There may yet be room for growth in online banking—at least when it comes to bill payments. According to the latest research from Forrester Research, the total number of U.S. online bill payment households will increase from 48 million to 63 million.
In the report US Electronic Bill Payment And Presentment Forecast, 2009 To 2014: Preparing For The Rise Of The Biller-Direct Generation, Forrester analysts outline the growth trends in EBPP over the next five years and concludes there is definitely more that can be done here.
However, even though they found that bill aggregators like banks and services like Yodlee have an edge, they also caution that the real battle will be by the banks to win over the younger generation, who tend to pay their bills directly at merchant websites.
Forrester predicts slow but steady growth in EBPP over the next five years, saying the market is not yet saturated here. Such factors contributing to the increase include the younger, more tech-savvy generation who rarely write checks, the growing realization by consumers of EBPP's speed and convenience, and the earth-friendly angle and cost savings around paper generated by EBPP. Furthermore, those households that already pay some bills online are very likely to pay even more bills electronically.
Although the biller direct model maintains its lead from early adoption by consumers, many are coming to realize the convenience of the aggregator model, notes the report. Once e-bill pay fees were eliminated by banks, this helped set the stage for what Forrester thinks will be a surge in uptake by consumers using banks as bill aggregators. The firm predicts biller consolidators will exceed biller direct sites for the first time in number of bills paid by 2012.
The trick for banks, however, will be convincing younger consumers to pay their bills with them. Young affluent consumers are slightly less likely than average to pay bills via bank sites versus other consumers (35 percent compared to 46 percent).
To remedy this situation, Forrester makes the following recommendations to financial institutions:
- Make the service more useful and attractive by adding more payment options, such as expedited payments.
- Deploy online and mobile bill payment alerts.
- Emphasize the "free" in free bill payments.
- Layer adoption drivers in ongoing marketing.
- Move beyond an acquisition-first mindset.