Gartner Says Banks Must Focus on Online Financial Applications to Remain Competitive in 2003 and Beyond
Online Bill Payment Will Be the Fastest-Growing Online Financial Application in 2003
STAMFORD, CONN., February 20, 2003 — As consumers continue to seek ways to save time and money, the use of online bill payment is becoming increasingly popular. In 2003, online bill payment in the United States is predicted to increase nearly 38 percent to 40 million users, forcing banks to make it a top priority in order to remain competitive, according to Gartner, Inc. (NYSE: IT and ITB).
"In 2003, online bill payment will be the fastest-growing online financial application, and banks will compete fiercely with billers to lure consumers over to their sites to view and pay bills," said Avivah Litan, vice president and research director for Gartner. "Most of the growth in online bill payment will occur at the same site where consumers view their bills."
In a September 2002 Gartner Web-based survey of more than 1,000 online adults, 79 percent of consumers said they view their bills at a biller's site, while 10 percent said they viewed bills through a bank consolidation service.
"Consumers are drawn to billers' sites because they can find their bills easily and the service is free," said Litan. "Banks must strive to provide more value with their online bill payment applications to attract and retain profitable customers as well as reap the significant payment-related revenue. Bill payment will pay off for banks in 2003, if it is done right."
Although banks must offer online bill payers very responsive and reliable customer service and enable customers to easily track their payments, initially attracting customers is one of the key aspects of remaining competitive.
"Consumers who sign up and begin to pay bills online at their banks' Web sites are more than twice as likely to stay with their banks," said Litan. "Once consumers set up and automate their bill payment preferences and payees, they are reluctant to go through the process again at another bank."
In the September 2002 survey, 45 percent of consumers said they use online bill payment to save time, while 10 percent cited cost savings as the primary motive to use the service.
To attract new price-sensitive customers, Gartner advises banks to offer discounts or free trial service periods. Survey results show that nearly one-third of online consumers who currently do not view bills online said they would do so if the service were free.
"Aside from cost-saving incentives, banks should offer value-added features such as customer self-service, automatic enrollment, bundling of automated payment plans and a user interface that does not impose bank preferences on the customer," said Litan. "With only 16 percent of U.S. adults banking online and just 15 percent paying bills online, a great amount of growth opportunity exists in this market."
Gartner will provide additional analysis on online financial services at Gartner Symposium/ITxpo 2003, to be held March 23-27 at the San Diego Convention Center in San Diego. Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look today at the future of IT. For more details or to register for Gartner Symposium/ITxpo 2003, visit www.gartner.com/us/symposiumwest or call 1-800-778-1997. Members of the media can register for the event by contacting Maria DiMasi at 212-699-2734 or e-mailing GartnerEvents@middleberg.com.
About Gartner:
Gartner, Inc. is the leading provider of
research and analysis on the global information technology industry. Gartner serves more
than 10,000 clients, including chief information officers and other senior IT executives
in corporations and government agencies, as well as technology companies and the
investment community. The Company focuses on delivering objective, in-depth analysis
and actionable advice to enable clients to make more informed business and technology
decisions. The Company's businesses consist of Gartner Intelligence, research and
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emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in
Stamford, Connecticut, and has 3,700 associates, including more than 1,000 research
analysts and consultants, in more than 75 locations worldwide. For more information,
visit www.gartner.com.
