Linking online bill pay to a bank’s rewards program is one way financial institutions could revitalize their customers’ use of online banking, suggests a new report.
Banks often have difficulty convincing customers to use online bill pay, suggests the Celent report, which examined top trends in online banking. Checks and biller-direct payments represent some 45% of total bill-pay transaction volume, whereas bill payments tied to online banking represent 25%, Celent claims. In-store payments and direct debits from credit and debit cards account for the remaining 30%.
To encourage greater participation, banks should reward customers who use their online bill-pay services, writes Jacob Jegher, Celent senior analyst and the report.
“Banks want to be the intermediary” with bill payments, Jegher tells PaymentsSource. Rewards can help change consumer behavior related to bill-pay habits, he adds.
The challenge, however, is that offering rewards costs money. And tying merchant-funded rewards to the bill-pay service within online banking could help to overcome this problem because financial institutions would not pay for the rewards, Jegher writes.
Merchant-funded rewards could succeed as long as the bank does not bombard or overwhelm customers with offers, Jegher believes. The offers should be delivered “softly,” he says.
Bank customers also require a simple way to opt in or out of such rewards, according to the report, which suggests a broad and rich merchant network would help gravitate customers to the program.
“A simple reward” is not enough, Jegher says. It should be “an intelligent reward that’s useful.”
Banks also should pressure third-party vendors to be more flexible when redesigning their online-banking services so that changes can happen quickly, Jegher suggests. “Reliance on a bill-pay vendor that is slow-moving or inflexible presents a large risk and challenge,” he writes.
Banks that redesign their online-banking sites should showcase the bill-pay feature in a prominent space, Celent suggests. Customers need “to see that bill pay is easy to access and use,” Jegher writes.
“By making the site more interactive and fresh, banks might be able to drive use in other places,” Jegher says.
What do you think about this? Send us your feedback.
