Printing and mailing paper statements can cost banks between 55 cents to 75 cents per month per customer, according to a recent report from Javelin Strategy & Research. Online statements, of course, cost nearly nothing. But as motivated as financial institutions are to wean their customers off the pricey paper and despite more than a decade's worth of explosive growth in online banking, relatively few customers have budged.

What could spur online statement use: Greater awareness of fraud and recognition that online monitoring can mitigate loss. Customers who rely on paper statements to track account activity detect fraud 114 days after it occurred, according to Javelin. That's compared to the average 18 days it takes for online or ATM users to notice a problem. The difference in the losses reported: $4,543 for paper users and $551 for online users.

While a handful of institutions claim to have moved "most" -- and serving the remainder of customers' paper requirements represents another cost management challenge -- of customers to online statements, a recent Javelin and a Ponemon Institute study sponsored by Watchfire show low customer adoption across the board. The Ponemon study found that 17% of U.S. Internet users viewed bank statements online instead of having them mailed.

A Javelin study reports that less than one-third (31%) of consumers have actually replaced their paper bank statements with the electronic version, although more than half (56%) have looked at statements online.

"Consumers are reluctant to turn off paper media for fear of giving up what they perceive as permanent, convenient and safe records," says Bruce Cundiff, research analyst with Javelin, and author of the report based on a survey of 2,200 consumers in March 2005.

But, Javelin's study points to signs of progress: 32% of consumers are willing to use non-paper bills and statements stored on their PCs or on the bank's system for their permanent records, up from 24% last year and 22% in 2003. The key to helping along this transition, according to Cundiff, is underscoring incentives that are meaningful to the consumer -- namely security and convenience.

In just one year, Javelin found, the number of online consumers willing to forego their receipt of paper statements to protect themselves against potential identity theft has more than doubled, to 25%, from 11% in 2004. In 2004, Cundiff says, 68% of identity theft originated from thieves who accessed paper documents, such as a bank or credit card statement stolen from a mailbox or the trash.

"Banks are not promoting paperless statements enough," Cundiff says. "They need to make a compelling argument for consumers to make the switch -- and they can make it in terms of increased protection."

Richard K. Crone, founder of San Carlos, Calif.-based Crone Consulting, says making electronic statements more interactive would also help. He suggests giving e-statement customers the ability to receive online alerts, tied to particular events within the bank or their account. Both Crone and Cundiff say banks need to store copies of e-statements, perhaps for several years, for customers who take their record-keeping seriously.

One example of a bank that has jumped on the e-statement bandwagon with both feet is Wells Fargo & Co. Wells has been offering online statements to customers for almost three years, according to Jim Smith, the bank's executive vice president for the consumer Internet channel. Customers who receive their statements electronically can set up customized e-mail alerts that notify them if their balance dips below a certain level, for example. They can also categorize transactions within their account to generate a report that tracks their spending. And users can access their account statements going back seven years.

Smith declined to say how many of the bank's 7 million online banking customers currently receive e-statements, or have stopped receiving paper statements. But he indicates the trend is clear. "Most customers don't even look at paper statements," Smith says. "They just shove them in a shoebox and have to figure out where to store them."

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