seek financial services, online bill pay and other Web-based banking services will be a competitive necessity, suggests Richard Winston, senior executive, director of North American payments, Accenture (Dallas). "As younger consumers come of age, the Web bank will be the primary face of their financial institution," he says.
Consumers "are motivated by the convenience and time savings the [EBPP] service provides," adds Len Goodman, SVP,Sovereign Bank (Boston; $136.91 million in assets). But providing secure transactions is key to the success of any EBPP service, he stresses. "Consumers are better educated about safeguarding their identities," Goodman says. "Our assurance policies provide a safety net for consumers who might otherwise be deterred by a not-so-positive public perception of online security."
Further, according to Goodman, it is important to tailor online services to specific consumer segments. "All consumers are different," he observes.
"Listening to and learning from the customers and their actions is the way to create the optimum mix of services," Goodman continues. "Our E-mails and our granular tracking tools enable us to build customer histories and profiles," he says. "As you feed customers with information valuable to them and their lifestyles, you earn their trust, and your service and products grow."