CAMBRIDGE, Mass. – One of the biggest of the big boys is dropping its bill presentment service altogether, but to other financial institutions that might be thinking of killing off that half of the electronic bill-paying enterprise, a leading industry analyst says, "Don't go there." "By dropping its bill presentment service, Bank One is taking a calculated risk. Others should not follow suit: Presentment is critical to growing the base of online billpay customers," says Ron Shevlin, principal analyst at Forrester Research. Bank One is following Bank of America's successful lead in providing billpay services for free, but the Chicago-based banking giant has decided that bill presentment is too expensive. The demand also is not there yet, and "the bank is betting that few will defect to either another bank or to direct-biller sites" to make their payments, Shevlin says in a new report titled "Don't Try This at Home: Bank One Drops Bill Presentment." Most medium and large credit unions already offer online billpay, in many cases for free. Electronic presentment also is being eyed as a way to keep the member at the credit union Web site, away from competitors that include banks and the billers themselves. Bank One, meanwhile, can play both sides of the coin. While it may lose some customers to biller-direct sites, the big bank has a lot of those same billers as clients itself, so it can earn payment processing fees from those transactions, anyway. The big corporation also can afford to build its own solution in-house at a lower cost if the demand increases. "This is consistent with its corporate strategy to in-source technology development, but not a feasible alternative for many smaller institutions," Shevlin observes. Indeed, not many credit unions have as members businesses that offer electronic billing sites, nor do they have that kind of internal IT power. Nevertheless, Shevlin reiterates that bill presentment is going to be increasingly crucial for attracting and keeping the loyalties of individual consumers, the people credit unions exist to serve. And consumers are not willing to pay much, if anything, for the service. "Financial providers need free billpay to drive adoption. We've advocated this for years," Shevlin says. "For consumers interested in bill payment, cost is the biggest barrier keeping them from enrolling." And, it follows naturally that bill presentment would follow. He says Forrester research shows that consumers tend to use biller sites instead of their financial institution's sites, when they do have that option, because "they're free and easier to view and pay bills on." He further points out that 36% of billpay users say they would use their financial institution's site to have all their bills presented if it were free. But only 1% of the respondents in Forrester's research said they would pay a $5 monthly fee to have all their bills presented at once. -

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