During the last several years, there has been a steady exodus of electronic bill-payment (bill-pay) transactions from financial institutions in favor of paying the billers directly through digital channels. The author’s latest research report, Bill Pay: Fast and Simple Wins, discusses why and how banks and credit unions could staunch this outflow.
Most financial institutions do not charge fees for electronic bill payment despite the expense of maintaining a bill-pay system. That is because consumers expect the service to be included in their monthly checking account fee or in the balances they need to carry. But bill pay is a product that keeps consumers coming back to the financial institutions’ web and mobile sites, which leads to frequent interactions and opportunities for a bank or credit union to communicate information to its customers or members and offer financial advice.
The new report provides an understanding of current U.S. bill-pay market, characteristics of bill-pay customers, and tactics being deployed by financial institutions that are interested in keeping and attracting bill-pay transactions in order to retain this critical consumer interaction.
"Billers have done a great job of making paying bills through digital channels as frictionless an activity as possible. Financial institutions need to determine if this trend matters. Bill pay doesn’t have much to offer FIs in terms of revenue, so assessing its value is difficult, but it is a very sticky product," comments Sarah Grotta, Director, Debit Advisory Service and author of the report.
Highlights of the report include:
- Overview of the current bill-pay market
- Bill pay’s role in banking relationships
- Proprietary survey data showing U.S. consumers’ bill-pay channel preferences
- Growth of online and mobile channels for bill pay
- Tactics that financial institutions are deployinh yo retain bill pay customers.
1. Executive Summary
2. Bill Pay, a Critical Banking Function
3. Bill Pay’s Role in Banking Relationships
4. Billers Are Winning Over Bill-Pay Customers
5. Importance of Keeping and Winning Back FI Bill-Pay Customers
- Bill-Payment Must Be Available on the Mobile Channel
- Offer Accelerated Payment for a Fee
- Offer Rewards
6. Emphasize the Advantages of the Financial Institution’s Bill-Pay Service
7. Other Trends in Bill Pay
- Things to Watch and Conclusions
List of Figures
Figure 1: The Importance of Bill Payment to Financial Institutions’ Digital Channels
Figure 2: Many Modes of Bill Pay
Figure 3: Consumers Likely to Use Credit or Debit to Pay Bills Online
Figure 4: Customers
Figure 5: More Billing Is Going Mobile at Financial Institution, Third-Party, and Biller Websites