People are flocking to pay their bills online- but not necessarily at credit union websites.
That conundrum prompted three diverse credit unions and two service providers to sit down and hash out the hits and misses of electronic bill pay during an exclusive roundtable this month with The Credit Union Journal.
More than half of U.S. online households will use bill pay next year, according to Forrester Research. In stark contrast, less than 20 % of online members are paying bills at most CUs, according to Callahan and Associates.
Roundtable participants did not question the idea that bill pay is vital. Instead, they focused on how to increase penetration, revealing that the failure of bill pay is deeper than the well-publicized "free or fee" debate. Security, the slow process of education- and the membership itself- make or break the service for these CUs.
CUJ: To quote the old saying: 'You can lead members to the website, but you can't make them pay bills.' Is it accurate to say that CUs are just beating their heads against the wall trying to get members to use bill pay if their memberships don't have the technology access or prowess?
Dixie Abramian, LA Firemens' CU: Based on demographics alone, there are some members that you're just not going to get. But with LA Firemens' demographic, it's easier for us to educate members about bill pay. We have an 'upscale' membership, according to Raddon Financial Groups consumer segments. A lot of our members consider us their primary financial institution. All fire stations have computers. The employees work and live together, and they teach each other about electronic services.
Deborah Guerin, Navy FCU: Our demographic is much more diverse in terms of economic status. And we don't always have the opportunity to educate our world-wide members face-to-face. But I do think that younger people, who are growing up with computers, will have a greater propensity to use Internet services from the start.
CUJ: Many members are worried that their financial information will be stolen if stored online at a CU site. Are concerns about security blocking adoption, and if so, what are the solutions?
Vonda Burkhart, Employees CU: In our survey of bill pay users, respondents who don't use bill pay said across the board that security was the reason. Yet statistics show that people are going in droves to biller-direct sites and plugging in their financial information. I don't get it.
Abramian: We address security concerns through education, such as sending emails to our members explaining our policies. Our penetration numbers show that our members trust the service, even though they're concerned about security.
Guerin: Even though on our website we encourage members to use anti-virus and firewall software on their PCs, we can't ensure whether they are taking these precautions. We're going to try to pilot two-factor authentication of identification at our website. Certainly, this will be very costly for us and could add a layer of inconvenience for the member.
Burkhart: Right, and members are already complaining about password requirements. Security doesn't always allow the ease of use a member wants.
CUJ: There's no magic bullet, but is there a unique educational or marketing approach worth trying?
Abramian: We present bi-weekly webinars through Genesys Conferencing. Members go to a web address and we push the bill pay demo to them. At the same time, they call in on a toll-free number and can ask questions. The cost to us can be as low as $30 to $40 per month, and 5 to 10 members attend each Webinar. It's absolutely cost-effective, and it's a lot better than devoting human time going branch to branch. We do these Webinar demos in addition to our regularly available website demo.
CUJ: What's the competition like outside of the credit union world?
Guerin: Another thing our bill pay programs are up against is the biller-direct sites, where people can pay with their credit or debit cards, which have rewards programs attached. A better way to market our Web bill pay service would be if we could allow members to make the payment choice that's right for them, whether it's a checking account, credit card or debit card. I've approached CheckFree in the past to discuss this possibility.
Burkhart: Right. Our Member Service Representatives are saying that members just want to be able to plug in their credit cards.
CU JOURNAL ROUNDTABLE MEMBERS:
$53-million in assets, Dallas
Vonda Burkhart, chief financial officer
Internet banking active use: 17% of total accounts
Bill Pay active use: 5% of checking accounts
Bill Pay provider: Princeton eCom
Free or Fee: Free/Fee structure
Quote: "There's a segment of the membership that's just resistant to using Bill Pay."
Los Angeles Firemens' CU
$695-million in assets, Pasadena, Calif.
Dixie Abramian, vice president, marketing
Internet banking active use: 39% of total accounts
Bill Pay active use: 28% of checking accounts
Bill Pay provider: Mastercard RPPS
Free or Fee: Free
Quote: "Security is our members' top concern."
$25-billion in assets, Merrifield, Va.
Deborah Guerin, vice president, Electronic Services Division
Internet banking active use: 29% of membership (2.6 million members)
Bill Pay active use: 9% of checking accounts
Bill Pay provider: CheckFree
Free or Fee: Free/Fee structure
Quote: "We're up against the biller-direct sites."