An Opportunity Financial Institutions Can't Afford to Miss
The future of money movement revolves around something familiar to everyone: bills.
The foundation of one’s financial health is grounded in the ability to pay bills on time. It might sound obvious, but if a person can manage and pay their bills on time, it becomes so much easier to tackle more ambitious financial goals — saving, borrowing, retirement planning, investing and more.
As the money movement space becomes more atomized, it can be challenging for financial institutions to compete with so many startups, challenger banks, billers and payment companies. You might improve one aspect of your service and then find that another is already being disrupted. However, because of the fundamental nature bills play in one’s financial health, FIs have an opportunity to reclaim a central role in their customer’s financial future by simplifying how customers manage and pay their bills and other financial obligations.
A Fractured Payment Landscape
Today, the average consumer pays between 10 to 15 bills per month with an increasing number of options to do so. Out of the 15.5 billion bills paid every year, 62% are paid online through a mix of biller websites, banks, subscription services, mobile apps and other third-party payment companies.
Though there are more ways than ever to make payments, it’s becoming increasingly difficult for consumers to achieve consistency and confidence in how they track, manage, and pay their bills. A recent Aite-Novarica study found that out of all the bills paid online, 64%, or 10 billion, are made as one-time payments. Without a consistent, consolidated look at outstanding bills, it’s no surprise that consumers lack confidence in their ability to manage and pay them on-time.
Amid such uncertainty, consumers are overwhelmingly heading towards individual billers — 76% of online bill payments are made at individual biller sites, compared to 62% a decade ago. Individual billers offer consumers something FIs currently lack: transparency, speed, and payment assurance. On a biller’s website, consumers can see statements, make payments using a variety of real-time options — including their credit card to earn reward points — and instantly receive confirmation that the payment has been posted.
This, however, comes at a cost. Users have to juggle multiple user names, passwords and payment methods. Though it’s easy to pay monthly bills, it’s difficult to see, much less manage, one’s entire financial health in a single place.
To make matters worse, traditional bill pay options through FIs have not improved over the last decade — antiquated systems often have inconsistent payment methods that take days to post, with no assurance that the biller received the payment.
Reimagining Bill Pay
Consumers haven’t forgotten about bank bill pay. In fact, 74% of consumers would prefer a centralized bill payment and management solution, However, 89% want more payment options from their digital banking experience, according to a 2020 Aite-Novarica Group survey.
Payveris’s Bill Center solves the “bill pay conundrum” for FIs by first offering consumers a way to centralize their bills, subscriptions, financial obligations and payment methods into a single hub. Bill Center also provides full bill details — such as due dates, balances and payment history from 15,000+ billers across the country. Second, the Instant Payment Network(R) powered by Paymentus offers consumers a multitude of ways to make payments and send money in real time, regardless who it’s going to. And with the ability to track due dates and cash flow combined with flexible rules-based auto-payments, it empowers consumers with more control over how they automate and schedule payments.
How Financial Institutions Can Transform Their Bill Pay
Incorporating Bill Center into an FI’s existing online banking experience not only gives consumers the bill management and payment experience they’ve been looking for, but importantly, reestablishes the FI as the central hub for their customer’s financial lives. This leads to added benefits in three key areas.
Consumer engagement and stickiness
Adding Payveris’ Bill Center gives FI customers the ability to gauge their financial health in a single, easy-to-access place. It’s a win for customers, because it makes it easier for them to manage their money and focus on financial goals, whether they are borrowing, investing or saving. It’s also a win for the FI, as customers who have a solid grasp of their financials are empowered to take advantage of other products and services the FI offers. And because customers are spending time on FIs’ websites for Bill Pay, FIs have more opportunities to advertise those products and services to them.
Keeping your card top-of-wallet
A challenge that FIs face today is that while customers still look to them to hold onto their money, they’re increasingly using other cards and methods to spend it. With Bill Center, you can incentivize customers to use one card — your card — for a number of transactions, whether they’re paying bills, sending money to a friend or making mortgage payments. Again, it’s a win for the customer as better incentives create more value in their continued use of your card, driving loyalty. And it’s a win for the FI, as keeping your card top-of-wallet nets increased direct revenue.
Develop innovative, personalized financial products
By offering the infrastructure for consumers to build a comprehensive look at their financial health, you get a better picture of your customer’s spending habits. This can be used to create products and services that better meet their specific needs. In other words, a more engaged customer base leads to a more collaborative relationship, and better services.
The Time is Now
Just like the old adage of planting trees, the best time to implement Bill Center was a year ago…and the second best time is today. Already we can see a generation divide forming in how people pay bills, move money and generally organize their financial lives. Millennials and Gen Z are increasingly using billers and third-party payment providers compared to Gen X and Boomers.
That’s not the only force working against FIs. There will always be a need for banks to keep money safe, but with increased competition from third parties, FIs will struggle with retention, especially with Millennials and Gen Z. On top of retention issues, deposit displacement will become a growing concern for FIs as more people opt to hold an increasing portion of their money in digital wallets.
But, as mentioned earlier, increased atomization of financial services isn’t something consumers want either — despite what the current usage statistics might suggest.
That’s why it’s time to reimagine the future of bill pay, and FIs can play a huge role in realizing this future.
What does that future look like? Providing the capabilities and convenience of real-time money management and movement will keep banks at the center of the consumer's financial universe. This helps consumers manage their bills and money more efficiently. It helps them make sure that they have enough savings to cover emergencies. And it helps them plan beyond paying next month’s bills.
Ultimately, both FIs and consumers benefit from taking a proactive, innovative approach to bill management and payment. There will always be bills, but the time to change how those bills are managed and get paid is now.