The use of electronic bill payment at financial institution websites benefits both consumers and financial institutions. The 2012 Fiserv Consumer Trends survey found that consumers who use electronic bill pay and electronic bills (e-bills) are more satisfied with their financial management processes and feel a greater sense of financial control. Also, there is a proven correlation between bill pay use and deeper customer relationships; bill pay users have higher balances, lower attrition and purchase more revenue-generating products than non-users.
However, only 41% of online U.S. households reported using bill pay through their financial institution and those that do make less than 25% of their monthly payments through this service. So, why is consumer adoption and usage of financial institution-based bill pay still relatively low? It seems that familiarity with existing routines and a pervasive lack of understanding about the availability and benefits of bill pay may be to blame. Our consumer research identified three main hurdles:
Stuck in routines. A typical bill payment routine includes the following steps: review the bill when it arrives; put it in a queue to be paid (often in a stack of bills); pay the bill (using any number of electronic or physical methods); and record information about the date and method of payment on the bill and file for future reference.
Elements of the routine play important roles, such as the stack of bills serving as a reminder to pay. Although many consumers may readily admit that their bill payment process is less than ideal, they are reticent to change since they developed their own processes and have used those processes month after month. The routine provides consumers with a sense of accomplishment and assurance, so most are not actively looking to change.
Lack of awareness and misperceptions. Some consumers still believe that financial institutions charge for bill pay, despite the fact that almost all banks and credit unions offer free bill payment within their online and mobile banking services. Consumers also express uncertainty around the reliability and speed of payment delivery, so they are hesitant to make their “important” bill payments through their financial institution. And one-third of bill pay users don’t know if their financial institution offers the ability to receive e-bills within the bill payment service.
Fear and uncertainty. Change can be scary, especially if missteps such as a late payment can incur financial penalties or damage credit scores. Consumers are unlikely to change their payment behaviors to include electronic bill payment, or more frequent use of electronic bill payment, unless they are confident that they understand how it works and feel that changing their bill payment habits offers some advantages.
How can financial institutions overcome these challenges and boost adoption? Our research indicates that the initial set-up process has a significant impact on whether a financial institution’s electronic billing and payment service is embraced by consumers. Consumers may experience anxiety during their first interactions with bill pay and the onboarding process may extend to several sessions or months as consumers build a sense of comfort and trust with the product and the steps involved.
A successful onboarding process addresses these potential barriers through tactics such as product design, user engagement and ongoing communications. Financial institutions should consider implementing these best practices to grow electronic bill payment adoption:
Provide peace of mind. Electronic bill payment products should mirror a consumer’s offline, paper-bill-based processes to quickly build comfort and familiarity with the electronic bill payment service. A well-designed electronic routine will instill the same sense of accomplishment and assurance that consumers derive from their current bill payment processes.
Make electronic bill pay feel like a win. Some of the gamification techniques that consumers encounter in many popular mobile apps and games can be incorporated into bill payment to engage new users. Such gamification tactics could include a gradual introduction of features and functionality, for example, letting users “unlock” advanced features after using basic features. In the case of bill pay, this could mean showing a recurring payment option only after a user has paid that particular bill for several months in a row. These and other visually driven experiences such as progress bars can quickly build comfort and trust while giving users confidence to change their bill payment habits through the experience of a few early “wins” earned by trying the functionality.
Integrated lifecycle marketing. Financial institutions should reinforce positive messages about bill pay at every customer touch point through a program of lifecycle messaging. In such a program, customers initially receive an email that describes bill pay features and functionality based on how they have or have not already been using the service. Messaging continues to be delivered throughout the user lifecycle, starting with support of bill payment onboarding and continuing to provide a gradual, responsive education that familiarizes customers with electronic bill payment and its features.
Knowledgeable, engaged employees as advocates can also be a powerful force in driving consumer adoption. The Fiserv Consumer Trends Survey has shown that branch employees are a primary influence in many customers’ decision to try electronic bill payment, with nearly a quarter of Gen Y and Boomer respondents saying a branch employee was the most influential source of information impacting their decision to enroll, more than any other single factor.
When working to drive awareness, employee education and engagement is a logical first step. It is surprising how many customer-facing associates at financial institutions have not used bill pay and do not know how it works. Educational and promotional marketing to consumers is a next step, as many current and potential customers do not understand the features and benefits of the bill pay service. Marketing can encourage consumers to try or re-try the product. These internal and external marketing initiatives can work together to grow consumer adoption and usage.
Mr. Steere is director of Market & Consumer Intelligence at Brookfield, Wisc.-based Fiserv. He can be reached at firstname.lastname@example.org.
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