Seeking More Revenue, Big Banks Get Set to Roll out 11th-Hour Bill Pay

Financial institutions seem likely to give expedited bill payments a big boost in the coming two years, according to survey results released today by Boston-based Aite Group LLC. In a March survey of 22 of the nation's top 100 banks, credit unions, and thrifts ranked by number of checking accounts, 64% said they were likely or definitely likely to introduce fee-based, same-day electronic bill-payment services through their Web sites. Not far behind on likelihood scale for the next 24 months were offering account balances over mobile telephones, 59%, and inbound and outbound automated clearing house funds transfers, also 59%. None of the responding financial institutions offered expedited bill-pay services or mobile-phone account balances as of March, though 32% offered ACH account transfers. While the survey sample was small, the results seem to give credence to the recent heavy emphasis by bill-payment processors such as CheckFree Corp., Online Resources Corp., and others on development of expedited services that allow consumers to pay a utility, credit card, or other common bill at the last minute in order to avoid a stiff late fee (Digital Transactions News, July 27, 2006). The driving force at financial institutions behind this planned technological push is more sales, according to the findings. Some 55% of respondents ranked generating sales as the No. 1 goal for their online-banking channels, ahead of increasing customer satisfaction and retention and reduction of customer-service costs. In fact, only 5% of respondents indicated that reducing servicing costs was their No. 1 goal in online banking. “You definitely see the institutions focusing on selling through the online-banking channels,” Aite research director Gwenn Bézard tells Digital Transactions News. Financial institutions are peddling everything you'd expect, he adds?checking accounts, certificates of deposit, student loans, and credit cards. Aite estimates an average of 34% of household customers of the top 100 deposit institutions are active online-banking users, and 11% are active bill-payment users. There are wide variations, not surprisingly. For online banking, the best performer among Aite's respondents had a 50% adoption rate while the worst performer's rate was 16%. The best performer in bill payments had a 27% adoption rate; the corresponding worst performer's adoption rate was only 1%. According to the survey, other online-banking features financial institutions seem likely to introduce in the next two years include a single sign-on across Web properties, 52%, and targeted marketing technologies to drive cross selling and upselling, 50%. Some 50% of respondents also said they are likely to definitely likely to offer rewards to customers for using online bill payment. Eighteen percent of respondents already offer such rewards.