CAMBRIDGE, Mass. — After an initial growth spurt, consumer adoption of online bill pay seems to be slowing, according to a new report from Forrester Research, and new tactics are now needed to maximize the channel.
"As annual growth rates for online bill pay slows, financial institutions can no longer afford to focus solely on enrolling new users," said Emmett Higdon, author of the report titled "Online Bill Pay's Last Mile: Encouraging Activation and Avid Use."
"They will realize the bottom-line benefit from their bill pay operations only when users are fully engaged in the service," Higdon said. "To achieve this, they must use a combination of hand-holding when the account is opened, new payee-switching technology, high-touch follow up, and a business model that values bill pay activation more than enrollment."
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Financial institutions typically use promotions such as direct mail and iPod giveaways to encourage enrollment in bill pay and measure success based on enrollment.
Higdon called that "a statistic that overlooks the critical issue of usage" because activation and use don't necessarily follow.
However, once consumers sign up for electronic bill pay and presentment, providers rarely continue working to ensure the new users become frequent users.
"Users who pay one or two bills a month in order to satisfy the requirements of a promotion are not likely to become fully engaged in the services without further prodding," Higdon said.
But rarely do banks send activation reminders, he said. And minimal assistance is typically offered to new EBPP users, leaving it to the consumer to navigate through the complex world of online banking and bill pay on their own as their financial institution attempts to maximize the number of services and options offered.
An area of difficulty Higdon cited in particular is adding new payees, also an area where he said few attempts have been made to simplify the process.
Because little help is offered, the Forrester report said, new users often begin EBPP by paying one or two bills to explore the process. However, users only paying one or two bills online also are more likely to abandon the service when they encounter difficulties.
To encourage use, Higdon recommended the development of bill pay on boarding programs that include "appointments" to be scheduled with consumers to walk them through the process.
While setting up EBPP, users are often forced to deal with "unfriendly" input screens with confusing designations such as "Verizon1, Verizon2 or Verizon3," the report said. Instead, Forrester recommends setting up groups of similar payees by industry or ZIP code.
New users confronted with problems also are frequent uses of call centers. Call center staff should be experts in the field. "Ideally, staff would be bill pay users themselves–and already familiar with the hurdles and pitfalls customers are likely to encounter," Higden said.
One of the most complex parts of setting up EBPP is converting from one financial institution to another. To win new business, tools should be provided to make that much easier, Forrester recommended.
However, the report said, the ultimate tool in encouraging EBPP growth is to measure more than enrollment. Measuring usage by consumers will help to determine service lost to such channels as biller direct, as users transfer for better service and faster payments.
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