As many as 29 million U.S. consumers are only one step away from paying bills through their bank or credit union.
A study from Javelin Strategy & Research says there are 29 million consumers that banks and credit unions could easily convert to online bill pay. That’s about one in every eight U.S. adults (12.1%).
Javelin’s “2013 Online Banking and Bill Payment Forecast” gives a five-year outlook that compares financial institutions against biller-direct websites. The study also explores strategies to boost bill pay adoption at banks and credit unions, focusing on the importance of the mobile channel and consumers’ expectations.
The research is based on an online survey of more than 5,600 consumers. This is the 11th consecutive year Javelin has conducted the study.
Adoption of online banking will see little growth in the next five years, and there’s very little financial marketers can do about it. The industry has nearly achieved market saturation, with 84% of consumers using online banking today. By 2018, that number will edge up ever so slightly to 89%, a compound annual growth rate of 3.2% that barely keeps up with population growth.
While there aren’t any tantalizing opportunities to improve uptake of online banking, online bill pay is another story.
Javelin found that growth of bill pay at financial institutions has also stagnated, and adoption rates among banks and credit unions are forecast to remain unacceptably flat through 2018. But financial marketers can take action to avoid this fate. (Hint: Mobile is the key, according to Javelin.) Financial institutions looking to significantly increase bill pay penetration need to upgrade their services, and counter misperceptions consumers have about paying bills through their banking provider.
Javelin says that if the banking industry takes the right steps, they could convert 13 million households to online bill pay by 2018, which would represent a 22% increase.
( Read More: Grandma Wants Online Bill Pay )
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If Anyone Should Be Using Online Bill Pay, It’s ‘Digital Drifters’
Javelin identified a new segment of nearly 11 million consumers they call “Digital Drifters.” These are people who already bank online and currently use mobile banking but do not pay bills at their bank. This has got to be the easiest segment banks and credit unions could ever hope to win over. Digital Drifters are some of the best tech users financial institutions have; all it should take is a gentle shove.
A majority of Digital Drifters pay bills online… they just do so at billers’ websites. More than half of young, savvy Digital Drifters think paying bills at the biller’s site gives them more control over their payments, vs. 39% who say this statement applies to bills paid through a bank or credit union system.
Javelin’s report outlines a series of recommendations for financial marketers looking to cater to these young, tech-savvy, mobile-minded consumers.
Financial institutions and bill‐pay innovators can reposition their services by emphasizing legitimate strengths, which Digital Drifters’ currently perceive as inferior to paying bills directly through billers’ websites.
“Mobility is rapidly rewiring the way consumers think,” said Mark Schwanhausser, Director of Omnichannel Financial Services at Javelin Strategy & Research. “Mobile-toting Americans demand simplicity, any-time convenience, immediate answers, pre-emptive alerts, personally relevant information and advice, an attitude of transparency, and time-saving options– all done safely and securely.”
( Read More: Photo Bill Pay Makes Bank Switching A Snap )
( Read More: Study Reveals Americans Are Bill Payment Omnivores )
Where Else Can Financial Marketers Find Likely Bill Pay Converts?
Besides Digital Drifters, there are two other factions of bill pay holdouts that financial institutions should be able to convert.
Malleable Traditionalists are those who bank online but do not use mobile banking or their institution’s bill pay system. Currently 57% of this group pay bills at biller websites montly, which is notably higher than the average.
Cautiously Content Consumers are those who do not use online banking, mobile banking or bill pay. And yet as tech shy as these consumers may seem, 28% pay bills at biller websites every month.