enjoyed robust growth in the US in recent years with more growth to
come, indicates a survey undertaken by CheckFree. Growth drivers
highlighted by CheckFree executives at a recent conference include
broadband adoption and environmental concerns.
Internet
banking and online bill payment (billpay) services have attracted
US consumers in impressive numbers but there is still room for
considerable growth, reveals a study undertaken by online billpay
service provider CheckFree, a unit of financial technology vendor,
Fiserv.
One of the key growth factors is the rapid adoption of broadband
internet services.
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Initially hindered by speed limitations of dial-up internet,
broadband has become “the on ramp” to internet banking and online
billpay, said CheckFree’s senior market researcher, Roger Johnson.
He was speaking at a conference marking the launch of CheckFree’s
eighth Consumer Banking and Bill Payment Survey.
“Broadband is critical to online banking growth,” stressed
Johnson, who cited research from consultancy Forrester revealing
that a household with broadband was twice as likely to use online
financial services than one using a dial-up connection.
Underscoring Johnson’s view, 39 percent of US households with an
internet connection banked online in 2002, a level that has risen
to 70.5 percent in 2008. During this period broadband adoption has
risen from 16.5 percent of households with internet to 70.5
percent. Johnson noted that there are 115 million households in the
US.
Indicative of the potential for further growth in online
banking, of households with an internet connection, some 17 million
have yet to embrace online financial services. In addition, a
further 30 million households have no internet connection
whatsoever.
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By GlobalDataOnline billpay takes off
The strong uptake of broadband and online banking by Americans in
recent years has also had a significant influence on their
propensity to pay bills online. Indeed, online billpay has outpaced
the adoption of internet banking by a notable margin.
In its first survey undertaken in 2002, CheckFree found that
some 16 million (14 percent) of US households paid at least one
bill per month online, a figure that has rocketed to 63 million (55
percent) of households in 2008. This represented a CAGR of 25.7
percent compared with a CAGR of 16.4 percent recorded in the number
of households banking online between 2002 and 2008.
CheckFree found that online billpay increased from 39 percent of
all household bill payments made each month in 2007 to 42 percent
in 2007 with the proportion via bank and billers’ websites split
evenly.
“It is mainly paper cheques that have been replaced by online
billpay and not so much auto-debits” commented Johnson. Indeed,
bills paid online exceeded bills paid by cheques in 2007 – a trend
that remains ongoing.
However, cheques still remain the second most popular method of
billpay, accounting for 31 percent of all bills paid by consumers.
Cheques are followed by automatic direct debit (11 percent), in
person payments (7 percent) and credit or debit card (6
percent).
Even among online households CheckFree estimates that 59 million
still pay at least one bill per month by cheque. If anything, this
is yet another pointer to the potential for further meaningful
growth in online billpay.
Environmental concerns
Of particular significance in the shift to online billpay and
online bill presentation is a growing awareness of the
environment.
“There is an amazing shift in the US consumer’s view on the
environment,” noted CheckFree’s business strategist, Eric
Leiserson.
This shift
was highlighted by the survey’s findings. Among respondents under
the age of 45, 57 percent considered the environment as an
important reason why they use online billing and payment while
amongst those aged 45 and older 44 percent held this view.
Leiserson stressed that prominence being given to the
environment this year by the media, companies and by a recently
launched financial industry body the Pay It Green Alliance are
having a considerable impact on consumer awareness. Indicative of
the impact, he said that a recent environmental awareness campaign
undertaken by New York City electricity utility Con Edison had
resulted in a 45 percent surge in its customers’ use of online
billpay.
From CheckFree’s perspective Leiserson noted: “We are seeing a
25 percent increase in e-bill volume.”
Another major factor assisting online billpay growth is growing
confidence in security, indicates CheckFree’s survey. Only 13
percent of respondents cited online security as the top reason for
not using the online bill payment service, down from 17 percent in
the 2007 survey.
Overall, online security ranked third among barriers to online
billpay adoption, compared to its number-one ranking in 2007. The
primary barrier revealed by the 2008 study was: “I don’t know
enough about how it works.”
