More financial institutions plan to begin offering electronic bill payment and presentment, and those already doing so plan to expand their offerings, TowerGroup said Monday.

Only 1% of U.S. depository institutions now offer both electronic bill payment and presentment, but 7% will do so by 2005, the bank technology research firm said.

Further, it said, this year less than 1% of bills will be delivered as well as paid electronically, but 9% will be in 2005.

"EBPP has been on banks' radar screen for awhile," said Beth Robertson, a senior analyst in the Needham, Mass., firm's e-banking research and advisory service. "It had not been a priority, beyond larger intuitions, because there were other initiatives that had to come first." For instance, she said, until this year banks had to allocate technology resources to year-2000 conversion issues.

She said she expects banks to begin allocating a significant share of information technology dollars to EBPP - 20% to 25% at large institutions.

"Banks are very actively entering the EBPP market," Ms. Robertson said. For instance, Hibernia Corp. in New Orleans, which does not offer EBPP, is preparing to make its mortgage bills electronic, she said.

The potential rewards of investing in EBPP are great, TowerGroup said. In the business-to-consumer market alone it projects that the ultimate conversion from paper to EBPP processes will generate a net revenue gain of $1.4 billion for banks.

But the onus is on banks to keep pace. The nation's large billers are in the forefront of electronic bill presentment.

Of the utility, finance, insurance, and telecommunications companies that produce about 80% of the bills sent to U.S consumers each month, a third are now offering EBPP, TowerGroup said. It predicts that number will grow to 60% by 2005.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.