Langley Federal Credit Union is making one of the products that bonds customers to online banking even stickier: bill pay.
Once customers have linked their bills to their bank, the convenience makes it harder to extricate themselves from their institution. But banks may be missing out on this prime opportunity. A report about bill pay from Aite-Novarica Group in November 2021 found that the number of bills paid through banks decreased year over year by 2.9% between 2016 and 2020, even though the total number of bills paid, regardless of channel, increased.
“Consumer expectation for a one-click, frictionless bill payment experience has often been better addressed by a biller’s solution rather than an FI’s solution,” reads the report. “This reality has resulted in bank bill pay solutions steadily losing ground against biller-direct solutions over the years that Aite-Novarica Group has been tracking the market.”
Langley, which is based in Newport News, Virginia, will be the first financial institution to go live with a payments hub called Bill Center when it debuts the service on August 29. Bill Center was launched after cloud-based bill payment technology company Paymentus Holdings acquired electronic billing and payment vendor Payveris in 2021. It’s a tool that exists within a financial institution’s digital banking system and lets customers consolidate, view, manage and pay their bills in one spot. It offers a range of payment options, including cards not associated with the financial institution. The payment goes through in real time for billers who accept card payments and the user immediately receives a confirmation number from the biller.
Having this card capability is extremely important, say analysts at Aite-Novarica Group, because people go directly to the biller websites to use their preferred cards to pay, and so they can pay at the last minute and get a real-time credit to their accounts.
Kevin Farnsworth, director of digital banking at the $4.5 billion-asset credit union, believes a few features about the new bill pay feature stand out: the ability for customers to make real-time payments using debit or credit cards, Paymentus’s wide network of biller relationships, which broadens customers’ abilities to make more or all of their payments electronically in one spot, and the flexible payment options.
“I know other providers, including our current one, are working on real-time payments, but Payveris is ahead of anyone I was talking to,” said Farnsworth.
Bill Center lets financial institutions turn on a variety of payment methods and channels including any credit or debit card (not just one branded by the financial institution), ACH, and in the future, digital wallets. Langley is still debating whether to restrict card usage to its own family of credit and debit cards or let customers choose their preferred card.
Upgrading online bill pay was part of Langley’s overall agenda to improve its digital experience. When Farnsworth told senior leadership that 50,000 customers of online banking used bill pay, out of 175,000 online banking users, the response was, “‘I would have thought it was higher,’” he said.
Hooking customers into multiple products inside online banking is key. “They’re not going to leave your online banking, which means they’re not going to leave your financial institution,” said Farnsworth. “Bill pay has to be very high” on the list of stickiest features.
At a recent meeting with his user group for credit union members who use digital, Farnsworth floated the possibility of paying a bill through a digital wallet. “It was one of the most exciting things I said in the hour I spent with them,” he said.
Although Langley is the first customer, Payveris reports that a half-dozen banks and credit unions have signed up.
Another advantage for financial institutions is the wealth of data that comes with learning more about a customer’s financial obligations, said Marcell King, chief innovation officer at Payveris.
“You can use it to understand consumers’ payments and behavior to cross-sell other services more relevant to them, or use it to act as a proxy to the credit bureaus,” he pointed out. “If you know their bills and due dates, you can see what their financial health looks like.”
Farnsworth is also adopting a Paymentus product called Loan Payments at the end of this year, which Payveris is rolling out to its customers. Like Bill Center, this product will let loan payments be made in real time by connecting to the financial institution’s core. Loan Payments broadens the methods borrowers can use to make their payments, especially if their primary banking relationship is elsewhere, including ACH, debit card, digital wallets, and paying by cash at Walmart. The channels through which customers can pay include mobile, text, interactive voice response, via electronic statements, and PayPal.
Langley will let borrowers pay for their loan with any debit or credit card, ACH and check. Upgrading this experience is key to Langley because it has an active indirect auto lending business.
“It’s extremely important to those members to have multiple options to pay their car loans,” said Farnsworth. “It’s important to us to make it a great experience so they open a checking account or get their next loan here.”
