BID® Daily Newsletter
Mar 26, 2008

BID® Daily Newsletter

Mar 26, 2008

OPENING A PRESENT


Most would say holidays where presents are given and opened are the most fun holidays of all. Who doesn't like to open a wrapped box to see what kind of surprise lies just inside? Maybe that is because every few gifts or so, money is given out and bankers light up in anticipation of capturing new deposits. Or, perhaps it is that the word "present" is embedded in bill presentment and these same bankers see profitable clients and cash management opportunities.
Whether cold hard cash or cash management, we only know that bill presentment provides an interesting and profitable opportunity for community banks. In short, electronic bill presentment gives customers flexibility when paying bills, while increasing bank profitability.
For most banks, electronic bill presentment is a free service that can be added to online banking services. It allows companies to send and receive e-bills electronically. Doing so allows bank customers to receive bills when they are away from the office, pay bills automatically, set thresholds to avoid paying balances that are over a specific amount, maintain bills online (instead of in paper form) and save payment history. For the bank, the customer relationship is deepened and the delivery channel is more cost effective than traditional banking alternatives.
One interesting fact we dug up as part of this piece is that studies find customers that use a bank's platform to aggregate their electronic bill presentment process are also more loyal and more profitable. In fact, customers that use bank bill presentment services are 86% more lucrative than customers using other channels (like the branch) and 22% utilize more products and services of the bank. For those community banks wondering how to capture and retain more profitable clients, online bill presentment aggregation platforms can make a lot of sense.
Even more interesting than these statistics, however, consider that studies also found that customers utilizing a bank's electronic bill presentment platform are even more profitable than those who just pay their bills online at the bank. Specifically, this client is almost 16% more profitable than regular online banking customers.
While on a percentage basis, a higher number of customers pay e-bills directly through large companies (i.e. utilities), bank aggregation platforms are quickly catching on. People would much rather go to a single source to pay and receive bills than signing up with individual companies.
If your bank is still exploring online bill presentment, know that it isn't too late to get involved. If you need just one more fact to make that happen at your bank, consider that customers using online bill presentment are also 78% less likely to switch banks than those who only utilize the branch to conduct their business.
We hope this present helps in some small way as you begin your day and we leave you this morning with one final thought - despite myths to the contrary, we know many bankers that are quite happy to act like kids around presents, so get out there and start unwrapping them.
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