Online Banking, Payments Outpace Growth of Internet

Online banking and mobile payments are growing at a faster pace than the Internet, according to Fiserv's 2010 Consumer Billing and Payment Trends Survey.

The survey, published today and available through Fiserv's website, also found online bill payment users to represent a broad demographic in age and income, that consumers who use online bill payment are more loyal to their financial institution and that the bill payment marketplace has become increasingly fragmented. There is an almost even split between males and females using online bill payment services.

While about 95 million U.S. households use the Internet, 72.5 million of those households participate in online banking, with 36.4 million using online bill pay. Those numbers represent a 51 percent increase in Internet usage per household since 2000, and an even larger increase of 84 percent in online banking and 78 percent in online bill pay. The number of online bill payment users receiving e-bills is also increasing.

With the higher rate of adoption comes a more diverse userbase.

"The face of online bill payment has changed significantly over the last decade," said Geoff Knapp, vice president, Online Banking and Consumer Insights, Fiserv. "Early users were tech-savvy and tended to be young and male, as is typical with new technology. Now it's moms and seniors and people at all income levels using the service. Online bill payment has become mainstream, and there's still room to grow."

Though growth in online bill payment provided by banks is positive, the overall market remains fragmented. One area of weakness could be among Generation Y, consumers born between the late-1970s and the late 1990s, who are adopting new technology at a high pace, but are more likely to pay through a biller direct service.

The Fiserv report concludes online banking and bill payment are no longer "early adopter" technologies, and often lead to increased customer loyalty. While consumers often hear about online options through word of mouth, bank branches have the best opportunity to educate customers on the services they provide.