How To Convert 22 Million Americans To Fi Bill Pay
Javelin Strategy & Research, September 2012, Pages: 38
The number of U.S. consumers who pay bills through their primary bank or credit union is on an unacceptable five-year course of stagnant growth. Therefore, financial institutions (FIs) urgently need to target the 22 million Americans who are one step away from converting to FI bill pay and to renovate bill-pay offerings to accommodate consumers' expectations in an era of interactive finance. Online consumers have clearly established their preference for paying bills online rather than offline, but they remain torn between paying at biller websites and paying through their primary financial institution. This prescriptive follow-up report to Javelin's “2012 Online Banking and Bill-Payment Forecast” identifies three top-priority investments to address areas where FI bill pay fails to measure up to paying bills at biller websites, as well as five key messages that are likely to be most effective at winning over banking customers who prefer paying at biller websites.
Primary Questions
- Can banks and credit unions increase bill-pay adoption by targeting consumers who are less tech-savvy?
- Which consumers should be targeted first?
- Which has the short- and long-term edge: FI bill pay or the biller-direct model? Why?
- What investments in bill-pay upgrades should FIs rate as top priorities?
- What marketing messages will be most effective at persuading online bill payers to convert to paying at their bank or credit union?
- Is there a return on investment (ROI) for bill pay beyond “stickiness,” retention and entanglement?
Audience:
Financial institutions: Senior strategists, product managers and marketers responsible for online banking, personal finance management tools, mobile banking, bill pay, financial alerts, transfers, and credit and debit cards.
Methodology:
Data that measures adoption of online banking by consumers is based on information collected online from 5,034 consumers who were primary or shared financial managers in March 2012. The overall margin of sampling error is ±1.38 percentage points at the 95% confidence level. The survey targeted respondents based on representative proportions of gender, age, income and ethnicity compared to the overall U.S. online population.
The majority of Javelin data for online banking and bill pay is based on households rather than on individual consumers. This is a typical way of presenting online banking and bill payment data because bills are normally paid on a per-household basis. In 2012, the U.S. population is estimated to consist of 316 million people. That number includes 240 million adults, 122 million households and 98 million households that are online. On average, a household contains about 2.6 people. Javelin also collects online banking data using a base of all consumers for comparison purposes.
Javelin's Moneyhawks™ segmentation examined consumers based on banking behaviors for online banking, bill pay and mobile banking. To draw starker conclusions, Javelin focused on the 77% of consumers who have defined behaviors. For example, Moneyhawks have banked online and paid bills through their FI in the past 30 days, and they have used mobile banking in the past 90 days. The report does not examine the 23% of consumers who exhibit infrequent behavior or inconsistent use of online banking, bill pay or mobile banking.
The analysis of financial institutions by size was based on where consumers maintain their primary banking relationship. FIs were divided into four categories determined by total deposits as of 2011, according to rankings by American Banker:
- Giant national banks: Deposits greater than $750 billion (JPMorgan Chase, Bank of America, Wells Fargo and Citigroup)
- Large regional banks: From $30 billion to $750 billion in deposits
- Small regional or community banks: Less than $30 billion in deposits
- Credit unions: All credit unions, except Navy Federal Credit Union, which was classified as a large regional bank based on deposits
Javelin's Bankographic Benchmark™
This report also draws on data typically available only to subscribers of Javelin's Bankographic Benchmark. For example, this exclusive custom service enables the nation's larger banks to measure themselves against chief national and geo-graphic rivals in the following area:
- Customer adoption and usage of channels, products and services
- Customer attitudes and perceptions about satisfaction, security and emerging technology
- Comparative strengths and weaknesses that point to opportunities to boost a return on investment by lowering operating costs, cross-selling products and services and deepening customer loyalty
OVERVIEW
METHODOLOGY
EXECUTIVE SUMMARY
KEY RECOMMENDATIONS
FLATLINING GROWTH SPOTLIGHTS URGENT NEED FOR INVESTMENT AND TARGETED MARKETING
AMERICANS ARE VOTING WITH THEIR FINGERS: THEY PREFER PAYING BILLS ONLINE (AND ON MOBILE DEVICES)
THREE KEY TECHNOLOGY INVESTMENTS TO BOOST FI BILL PAY
TARGET MESSAGING TO CONVERT 22 MILLION MALLEABLE TRADITIONALISTS AND CAUTIOUSLY CONTENT CONSUMERS
THE ROI OF BILL PAY EXTENDS BEYOND “STICKINESS”
RELATED RESEARCH
COMPANIES MENTIONED
Table of Contents
Figure 1: Methodology: Behavior Definition Used to Segment Consumers
Figure 2: Potential Gains in Total FI Bill-Pay Users
Figure 3: How Average Online Consumers Pay Bills
Figure 4: How Online Consumers Pay Seven Common Bills
Figure 5: Top Three Performance Gaps (FI Bill Pay vs. Biller Direct)
Figure 6: Malleable Traditionalists' Typical Method of Payment for Common Bills
Figure 7: Malleable Traditionalists' Important Factors in Choosing a Bill-Pay Method
Figure 8: Cautiously Content Consumers' Typical Method of Payment for Common Bills
Figure 9: Cautiously Content Consumers' Important Factors for Choosing a Bill-Pay Method
Figure 10: Online Banking Loyalists' Important Factors for Choosing a Bill-Pay Method
Figure 11: Five Areas of Vulnerability for Biller-Direct Payments
Figure 12: FI Bill-Pay Habits by ROI Type
Figure 13: Potential Increase in Paper Turnoff from Converting Customers to FI Bill Pay
Figure 14: Conviction Gaps in Performance (FI Bill Pay vs. Biller Direct)
- Citibank
- JPMorgan Chase
- Bank of America
- Wells Fargo
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