How does your bill pay adoption rate compare to that of other financial institutions? According to Forrester Research, 16 percent of online U.S. households pay bills online. Some banks have brought more than a quarter of customers on line.
Boston Consulting Group reports that active online bill pay customers are 98 percent more profitable than the average offline customer. A study by Digital Insight, Inc. supports this analysis, finding that online bill payers consistently have more accounts and higher balances (for both loans and deposits) than offline members. In fact, the net annual relationship value to the credit union averaged $812 higher for online bill payers than for offline members. And online bill pay creates sticky relationships: online bill payers are 78 percent more likely to stay with their credit union, making them direct contributors to profitability.
What does this mean for credit unions whose bill pay adoption rates leave something to be desired? Below are four tactics every credit union should adopt to help drive bill pay:
Openly address online security fears.
One of the biggest objections people have to bill pay is security risk – the fear of entering personal information online. What consumers don't realize is that online bill pay actually is MORE secure than physically paying bills. According to Javelin Strategy, security experts actually recommend consumers pay their bills online; as well as shred their monthly invoices as a precaution.
It's important for members to understand that when they log on to their accounts, they're in a secure area. Actions made, even if simply checking cleared items, are encrypted. Along with an Internet browser that uses 128-bit encryption, this is far more secure than putting a paper check in a mailbox.
If your staff understands it, they can sell it.
Studies show that if a credit union's branch staff personally uses online bill pay, they're far more effective at selling it.
Without a doubt, Bank of America (B of A) is the leader in online bill pay adoption with adoption rates over 25 percent. Its success doesn't stop with massive advertising campaigns and a free price tag. B of A also places a large emphasis on employee education. Ideas that credit unions can use to mimic B of A's technique include:
1. Use direct mail and back-office merchandising to market to employees, just like to members; hold year-round contests to keep employees active.
2. Provide employees a way to pay bills online during breaks, so they can familiarize themselves with the service and improve bill pay sales skills.
3. Reward branches for reaching monthly bill pay sales goals by paying incentives based on activation.
Offer multi-faceted marketing programs. Statement inserts are not enough.
It's important to combine multiple strategies when marketing bill pay. Combining a bill payment sweepstakes with statement inserts, an online campaign and branch posters will result in a far more effective sweepstakes. A recent study by MasterCard RPPS showed that “a well-focused consumer marketing initiative with repeat communications” is effective in moving consumers toward adoption.
Repeated marketing efforts that emphasize the benefits to your members and address their top concerns – security, convenience, speed and control – will prove most effective.
Move toward free.
According to a study by Online Resources, bill payment adoption rates for financial institutions offering the service free-of-charge are 80 percent higher than those charging $5 or less, and 190 percent higher than those charging over $5. Considering these statistics, it's more evident than ever – credit unions must offer free bill pay to appeal to members. Just think of B of A's success.
With all the options available to consumers, it's critical to communicate to all members the benefits of online bill pay: time-saving convenience, control, security and ease of use. Even more important, it's imperative that credit unions position themselves to compete with financial services industry leaders. For more tips regarding online bill pay, contact your corporate credit union or Darren Christman .