A recent Financial Brand article cites a research study which claims:
“There are 29 million consumers [in the US] that banks and credit unions could easily convert to online bill pay. [The study] identified a segment of nearly 11 million consumers who bank online and 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…all it should take is a gentle shove.”
My take: No way. Banks are losing the online bill pay game, and it’s foolish to think that there’s “low hanging fruit” out there.
Aite Group recently published a report I wrote titled How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and Methods, 2013-2016. The report is only available to Aite Group clients, but I can share a few points to debunk the notion that a “gentle shove” will get more people to use their bank’s (or credit union’s) online bill pay services:
- The percentage of online and mobile payments made on biller sites increased from 62% in 2010 to 69% in 2013. Bank site payments declined from 38% of online/mobile bills paid to 30% (with third-party sites like Check.com picking up 2%) over the same period.
- Of the bills paid online by Gen Xers in 2013, 75% will be paid on biller sites, and of the bills paid online by Gen Yers, 71% will be paid on biller sites.
- By 2016, the percentage of all bills paid online/mobile on biller sites will increase, the percentage on bank sites will decrease, and the percentage made on third-party sites will nearly double from its 2013 level.
Source: Aite Group
There’s no low hanging fruit out there, and no gentle shove will get more people to pay bills on their bank’s or credit union’s site. The trends are working against FIs:
- People don’t “hunt all over the Internet” to find their bills. Can’t tell you how many times I’ve heard a banker say that bank bill pay is easier than biller bill pay because people don’t have to “hunt” all over the Internet. Nonsense. People get an email from the biller, they click on the email, they pay their bill. Done. The only “hunting” that’s occurring here is the hunt for any shred of logic in the bankers’ claims.
- Young people are lazy and don’t like banks. No, just kidding. Or not. Actually, we’re all lazy, and why the percentages of Gen Yers and Gen Xers are so heavily skewed to biller bill pay is a good question. A dislike for banks may very well be one reason. The other side of the equation is that of consumers who pay their bills online, those over the age of 60 are the ones more likely to pay them on a bank site (vs. a biller site). Good luck changing the behavior of this group.
- Mobile makes it harder, not easier, to get consumers to pay bills at a bank (vs. biller) site. Many types of billers are developing mobile apps to interact with their customers. Insurers have apps for filing and tracking claims, utilities are developing apps to let people monitor electricity usage, etc. As these apps continue to develop and begin to incorporate bill pay capabilities, consumers will have even less reason to pay bills on a bank site. Mobile banking is not a pathway to mobile bank-based bill pay. It doesn’t alleviate the two big hurdles banks face: 1) the biller info still needs to be entered and set up, and 2) there’s no compelling reason for the consumer to pay at the bank site vs. the biller’s site.
Bottom line: Is it “game over” for banks when it comes to online bill pay? As Monty Python once said “I’m not dead yet.” There are things banks can do to regain momentum in online bill pay (recommendations are included in the Aite Group report), but as Ringo Starr once said “It don’t come easy.”