Bank: Fifth Third
Problem: Bill-pay adoption was straggling among a reluctant online user base.
Solution: The bank involved customers directly in features and platform selection.
Fifth Third Bank set an aggressive goal for bill-payment penetration among its online banking customers: a 40% increase in two years. To achieve this, the bank knew it would need to modify the service. How the regional's executives decided which changes to make was as clever as it was direct. They simply asked customers what they wanted the bank's bill-pay solution to do that it didn't do already? The answer: custom-scheduled payments.
Ultimately, Fifth Third let its customers decide which system the bank deployed by putting the actual bill-pay interfaces under review in front of the customers, asking them which they liked best.
Functionality was less of a factor in deciding which new system to tap. Competing bill-pay systems all provide custom-scheduled payments. Incumbent provider Fiserv's fully hosted system also offers it. Fifth Third had been a batch-bill-pay client of Fiserv. In that arrangement Fifth Third controlled the user interface and the debit process, Fiserv says, whereas Fiserv would process credit files sent by the bank.
The bank declined to specify the exact interfaces customers tested, but "customer feedback was that FIS' Payment Manager, the user interface we deployed, was simple to use," says Larry McClanahan, director of digital delivery at Fifth Third. The bank finished converting online bill-pay users to Payment Manager in October.
Speedier pay times resulted from switching to a different payment processing model, according to Fiserv. Fifth Third moved from an archetype with Fiserv that requires sufficient available funds to a risk-based model with FIS that pays regardless, Fiserv says. Both vendors offer either method. Fifth Third would not discuss payment model use.
"Before, money would be subtracted from the account immediately, but it would reach the payee two to five days later, so the customer had to do some advance planning," McClanahan says. "With the new system, they don't have to." Payment Manager offers customized bill-pay scheduling, including next-day payments; automatic payee address fill-ins culled from a database; and e-billing aggregation.
Fifth Third, of Cincinnati, remains a customer of Fiserv, McClanahan says. The $115 billion-asset bank uses Fiserv's Frontier account reconciliation, UniFi PRO and MortgageServ loan origination and servicing systems, and image-enables its mortgage documents via the vendor's Imagesoft Nautilus content management solution.
The new system includes "reporting so customers can understand better what they're spending money on based on where their bills are being paid," McClanahan says. "It's not account aggregation where you can pull in and calculate your net worth and understand that piece, but it shows, 'You spent x dollars this month, with x percentage going to utilities, y going to your home and z going to cars or entertainment.' " Emails notify users when bills are due and when a payee is added.
Online bill payment has long been touted to banks as a means to cross-sell and increase fee-based revenue. At the same time it promises to cut costs by getting customers to consolidate their bills online with banks and to self-serve. Many banks have adopted bill-payment services from big providers like Fiserv and FIS. Many have partnered with personal financial management providers and bill-aggregation upstarts like Yodlee to capture some of this business.
"Revenue opportunity is maybe not the right word," McClanahan said. "Bill pay is a sticky service that will help us build deeper, long-term relationships with our customers. That's really what we're trying to do here."
Forrester predicts 63 million U.S. households will be using online bill payment by 2014, though it remains unclear what percentage will use their bank to do so. In a report released Nov. 3, Forrester analyst Brad Strothkamp said that of the 65% of online bank customers who had yet to adopt online bill pay, two-thirds had never tried it and did not plan to.
McClanahan knows it won't be easy for Fifth Third to reach that goal of getting 40% of online customers to convert to bill pay. "A large percent of our customers that use online banking haven't transitioned over to the online bill-payment solution," he says. "But we just concluded migration. Now we're marketing its benefits."
A bill-pay microsite that recently went live enables Fifth Third customers to view a video tutorial showing how the system works or use a demo the bank created with FIS. Enrollees can also enter a contest for the chance to win $10,000 worth of holiday bills paid by Fifth Third if they use the service to pay at least five bills. The implied rubric: Frequent use equals better odds for cash prizes.
