The Paperless Chase

As online delivery of statements and checks is rapidly becoming the norm in consumer banking, banks are now following through on their plans to take paper deposit statements and delivery of paper checks out of the system altogether. With the growth and maturity of online document delivery, we consider how banks are designing online statements and check imaging into their online banking offerings and marshalling these features in support of paper-suppression campaigns.

Examining the 30 banks on the Watchfire GomezPro Banker Scorecard, several features of the online document delivery trend are coming into focus. First is the extensive use of PDF statements for online deposit statement delivery, which contrasts with the trend toward interactive HTML for credit card statements. Of the 16 banks offering online checking statements, eight offer PDF statements, two offer HTML statements and six offer both. Meanwhile, credit card issuers are much more likely to offer HTML statements than PDF statements.

Driving the different choice of formats is the different role the monthly statement plays in how customers manage their deposit and credit card accounts. With credit cards, the requirement to make payments by a given date based on charges during the statement cycle focuses the customer on statement-based information, such as the spending during the cycle or the due date for the payment. But for deposit accounts, consumers typically only need to consider what appears on the standard transaction history page. The deposit statement is essentially an official archive. Therefore, while most credit card issuers design online statements that users can drill down on and link from, online deposit statements often mimic the mailed statement.

A year ago, banks were telling us that they would eventually use online statement delivery as a wedge to separate customers from their reliance on mailed statements. Now we see more and more banks taking a very direct approach to this effort: Many banks, including regional and super-regional banks such as First Tennessee, Key, U.S. Bank and Wells Fargo, now require paper suppression in return for online statement delivery. A checking account from Charter One Bank offers particularly attractive rates and fees, but it comes with the requirement that the customer suppress paper.

Online check delivery, the display of images of cleared checks within online banking, comes on the heels of a multiyear campaign by banks to curb the practice of returning checks with statements. The result is that online check images may already be more widely obtainable at mid-size and larger banking institutions than the checks themselves. Of the 30 Scorecard banks, only Webster Bank returns checks for all accounts while not displaying check images online.

With the enactment of Check 21, all banks will have the ability to handle digital check images within the enterprise and will at the same time have to accept digital images for processing. There is only a small marginal cost for a bank to build online check imaging beyond what it has to spend anyway to handle Check 21. Meanwhile, the future of check return with any bank's mailed statements is in doubt.

Generally, about three out of every four Scorecard banks now provide online check images, while less than half of these Scorecard banks offer to include check copies or images with the paper statement for all checking accounts. While some of the Scorecard banks that do offer to return checks with the paper statement charge for the service, no Scorecard banks charge for online check imaging.

Banks are now explicitly coordinating online check imaging with check safekeeping campaigns. For instance, Charter One requires making online check imaging available only to customers not receiving returned checks with their paper statements. Hibernia provides online check imaging for free, except that it charges $2 per month for customers who do not then agree to stop receiving checks with their paper statement.

To further reinforce customer interest in not only viewing documents online but in suppressing paper delivery, banks are highlighting the value of paper suppression in reducing exposure to identity theft and account fraud. Indeed, as a result of recent legislation, the growing popularity of online banking, the ongoing pressure to drive out costs and security concerns, banks will be pushing online-only delivery even harder.

Alice Wang is a Research Analyst with Watchfire GomezPro in Waltham, MA. She can be reached at [email protected].