Bill Pay: Driving Adoption in an Unpredictable Payments Landscape

While new types of payments often steal the spotlight, bill pay is becoming increasingly important for banks trying to shore up their customer loyalty and retention.

Mobile wallets, P2P payments and virtual currencies are just some of the shin new toys of the payments world that have banks worried about the possibility of disintermediation and the future of payments. Even though it isn’t as sexy as those newer forms of payments, bill pay still offers banks tangible benefits in customer satisfaction and insights if they can encourage adoption creatively.

For many institutions driving that bill pay adoption among their customers still presents a difficult -- and immediate -- challenge. “Mobile wallets have been talked about for a long time. Our membership base will want to wait and see what happens [with it]. For us, it’s still a struggle just to get customers to use bill pay,” Jeff Christensen, CIO of Ohio-based Fiberglas Federal Credit Union, said during the ProfitStars user conference this week in Las Vegas.

Among the challenges that Jeff and other bankers mentioned around gaining bill pay adoption were educating employees about bill pay products and making it easier for customers to find where to sign up for bill pay and add new payees on the website.

“To me it starts with employee education. Once the employees use it, then they can talk about,” Christensen explained. The credit union is also switching its website to a new responsive design to help make it easier for customers to find additional services like bill pay.

Bill pay adoption can also be limited by a generational gap in some cases, Kelly Burdette, VP and delivery channel manager at Alabama-based Bank Independent, added. “Older customers tend to be quick followers to new technologies like social media. But we haven’t been able to get that in bill pay. So there is a generational challenge with getting older customers to use it,” Burdette noted.

Banks need to address these challenges though because bill pay users tend to be more satisfied and loyal to their bank. Bank Independent’s annual customer satisfaction surveys have found that bill pay customers have 97% satisfaction rates, according to Burdette.

Susquehanna Bank (based in Pennsylvania) has also found that customers are more willing to stay with the bank if they use additional services with their accounts like bill pay. “We’ve found that if a customer has one additional service with us, the relationship tends to last a year and half. If they have two, then the average relationship lasts about four years,” Connie Hartman, Susquehanna’s vice president and manager of electronic delivery service and support, explained.

Susquehanna has also implemented a number marketing initiatives in recent years to drive bill pay adoption. Two years ago they held a sweepstakes offering prizes for new bill pay users, and one year later the bank found that more than 60% of the new users that signed up during the sweepstakes were still using the service, Hartman reported. In the past year Susquehanna also introduced a new checking account, called Stellar Checking, that rewards customers five cents for every bill payment.

Bill pay can also provide customer insights that can benefit marketing campaigns, Jeff Christensen added. The bank uses ProfitStars’ iPay bill pay solution, which allows Christensen and his team at Fiberglas Federal Credit Union to pull data on their customers’ payments. “We can see if they are making a payment on a credit card, and then send them a marketing blurb offering a better rate,” he remarked.

Alabama-based BBVA Compass has been seen many of the benefits around bill pay usage translate to the mobile channel since the bank began offering mobile photo bill pay last year. “Customer satisfaction with our mobile channel and with the bank is much higher with intensive users [of mobile photo bill pay]. The more they use it, the more they like it,” Alejandro Carriles, BBVA Compass’s executive vice president and director of channel development, said during the BAI Payments Connect conference, also held in Las Vegas this week.

[For More on the Benefits of Mobile Bill Pay: How Mobile Photo Bill Pay Is Helping Community Banks Appeal to Mobile-Only Customers]

Compass was one of the first to offer the camera phone-based bill payment solution, and since then has seen a 51% increase in mobile logins and a 75% increase in payments made through its mobile app, Carilles reported. And some of the new users that have signed up for mobile photo bill pay were not online bill pay users, according to Carilles.

The bank, which won the best functionality award last year from Javelin for its mobile banking app, also makes it easier for new customers to switch to the bank, Carilles commented. “When you open a new account with a new bank, it can be a painstaking process to go through all of the documents and add each of your payees manually. Mobile photo bill pay makes it easy because you just have to take pictures [of the bills to add the payees],” Carilles explained.

But adoption of mobile photo bill pay is not without challenges. It still requires customer education on the part of BBVA Compass to help customers understand the new solution and how to use it, Carriles shared. “If a customer sees something called ‘mobile photo bill pay’ in the bank’s app, they might not know what that is,” he added. Compass is producing a series of 30 second Youtube clips to help raise customer awareness about mobile photo bill pay and understand how to use it.

Looming over the issue of bill pay adoption in the potential of other non-bank players to disintermediate banks’ customers through mobile wallets or P2P payments. This makes the challenge to increase customer satisfaction and loyalty, which bill pay helps address, more urgent in light of that threat of disintermediation. So while banks wait and see how new payments types are adopted they can start improving their bill pay adoption now through optimizing the customer experience for online and mobile to help solidify their customer loyalty.

[The mobile employee -- as well as the mobile customer -- are here to stay. Is your bank prepared? Learn how to set up and maintain a mobile infrastructure that can support today's needs and tomorrow's expected mobile demands. Attend the From BYOD to 802.11ac: How to Build A Next-Generation Mobile Infrastructure session at Interop 2014 in Las Vegas, March 31-April 4.
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Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio