Bill pay no longer just a Gen-X commodity

As electronic bill pay (EBP) moves into the consumer mainstream, it’s imperative to focus on the evolving demands of the bill pay marketplace to remain competitive.

 

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Sixty percent of credit unions currently offer online banking, and 40% offer online bill payment to their members – up from 27% just a couple of years ago. The trend in providing EBP offerings is rising in our community. But is it rising quickly enough to keep up with consumer demand?

Latest statistics
Over the next five years, as members of Generation Y mature, online bill payment adoption will see a 219% increase, according to Forrester. Simply put, if a financial institution doesn’t offer EBP, it gains nothing of that 219% increase. Younger generations are demanding the convenience and speed of EBP, and they’re able to get it. Older generations, although at a less significant rate of adoption, also are becoming more and more keen on the convenience, speed, and security features of EBP.

Online bill payers continue to be a financial institution’s most profitable members. Studies by both Gartner, Inc. and Forrester Research found that members who pay bills online typically:

  • Have loan balances up to 40% higher
  • Buy up to 10% more financial products
  • Maintain checking balances up to 45% higher than traditional members
  • Have 80% lower attrition rates
  • Place 30% fewer calls to call centers

Digital Insight® Corporation’s study of almost 500,000 credit union members aimed to determine the value of online bill payers to financial institutions. The study found that online bill payers retained combined balances that were up to 257% higher, and were 78% more likely to remain with that financial institution than were traditional members. That’s significant value in increased member balances and member satisfaction – a win/win situation for both credit unions and their members!

How is bill payment evolving?
What are consumers seeking in their EBP service? Here is a list of just a few online bill pay features in demand:

  • A system that can fix mistakes and prevent exceptions
  • The ability to schedule a payment at the last minute
  • Due-date debiting to avoid late penalties
  • Electronic bill presentment (bills delivered electronically vs. through the mail)
  • Consolidated bill presentment
  • Account aggregation
  • “Me-to-me transfers” (inter-financial institution transfers)
  • Person-to-person electronic transfers

Additionally, when choosing an EBP vendor, make sure you retain control of your member data. Some vendors contract in the “owning” of member data. This not only gives them the freedom to cross-sell to your members but also to sell information to third-party list services – which won’t win you any brownie points with your members.

While there is a marginally higher service cost for online bill pay users, many institutions have found these costs are more than offset by increases in account retention rates and the number of products used. The message from the marketplace is clear: online bill payment will continue to grow, and we need to ensure we’re aligned with our members to meet their demands, obtain additional members and improve profitability. 

For more information, contact your corporate credit union or e-mail Jon Bartek at Corporate Network eCom.

 
 

Nov. 13, 2006


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