Online Bill Payment Drives Greater Share of Wallet, Recommendation and Loyalty For Banks, According to New Study
Customer Satisfaction Survey from ForeSee Results and Forbes.com Finds Online Bill Payment Yields Greater Returns than Online Banking Alone
ANN ARBOR, MI (April 17, 2007) – A new study from ForeSee Results and Forbes.com found that customers who pay bills through their bank’s website are more satisfied with the bank and the online banking experience than those who don’t, and are significantly more likely to purchase additional services from the bank. The data suggests that converting online bankers to online bill paying customers represents the best opportunity for banks and credit unions to increase share of wallet while driving customers toward the most cost-efficient channel for services.
The survey of over 900 Forbes.com newsletter subscribers compared three different kinds of banking customers: non-online bankers; online bankers who don’t pay bills online with their bank; and online bankers who also pay bills online through their bank’s website. The results show that the more engaged customers are with their bank’s website, the more satisfied they are. The survey uses the methodology of the American Customer Satisfaction Index (ACSI), which has been proven to link customer satisfaction to financial returns.
Customer satisfaction with the bank overall is highest among online bankers who pay bills via their bank’s website: 79 on a 100-point scale. Online bankers who do not pay bills via their bank’s website rated bank satisfaction a 76 while non-online bankers scored 70. Higher customer satisfaction boosts share of wallet, too: online bill pay customers are 31 percent more likely to purchase additional services from their bank than online bankers that do not pay bills via their bank’s website.
“Banks’ most desirable customers are busy people who want the convenience of online banking and bill payment. The more banks can get their customers to engage online, the happier those customers will be, and the more likely they’ll give the bank a bigger share of their wallet,” said Larry Freed, president and CEO of ForeSee Results.
The survey results suggest that converting customers to the online experience represents additional opportunities for banks to improve their bottom line. In addition to being more satisfied, customers who bank online are 19 percent more likely to recommend their bank than those who don’t, which helps fuel acquisition. In addition, online bill payers are 21 percent more likely to use the website as their primary channel than those who do online banking alone. The website is a lower cost interface for the bank than the call center or teller window.
Almost half of non-online bankers in the survey cited privacy and security concerns as their primary reasons for not adopting online banking. It’s possible that phishing and other online scams may make them skeptical of online banking.
“Any reputable banking institution takes measures to improve privacy and online security, but the customer doesn’t always understand that,” said Freed. “Many non-online banking customers are comfortable with performing some financial transactions online, such as making retail purchases, but they are not familiar with the security precautions that financial institutions take to protect them.”
If paying bills online is a good thing, then paying more bills is even better. The survey shows that satisfaction among banking customers who pay six bills or more through the bank is 81, whereas customers who pay between one and five bills score 75.
Banks have an opportunity to convince customers to pay bills via their website, with 74 percent of the survey respondents stating that they pay bills online through other sources. Of this group, 15 percent use independent payment services like PayPay, 43 percent pay bills directly with the vendor or service provider and 13 percent pay bills online with banks that aren't their primary bank.
Credit unions, which scored 83, have higher overall customer satisfaction scores than both large banks (77) and community banks (74). “Credit unions tend to be more customer-centric organizations, which seems to be reflected in the higher credit union scores,” said Freed. “What’s interesting is that in spite of the economies of scale for the large banks, credit unions have maintained a significant satisfaction advantage online, which can translate into the ability to siphon dollars away from more ubiquitous large banks.”
“We’re pleased to partner with ForeSee Results on this research,” said Forbes.com President & CEO Jim Spanfeller. “Forbes.com visitors are key influencers for financial services, and online banking is a key to that relationship.”
Larry Freed will present the results of the survey today at the Net.Finance conference in Scottsdale, Arizona.
About ForeSee Results
ForeSee Results is the market leader in online customer satisfaction management and specializes in converting satisfaction data into user-driven web development strategies. Using the methodology of the University of Michigan’s American Customer Satisfaction Index (ACSI), ForeSee Results has created a model that scientifically quantifies the elements that drive online customer satisfaction and predicts future behaviors, including the likelihood to return to the site or recommend the site to others. ForeSee Results, a privately held company, is located in Ann Arbor, Michigan and can be found online at www.ForeSeeResults.com.
ABOUT THE ACSI
The American Customer Satisfaction Index (ACSI) is the only uniform, national, cross-industry measure of satisfaction with the quality of goods and services available in the United States. A key distinguishing feature of the ACSI methodology is its patented scientific approach to customer satisfaction measurement. The technology behind the ACSI computes scores that reflect performance—based on the relative impacts of various components of satisfaction on overall satisfaction and the likelihood of desirable future behaviors, such as repeat purchases. Accordingly, the ACSI methodology is able to isolate and determine the importance of the features and functions most likely to produce these behaviors—an important distinction from basic customer satisfaction ratings.