Online Bill Payment Gains Popularity While Customers Eschew Aggregation
Quittner, Jeremy, American Banker
Banks made big gains in online bill payment last year, but consumer interest in account aggregation went nowhere.
Nearly 15% of the respondents to this year's American Banker/Gallup Consumer Survey are paying bills online through their primary financial institution, up from 10% last year. The percentage who knew it offered the service rose by the same 5 percentage points, to 83%.
"We have seen online usage grow dramatically, and there was strong demand from customers to adopt bill payment," said Sanjay Gupta, the senior vice president of e-commerce marketing for Bank of America Corp. in Charlotte, N.C.
Wells Fargo & Co. said about a million customers use its bill payment service - 40% more than a year ago and a third of its online banking total. Further gains are expected from the online presentment service it has offered on a limited basis since January, the San Francisco company said.
"Most of the banking trends of the last 25 years have been about convenience, and I think that convenience will drive this adoption as well," said Jim Smith, Wells' senior vice president of consumer Internet services.
FleetBoston Financial Corp. officials said the number of customers using its online bill payment service has increased by a quarter in the past year. They would not give a total but said that as a percentage of its 2.6 million online banking customers the bill payment contingent is well into the double digits.
"I don't think the growth in online bill payment will plateau anytime soon," said Neal Wolfson, Fleet's director of interactive banking. "We will continue to see strong growth. We aggressively promote the service."
He and Wells' Mr. Smith said online bill payment is becoming a mass-market service. Subscribers used to be mostly tech-savvy, younger, and wealthier than the average customer. Now they range "from 18 years old to seniors," Mr. Wolfson said.
Nevertheless the service is most popular among the young. Twenty-six percent of the American Banker/Gallup respondents 18 to 34 use it, but only 11% of those 55 to 64. (Nineteen percent of the men and 16% of the women said they use such services.)
James Van Dyke, the research director for Jupiter Communications in Pleasanton, Calif., said customers will not start signing up in droves for bill payment until they can see their bills online.
Of the 20 million people who now pay bills online through the Web sites of depository institutions, fewer than eight million can view any of their bills that way, Mr. Van Dyke said. By 2006, though, 45 million will do both, he said; only two million will be paying bills online without viewing them online.
Credit unions are the big success story in online bill payment, the American Banker/Gallup survey suggests. Twenty- four percent of the respondents whose primary financial institution is a credit union use its online bill paying service, versus 15% in last year's survey. The percentage also jumped at thrifts, from 8% to 20%, but crept up to only 11% at banks, from 9%.
"A lot of the success that credit unions have in particular is that their members trust them more than typical bank customers," said Jeanne Capachin, research director of Meridian Research in Newton, Mass. "It is the personal attention they can provide."
Douglas Benzine, the senior vice president of business development for CUNA Network Services LLC, said credit unions are very interested in bill payment. "They are pushing it more," said Mr. Benzine, whose company is an affiliate of the Credit Union National Association. "Members have more of a comfort level with the credit union . more of a personal relationship."
In its 2002 member survey CUNA found that 84% of credit unions with more than $200 million of assets offer online bill payment services. Seventeen percent of credit union members use online bill payment at least once a month, the survey found. …