BILL PAY—IT DOESN'T HAVE TO BE THE UGLY 'STEP CHILD' OF DIGITAL BANKING

Allied president Kelli Schultz sat down with Bryan Clagett of BadAssBanking to discuss the consequences of regarding bill pay as the 'ugly stepchild' of digital banking, while offering community banks and credit unions actionable ways to reverse this trend. 

A transcript of this segment is below the video. Watch the full podcast HERE. 

 

 

Transcript: Bill pay—It doesn't have to be the 'ugly stepchild'

 

BadAssBanking (BAB): Let's finish up this conversation with a with a discussion about the ‘ugly stepchild’ of digital banking, which is bill pay and bill management. It seems like [bill pay] is an attribute of digital banking that we all need every darn day, but the financial services industry has almost forgotten about it.

Kelli Schultz (KS): Yeah, I think complacency kills. And what has happened is billers were able to create sleek apps. And, that’s super easy, right? if you've got a payment going from one individual through an app to one biller, it’s super easy to do that all day, every day. So, when the biller started making it easy to pay directly through apps on your phone, that became an easier experience than trying to set your bills up [in digital banking] and you still had to receive the bill somewhere [i.e., through the mail, etc.]. You were getting information from outside in order to be able to pay your bill through the bank or credit union bill pay.

What's really needed are three things:

1. Speed of the transaction is important. When we talk about COVID, cash flow has never been more important to people than it is right now, and we conserve cash, even if we don't need to. In the back of our minds, we're worried about the economy, and the state of the union here. And so, speed of the transaction is important: I need to be able to make a last-minute payment on the day I get paid.
2. The ability to see my up to-the-minute information, such as my ‘now’ credit card balance, versus my statement balance… and that type of information. That is available on the app, but not available in traditional bank or credit union bill pay.
3. Then, the last component is transparency: I made the payment and now I wait, right? And I don't know if the payment landed or not.

At the end of the day, it's speed; it's transparency that the end user’s payment actually landed at the biller and is posted; and it is the information that is available.

We need to get back to where we once were. We had about 40% adoption across the industry: 40% of digital banking users paid bills through the bank. Now, we're down to about 22%. Over 10 years, we lost almost half of the traction we had.

And some bankers have asked me: “Why is even than important? I just pay you [bill pay providers] more for every transaction we process; I don't pay anything when consumers pay through the biller.” It’s important because you want to own the primary banking relationship, and it is about engagement.

Brian, I know you and I have had lots of conversations about the importance of the engaged user and how valuable that is. All checking accounts are not the same. You have to own the profitable checking account in order for it to even be worth opening it.

Bill pay is a hook, in that you can't pay bills if you don't have money in the account. You [the FI] automatically get that direct deposit, which also drives debit card usage, which drives regular digital banking sign-ins to check balances and transact, and things like that. Bill pay is a hook that secures the primary banking relationship, and that's what we've lost sight of in this industry. The worst thing that can happen to us is we let that fall into the hands of T-Mobile, for heaven's sakes, or any large retailer. They are clamoring for the depository relationships right now and trying to come at those. I think it's important that we step up our game and regain control of our turf in this space.

BAB: I agree. The telecoms also want the data. There's a lot of data in there and that's data that can be leveraged to create better, enriched banking relationships between consumers and members, depending upon whether you're a bank or credit union.

KS: Exactly!


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If you have questions about how value-added digital payment services can help your financial institution earn the primary banking relationship—or if you need assistance in making decisions about your money movement options—please CONTACT US.

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