COLUMBIA, S.C. – According to a new Forrester Research report, the percentage of online consumers who get at least one e-statement has more than tripled in about 18 months or so. So that should amount to big savings for those financial institutions that no longer have to send costly paper statements in the mail, right? Not necessarily, according to the new report, titled "The Dirty Little Secret About eStatement Adoption." According to researcher Catherine Graeber, the problem is "that 97% of e-statement adopters continue to receive a paper statement." The reasons are many. Technology for one. For instance, broadband users are much more likely to be willing to download statements than dial-up users. Age and gender also appear to be factors. Older consumers are somewhat more likely to be concerned about security of their personal data than younger consumers, and men are more likely to adopt e-statements than women. Forrester's advice? "Firms must wean customers from their addiction to paper by offering a printable statement in PDF format, automatically turning off paper statements for e-statement adopters, and charging customers who request a paper statement via snail mail," Graeber concludes, based on the research and advisory firm's findings in its August 2004 North American Finance Online Study. Of course, customers and members are two different things. A check with several credit unions and a couple major e-statement vendors found no takers for the proposition of charging for paper mailings. And one e-statement vending pioneer, DigitalMailer's Ron Daly, says the Forrester Research numbers "are a little skewed. That 97% number is reflective of credit unions and banks storing all statements electronically and hoping members will turn off the paper." He notes that one of his firm's 43 client credit unions, for instance, has about 65,000 members, all of whom could be considered e-statement adopters, since the credit union stores all its statements electronically "in hopes members will turn off the paper, but only about 3,000 actually have." That number, therefore, includes a lot of members who don't use online services at all, and thus are unlikely to be e-statement users, either. But either way, increasing adoption is where it's at, and Daly says marketing is the key. "Regulations require members to opt out of getting paper statements and you have to promote the service to get them to do that, including things like giveaways of Redskins tickets, digital cameras, things like that. Unless you do that, get their attention, a lot of members may not even be aware you offer e-statements," says Daly, whose company is based in the Virginia suburbs of Washington, D.C. Promoting the service, and using it as a marketing tool for other products, was a key to success at Daly's first client, his former employer, Northwest Federal Credit Union. Northwest FCU has about 24,700 of its 73,000 members using e-statements, saving the $1.3 billion CU nearly $300,000 a year in printing and mailing costs, says Gerrianne Burks, the CU's executive vice president and chief operating officer. Northwest FCU's main SEG is the CIA, "so we have a lot of older retirees who are not as comfortable with computers as their younger counterparts, but they're coming around, and a lot of them are on government annuities, so they can get in the habit of checking at the first of the month to make sure they got them," Burks says. "We save a lot of money, and we get a great marketing opportunity, too," Burks says. "We use banners and special messages, and we can then use e-alerts, in which members can sign up to receive notices about things like rate changes." At Northwest, members who sign up for e-statements automatically quit getting paper statements and have to opt back in to get them. That's also the way it works for the 86 credit unions using Harland Financial Solutions' e-statement and MyKeptData.com products, says Paula Schneider, marketing manager at HFS' Enterprise Services Center in West Des Moines, Iowa. "The first time a member goes to the MyKeptData.com site, she or he has to click OK to a pop-up consent form. Some of our credit unions also have the member sign a written consent form to keep on file for a permanent record," says Schneider. Members who agree to e-statements then stop getting paper statements, with the option of asking for them back, she says, adding that that rarely happens. That's also the experience of Stanford Federal Credit Union in Palo Alto, Calif., one of the first financial institutions in the country to offer online banking and e-statements, the latter created in-house and offered since 1996. "Our experience is that few members actually want and use the paper statements. The key is to make it simple to opt out of receiving them," says Sam Tuohey, Stanford FCU's vice president of e-commerce and technology. "We do a good job of cross-selling at the point at which the account is opened and we continue those efforts afterward for those who are online who retain the paper statement option. "We have a simple, pre-populated online form that members can access through online banking that instructs us to turn off paper statements." Of the CU's 22,259 checking accounts, 12,089 get e-statements, Tuohey says, and overall nearly 15,000 of $590 million Stanford FCU's 41,800 members get e-statements only, a number that's growing by about 300 a month. "We conservatively estimate that a paper statement costs us a dollar each. Our members' conservation efforts save the credit union about $156,000 a year," Tuohey says, adding that members who don't get e-statements now are encouraged to in messages in their monthly paper mailings. Promotion also was the key to a quick start for e-statement adoption at The Family Credit Union in Davenport, Iowa, an HFS client which began offering e-statements last summer. "We started by giving away a $500 travel certificate and got 500 e-statement users right away, and now we constantly put it in our newsletters and on our Web site," says Kris Lundquist, marketing coordinator for the $62 million, 15,000-member institution. "There's not a way to get both paper and e-statements in our system, so that's not an issue," she adds. "Some people have tried it for a few months and decided they didn't want it for whatever reason, and they simply resumed getting paper statements." Internal promotions also was a key to steady adoption of e-statements at Virginia's Fort Belvoir Federal Credit Union, a DigitalMailer client where just more than 5,000 of the 22,500 members get e-statements, says Jacque Connor, the $200 million CU's vice president of marketing and business development. "We have worked with Adfluence for online promotion of our e-statements but probably the most successful has been our internal promotion," Connor says. "We incented the staff by setting an overall goal and awarding a day off with pay for the staff person who signed up the most members for e-statements." And as an incentive to members, those who want online check copies can only get them through signing up for e-statements only, Connor says. Meanwhile, one credit union reports that the popularity of its monthly newsletter may be holding back adoption of e-statements. Ohio University Credit Union in Athens has about 1,040 of its 21,000 members on e-statements, a service it began offering in late 2001 at members' requests. "Now we promote it to students when they sign up and on our Web site and in our newsletter from time to time," says Laura Pratt, marketing manager for the $164 million CU, an HFS client. "The one thing our CEO would like to see happen to e-statements is that members who use home banking must opt out of e-statements in order to get paper. He's read about credit unions having success with this kind of programming," Pratt adds, noting that her CU's home banking and e-statement systems "are entirely separate." "But our members really like our newsletter, which of course goes out with the printed statement, so we're thinking that may be one reason some aren't going electronic for their statements," Pratt says, adding that the newsletter also is now available online. -

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