With merchants and card companies pushing people to abandon paper statements, financial companies are using electronic billing services to keep customers from abandoning their online bill payment sites as well.
A growing number of billers are piggybacking on the popular green marketing trends to encourage people to switch to electronic statements, and some are being more aggressive than others about it — charging fees for paper statements or even eliminating them. But without these monthly invoices, many people are going straight to the billers' sites to pay bills they once paid through their banks.
Banks and tech vendors say revamped e-bill services can stem these defections.
SAFE Credit Union in Sacramento has paired personal financial management systems and e-bill presentment to make its bill-pay service more useful to members.
"Obviously we don't want them going to biller direct," said Tarrah Palomino-Prim, SAFE's e-commerce manager. "We want them coming to SAFE's website."
E-bills, electronic invoices delivered to customers through their banks' websites, have been around for years but the concept has never really caught on with consumers.
Palomino-Prim said her credit union's service can solidify its relationships with its members and boost cross-sales.
"A lot of people don't understand what an e-bill is yet," she said, but those who do "are clearly more profitable. I think bill pay is one of the stickier products that we have in our basket of goodies. E-bill extends that stickiness."
The credit union uses Intuit Inc.'s FinanceWorks PFM software. Incorporating monthly billing data into the application helps people better manage their money, and the combination lets SAFE make bill presentment more conspicuous within its online banking interface, Palomino-Prim said.
SAFE and Intuit are not the only companies using PFM to promote bill presentment. Fiserv Inc. prominently features e-bills in the default configuration of its Corillian Online PFM software.
The Brookfield, Wis., banking technology company said it did this after a 2008 experiment that put bill presentment on the front page of an online banking site rather than burying it as a feature within its bill pay pages.
In the first week after the company gave e-bills such prominence, enrollment in the service jumped 145% a day, and it stayed above the 100% mark for several weeks thereafter.
Banks and billers have long competed for consumers' bill-payment transactions, and a number of observers say paper statements gave banks an edge — consumers typically accumulate several throughout the month and then pay all of them at once, through a bank's site.
But without the details on the bill — the amount due, for example — many consumers must visit the billers' sites.
Banks' e-bill services face increased competition from billers, which are trying to persuade their customers to receive their monthly statements electronically instead of in teh mail.
American Express Co. has taken what might be the most active approach: last year it eliminated paper statements to customers of its global commercial card business, which had 7.1 million cardholders as of April 2009. As a result, about half of those customers quickly began paying their bills electronically, a company spokeswoman said, and nearly all of them did so through Amex's website.
This year, Alliance Data Systems Inc. began charging its retail store card users a dollar for each paper statement they receive, though the operator of private label store card programs said it is too soon to tell how this has changed customer behavior.
Fidelity National Information Services Inc. has incorporated alerts into its e-bill service to help banks notify people about their monthly payments before the billers do so.
Jeff Lewis, the president of Fidelity's e-payment solutions division, said "billers are the ones pushing the messages out to the consumer," not banks. But banks have a way to step in front of that, he said: "mobile alerting based on payment history."
Banks already have data on how frequently their customers pay their bills, Lewis said.
They can use this information to alert consumers that a bill will soon be due — and then notify them that they can view that bill on their bank's website as an e-bill long before the statement arrives in the mail.
"The bill is like your reminder note," Lewis said. "It's the memo you get. It's the thing that sets in motion paying a bill," and the company that sets that process in motion has a better chance of guiding its direction.
Mobile phones are vital to this strategy, Lewis said, since text-message alerts are more timely than most other alerting methods, including e-mail.
"In the mobile models, we're alerting you to things that are relevant to you as a consumer when they're relevant," he said, which is why Fidelity in February expanded its e-mail alerting system to include mobile.
Nacha, the electronic payments association, announced last week at its annual conference in Seattle that it was working with The Clearing House Payments Co. LLC to offer its Electronic Billing and Information Delivery Service to banks. The service lets billers send electronic invoices to customers' banks through the automated clearing house network.
Cathy Graeber, the founder of the consulting and research firm Swimming Upstream, said financial companies should "not treat e-bills as an afterthought."
Bill payment is such an established part of the online banking experience that banks may overlook it as a tool to build their business, Graeber said.
"Banks and credit unions are by no means done in growing adoption in paying bills and viewing bills online," she said.
Financial companies need to get consumers "transacting at their site, locking in that loyalty," she said. "It's something they have to do because I think they've been somewhat complacent in letting billers jump the pack."
A report Graeber published in March said that PFM services can be profitable to financial companies, and she also discovered that many PFM users also gravitated toward e-bills. At one credit union she studied (but did not name), a third of people enrolled in FinanceWorks also receive e-bills.
Both of these behaviors — using PFM and using bill presentment — are associated with higher retention than people who do neither, Graeber found. They also have higher deposits and more credit accounts, she found.
Most banks advertise PFM as a way to view all accounts, but Graeber suggested advertising it as a way to view both accounts and bills.
Promoting the e-bill as part of the PFM view "makes that 'hub' concept really start to pull together," Graeber said.
