A search for the term “engagement” on The Financial Brand turns up 20 articles on the first page with that word in the title. Interestingly, the first two articles concern bill pay:
- Photo Bill Pay Drives Mobile Banking Engagement. The key point in this article that banks and credit unions can capture the attention of consumers and increase mobile engagement through photo bill pay.
- Bill Pay Rewards Improves Consumer Engagement. This article says that “rewarding two repetitive behaviors together — direct deposit and use of bill pay — can help banks and credit unions own the primary account relationship.”
I couldn’t agree more with the conclusion of both articles. However, recent data from Aite Group which reaffirms a trend that has been a long time in the making: fewer consumers are paying their bills on bank and credit union sites.
The Decline in Bank Bill Pay
Every few years, Aite Group sizes consumer bill pay volume and methods (I was the analyst who did it back in 2010). The most recent analysis was just released, revealing that consumers’ bill pay behaviors have shifted significantly. While that’s not necessarily surprising, some of the actual numbers may be.
Back in 2010, snail mail was the most popular method of bill pay, accounting for 36% of the bill volume (by number of bills). Paying on biller sites was the second most popular method with a 20% share of the volume. In 2016, those methods have reversed order, with biller sites up to 36% of the volume, and snail mail down to 20%.
| Share of US Consumer Bill Pay Volume |
2010 | 2016 |
|---|---|---|
| Biller | 20% | 36% |
| 36% | 24% | |
| In Person | 15% | 14% |
| Bank | 13% | 13% |
| Direct Debit | 11% | 7% |
| Phone | 4% | 6% |
Source: Aite Group
Interestingly, the share of payment made in-person, and those made on bank sites, remained relatively constant between the two reporting periods.
There are two primary drivers of the change:
1. Demographic shifts. The percentage of the overall US consumer base that Millennials account for grew dramatically between 2010 and 2016. As they predominantly pay their bills (the ones that mommy and daddy don’t pay, that is) on biller sites, this helped drive up the biller share of bill pay.
2. Desire for more control. The share of bills paid by direct debit dropped from 11% to 7%. The drop, in terms of the total number of bills paid by this method, was roughly 50%. Why the drastic change? Many consumers don’t want to “set it and forget it” when they can easily pay their bills on a biller site upon getting an email, eBill, or reminder.
Engagement Realities vs. Delusions
If you agree with the thrust of the “engagement” articles on The Financial Brand as I do — that bill pay is an effective way to engage banking customers — then you have to admit that banks and credit unions are missing a huge opportunity to deepen their levels of engagement.
When I’ve mentioned this to bank and credit union execs, the response I typically get is, “Yeah, I know. But what are we supposed to do about it?”
To which I respond, “Oh, I don’t know… How about doing some consumer research to find out what kind of advice- and convenience-related value propositions — and/or financial incentives — might work?”
It seems to me that some of the big banks like to brag about how many mobile banking customers they have, and the number of mobile transactions (or interactions) those customers have through mobile devices on a monthly basis. At some point, however, checking your account balance on your smartphone for the 78th time this week stops being “value-added” engagement, doesn’t it?
The problem here is thinking that any and all interactions count as “engagement.”
Measuring Engagement
There’s no doubt that marketing is getting a lot more sophisticated in a lot more mid-sized banks and credit unions. Just this week, I spoke with two credit union CEOs were formerly CMOs. But the problem is that not enough of these institutions are reaching a sufficient level of marketing sophistication.
One step they need to make is better measurement. Not just measuring marketing ROI, but creating and quantifying metrics that help the organization make investment and resource allocation decisions.
Measuring engagement would be a good place to start, but there’s no approved formula or definition for this. You have to come up with your method and definition for “engagement.” If I were in your shoes though, here’s what I would include:
1. Money management activity. The idea here is that a consumer isn’t very engaged in the management of his/her financial life isn’t very likely to be engaged with his/her bank. Likewise, it would be more difficult for your bank or credit union to drive higher levels of engagement with consumers who aren’t engaged in the management of their financial life. So, this would be good place to start.
2. Advice activity. How many times has someone engaged with your institution looking for advice (loosely defined) about how they should manage their financial life, what products are best for them, etc.? People who ask for advice or guidance — whether it’s by talking to someone or using digital tools — are more engaged than those who are checking their account balances 78 times a week. Providing advice on how to manage one’s bills might be a great way to deepen engagement… but it can’t be done if the customer doesn’t pay their bill on the bank’s site or mobile app.
3. Product penetration. This is an easy one. If you’ve got their debit card, credit card, and investment accounts, then yeah, they’re probably more engaged with you than customers who don’t have that level of penetration.
4. Channel usage. If you have someone who’s doing mobile banking and online banking and online bill pay and comes into the branch and calls the call center, then there are one of two likely probabilities: You either have (a) a possibly highly-engaged customer, or (b) someone with serious money problems. A little analysis should be all that it take to sort out the correct category in which those people belong.
You can’t rely on just any one of these factors — you have to take them all into account. You’ll probably need to get creative, and come up with your own way to score your customers (or members) based on how engaged they are. Use that measurement approach consistently over time, and you’ll begin to see trends in how well you’re truly engaging them.
If you’d like a copy of the What’s Going On in Banking 2017 report from Cornerstone Advisors, click here.