A new study sponsored by Fiserv Inc., in Brookfield and conducted by Chicago-based Aspen Marketing Services recently found that consumers who pay bills online are more profitable customers for their banks and more loyal to their financial institutions due to their use of online bill pay services.
Customers who began using online bill payment during the course of the study delivered 15 to 20 percent more profit to their financial institution when compared with similar customers who did not adopt the online service. Further, customers who paid bills online were 76 percent less likely to leave the financial institution.
The study also showed that bill payment data can be used to reliably predict customer behavior. Decelerating online payment activity served as an early "red flag" that the customer was likely to move his or her account to another institution in the near future, providing the financial institution with an opportunity to take preventative action.
"The Fiserv and Aspen Analytics Study is the most comprehensive of its kind to date and again proves that online bill payments create a much deeper and more profitable relationship between the household and the bank or credit union offering these services. These findings are particularly significant for financial institutions that are increasingly competing to grow and retain deposits in this challenging economic environment," said Kirk Gripenstraw, senior director of analytics for Aspen Analytics. "Consumers get hooked on the convenience of these services and don’t want to go through the time-consuming transition of accounts and bill payment transactions that would result from moving to another bank or credit union. By mining transactional data to identify those customers whose bill-pay activity is declining, financial institutions can identify those most at risk of leaving and use this window of opportunity to try to prevent customer churn from occurring."
The Online Bill Pay Longevity and Lifetime Value Study conducted by Aspen Analytics, a division of Aspen Marketing Services, and sponsored by Fiserv, analyzed transactional data from nearly 10 million customers at one of the top 10 banks in the United States during a 16-month period in 2007 and 2008.
"This landmark study proves that online bill pay is a strategic pathway for financial institutions that want to drive increased value from their customer relationships," said Geoff Knapp, vice president of consumer marketing and analytics, Electronic Banking Services, Fiserv. "By increasing customer adoption of online bill pay services and optimizing their online channel for cross-selling purposes, financial institutions can achieve significantly higher rates of customer retention and profitability, while encouraging consumers to consolidate more of their financial lives with their primary financial institution."
To download the research brief, visit www.checkfree.fiserv.com/whitepapers.
