Oh no! Online banking saturation is lurking behind the door [UPDATE]

November 16, 2011  |  Adoption, Electronic Invoicing, North America

What do you do when want to convince people of facts that have a particular interested to you(r sales)? You build yourself a research. And when it comes to electronic invoicing, online banking or purchase to pay, there are a lot of people who have a particular interest. And so you and I can receive new researches, white papers and so on about every other day.

Every now and then (definitely not every other day) the research findings show some interesting insight. So does a recent report from Javelin Strategy & Research, that states online banking adoption appears to have reached its limit. In the US that is.

Online banking saturation: the facts and findings

You don’t have to read (or buy) the research. Why? Because Javelin Strategy & Research provided the perfect summery: “the findings revealed that while online banking has clearly established itself as a vitally important self-service channel, the [US] adoption rate for online banking has tapered off.”

So now you know. But because we love to bore you, we have some more findings (mind you, these are US statistics):

  • Javelin’s forecasts slow growth for viewing and paying bills online through financial institutions and biller websites.
  • In fact, consumers are putting the brakes on online bill pay
  • So, whereas the financial services industry is convincing consumers to move away from paper statements, these very consumers keep concerns about the process.

UPDATE: Zumbox confirms move to paperless billing has “stalled” in US

US digital mail provider Zumbox has said 10 years of transactional mailers to switch to online billing has effectively “stalled”, on the grounds that it is too complicated for consumers.

Zumbox said a decade of effort from transactional mailers to cut costs by encouraging customers to go digital has “stalled”, as more Americans continue to prefer to deal with bills and accounts through the physical mail, rather than lots of different online accounts.

The digital mail provider said national adoption of paperless systems was stuck on 15-20% of the US public, despite the fact that 80% of Americans were regularly carrying out retail transactions online at least weekly. It said regarding digital communications, consumers want a more simple, convenient option where they are in full control of their documents.

General online banking statistics

And we have some (again: US) statistics too:

  • Weekly online banking use has doubled since 2005, reaching 65% in 2009
  • the percentage of consumers who have never banked online has been cut in half
  • the Web is consumers’ preferred channel for checking account balances, transferring funds and paying bills
  • 81% of those who managed their household finances, banked online at least once in the past 12 months.
  • this rate is expected to remain flat through 2016, increasing only through population growth.
  • Online banking has not only become the primary mode of contact for profitable customers, it also has provided a launching pad for mobile banking.
  • Consumers have embraced the idea of logging in around the clock to deal with banking chores at their own convenience

Statistics on electronic billing

The year 2011 has also seen a shift in paperless practices:

  • 37% of consumers receive electronic checking account statements
  • 35% rely on paper statements, a notable change compared to 48% in 2008.
  • Twice as many consumers pay their eight most common bills online as opposed to by mail.
  • Decline: 54% of consumers paid a bill online through their financial institution in a past month, while 63% did in 2009.
  • 50% of consumers went online to a biller site to pay a bill during that same month, compared to 51% in 2009.
  • Online banking and bill pay lags at smaller financial institutions: compared to 82% of customers at Bank of America, Chase, Citicorp and Wells Fargo, 67% of community bank customers banked online each month.

Online banking recommendations

Javelin offers several recommendations to help reverse negative trends.

  1. Upgrade online banking systems and emphasize personal financial management capabilities.
  2. Encourage online bill pay by sending reminder messages and tailoring them according to the degree in which the consumer uses online banking and bill pay.
  3. Utilize financial alerts and notifications to eliminate the need for a paper statement as a bill pay reminder. Example: financial institutions can offer a mobile app that creates a queue of unpaid bills and tracks when they’re scheduled and paid.
  4. Addressing consumers’ fears about online bill pay by letting them know it’s convenient, allows them to view past payments, and most significantly, is safe and secure.

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