By Chris Musto, vice president of research, Gomez, Inc.
Insurers can learn some valuable lessons about online customer service and consumer preferences from the banking industry's experiences with online banking and bill payment. While the majority of consumers may not be flocking to their banks' bill payment offerings, these services do help banks satisfy and retain their most profitable customers. Wells Fargo, for example, reports that online banking customers who use its bill payment offering exhibit 68 percent lower attrition rates than equivalent offline customers. Bank of America, meanwhile, cites an attrition reduction figure that's even more dramatic: 75 percent.
Gomez research supports these findings. A recent study indicates that consumers use and appreciate bank-sponsored bill payment-but not for paying every kind of bill. The research shows that 7.5 million "Active Web Bankers" pay bills through their banks' pay-anyone online offerings at least once per month. Active Web Bankers are customers who check balances once a month and engage in at least one kind of customer service or financial transaction per month through a bank's Web site.
These customers represent 55 percent of the 13.6 million Active Web Bankers and one in three of the 22.3 million total online banking consumers-those who report at least minimal Web banking usage.
Online bankers rely on bank-sponsored bill payment to varying degrees, depending on the kind of bill being paid. The most common are telephone or utility bills, with almost 30 percent of online bankers reporting they paid their last bill of this type through bank-sponsored bill payment. And while online bankers are less likely to pay credit card bills via bank-sponsored bill payment than at the issuer's site, nearly 23 percent paid their last credit card bill on a banking site.
High usage rates for telephone and utility bill payments are related to cooperation from these billers, who are inclined to participate in consolidated bill presentment because they don't typically compete with retail banks' holding companies and are rarely engaged in invoice-based cross-marketing or in development of online account management areas. These bill payments are typically smaller in amount and involve less risk of late fees or other penalties associated with a delay of a couple of days when compared with credit card or mortgage payments.
As one looks at insurance and mortgage payments, however, the numbers start to fall. Due to a heavy reliance on direct debit, particularly for insurance payments, fewer than 15 percent of online bankers paid their last insurance bill through their banks' online offerings, while only 12 percent of online bankers paid their mortgage bill this way.
Striking among regular users of bank bill payment is the high level of satisfaction with the Web banking offering overall. On a scale of one to seven, with seven being "completely satisfied," less than 6 percent of online bankers rate their satisfaction with their most-frequented Web banking offering below four, while nearly 59 percent rated it a six or seven. Among "Active Web Bankers," regular bill payers are more likely to express satisfaction, with more than 86 percent expressing satisfaction with the service, versus 79 percent of those who don't regularly pay bills online.
Interestingly, "Occasional Web Bankers" (online banking consumers who are less active than Active Web Bankers) show the same 79 percent satisfaction rate. This suggests that satisfaction with Web banking doesn't depend on how heavily one uses it, but rather how often one uses the bill payment option.
Both regular users of bank bill payment and online bankers in general, however, prefer to use phone customer service when something goes wrong. Roughly 52 percent of each group prefer to use the phone to resolve a routine error such as a balance discrepancy.
Chris Musto is vice president of research at Gomez, Inc., a Waltham, MA., market research and consulting firm that specializes in Web site usability, utility and performance. Visit www.gomez.com for more information.