BROOKFIELD, Wis.—Adoption of electronic billing and payment services continues to grow, and financial institutions continue to miss out, according to one company.
The reason? The growth in the use of these services has come almost entirely from payments made directly to billers, while growth at financial institutions has been incremental at best, explained Steve Shaw, vice president of strategic marketing for digital channels and electronic payments at Fiserv.
“Your customers or members want the easiest, most convenient path to paying their bills. Financial institutions must provide the capabilities people want, to educate consumers about them and to market these convenient services and showcase their benefits,” said Shaw.
Shaw noted that the 13th Annual Fiserv Consumer Trends Survey revealed that interest among nonusers in financial institution-provided bill pay services increased by 12% over a one-year period, with a third of all non-users saying they would be interested in trying the service. Interest was even stronger among Millennials, the study showed, with 45% of current non-users expressing interest.
“Financial institutions have an opportunity to capitalize on this window of opportunity by marketing the availability and benefits of their bill pay services, with a particular focus on Millennials,” said Shaw.
Millennial Competition
In the competition to attract Millennials to adopt bill pay, billers—and even non-financial institution third parties—have clearly been more successful than financial institutions, according to the survey.
“This is in part because these companies are doing an excellent job of engaging their customers early by marketing bill pay during initial customer onboarding,” said Shaw. “As new customers sign up for services, one of the very first communications they receive is often: ‘You can pay your bill electronically, and let me show you how easy and convenient it is for you to sign up and get started.’”
Shaw said the targeted marketing appeals to Millennials who manage finances primarily through their smartphones and tablets.
Billers and third-party providers are extremely motivated to promote bill pay at their sites because of the marketing and cross-sell opportunities that the connection creates, continued Shaw.
“Every time a customer pays a bill, they are immersed in cross-sell and up-sell advertising, as well as personalized offers that will help grow the relationship and, ultimately, the company’s bottom line,” he said. “In addition, many Millennials are choosing to automate their bill payments, having them debited directly from their deposit account or credit card. In this case, convenience is the factor that overrides any perceived loss of control over the payment itself.”
Deeper Relationships
Bill pay at the financial institution deepens the customer relationship by driving more visits to an institution’s website and opening the door for cross-sell and up-sell opportunities, asserted Shaw.
“We know from the results of the Consumer Trends Survey that consumers who use digital banking are more likely to use other revenue-generating services. For example, users of online bill pay use an average of 33% more services than nonusers. Specifically, usage of bill pay services is associated with significantly higher rates of savings account and credit card adoption,” said Shaw. “In addition, e-bill adoption is one of the strongest predictors of revenue generation, with e-bill recipients having an average of 1.3 more services than customers who do not use online banking. Once Millennials are engaged, other services are at their fingertips, from transfers and person-to-person payments to auto loans and mortgages.”
Shaw pointed out that financial institutions shouldn’t assume their customers are aware of this functionality. And often, even awareness is not enough, he said.
“It’s critical to inform them of the value obtained by paying their bills in one place. To drive actual behavior change,” Shaw explained, adding that it takes a concerted marketing effort to deliver this bill pay message and focus on adoption.
But the message doesn’t have to be complicated, noted Shaw.
Steve Shaw, Fiserv
“The best strategy is to capture the consumer’s attention at strategic times and places and educate them on the benefits,” said Shaw, emphasizing banks and credit unions should focus on three things when promoting bill pay:
- Focus enhancements on just-in-time and just-in-case offerings. “Same-day posting of an online banking transaction was the most desired enhancement from all respondents of the survey,” said Shaw. “Many of your customers are living paycheck to paycheck. Let them know they can come to you to help them manage their money-movement routines.”\
- Educate consumers to close the awareness gap. “Fiserv has conducted numerous focus groups where bank customers have said, ‘I wish my bank would offer online bill pay,’” explained Shaw. “Even if you already offer this service, don’t assume your customers know about bill pay or its capabilities. Instead, assume they want to know how your institution can make their financial lives easier and more convenient so they can bank on their terms.”
- Market the most salient value propositions to current and potential users. “Control, convenience and time savings are key value proposition themes. Over a third of the respondents to the survey worry most about keeping track of due dates and late payments. Let your customers know you have the digital solutions to make it easier for them to stay on track and in control,” Shaw said.