TUKWILA, Wash.-Bank customers who want to become credit union members may give up when they try to switch their electronic payments.
"The hassle of switching bill pay and ACH debits still definitely impedes people, simply because of the amount of manual effort it takes," said Howie Wu, VP-virtual banking at $9.5-billion BECU here, though he was not able to calculate how many potential members may have abandoned BECU because of payment switching.
People who frequently use bill pay and ACH services are the most attractive potential members: they're anywhere from 15% to 75% more profitable than members who don't use those services, according to various studies.
But the "stickiness" of electronic payments could become a sticking point when people consider beginning a financial relationship with a CU. Comprehensive payment-switching automation is nonexistent, according to the credit unions and technology vendors interviewed for this story.
Asked why no one has built a tool that makes it easy to switch electronic payments, several vendors suggested that the idea goes against the very nature of payments services, which are designed, in part, to keep a consumer lodged in place.
"Even if the technology were available, would the losing financial institution be inclined to provide it?" replied Bill Murphy, president of Ballwin, Mo.-based Murphy & Company, an online services consultancy for financial institutions.
The result: credit unions must shepherd potential members through the tedious payments switching process. For each electronic bill payment, a new member must complete a multi-step process online to set up a biller. If the bill pay system can't automatically match the biller to its biller database, the member has to enter all biller information by hand.
ACH Even More Laborious
Switching ACH debits is more laborious. The member must provide his or her new debit account information by calling each merchant. Alternatively, the member could grab a pen to complete an extensive paper worksheet and send it to each merchant.
Granted, new members with a half-dozen payments may be able to accept that they'll have to spend a Saturday afternoon switching their payment accounts. But someone with 187 electronic payments per month-the highest ever completed by one member at BECU, said Wu-may think twice once presented with the task at hand.
At the same time, bill pay providers have built a degree of automation that makes it a bit easier to set up payments.
"In recent years, we've taken steps to streamline the online bill payment set-up process," suggested Steve Shaw, VP-strategic marketing, Fiserv. "For example, areas of the bill payment set-up screen, such as the biller address, can be pre-populated with information. This saves a customer time."
Despite the difficulty of switching e-payments, both BECU and SECU of Raleigh, N.C., are noting a marked increase in new accounts as a result of Bank Transfer Day.
"The BofA announcement gave people the 'enough is enough' motivation to go through the manual switch process," said Wu, even after Bank of America rescinded on its plan to implement debit card fees.
Member enrollments jumped to more than 15,000 in October, up from 9,000 in September, Wu said. And the new members are opening multiple accounts with loans, he added.
"Most new members are switching their entire primary FI relationship," said Wu. "This makes them profitable right out the gate."
At SECU, people opened nearly 30% more checking accounts in September over one year ago, said Rick Rhoads, SVP-eServices at the $24-billion CU in Raleigh, N.C.
