A new report from Javelin Research shows numerous startups are chipping away at the banks’ stronghold of online bill payment. Companies with memorable names such as Mint, Bill.com, Billeo, Doxo and Zumbox are looking for ways to improve the bill payment process, while banks continue to operate using an “entangled web” strategy for customer retention which is just too painful for customers.
In fact, Mark Schwanhausser, senior analyst at Javelin, cited bill-pay as a key reason more customers didn’t switch banks during Bank Transfer Day.
Banks cannot sit idly and watch startups innovate their customers out of the bank entanglement and into a richer and easier solution for bill-pay. This is true especially as younger consumers will tend to go to the best service provider and not be so reliant on the bank for financial services. The same trend applies with the great use of pre-paid cards and PayPal accounts by younger consumers.
If Banks were to step up their game, they’d be in a unique position to continue to dominate this market due to their trusted relationship with customers and direct ties into their financial lives. Schwanhausser observes four major steps that will lead to innovation in bill payment:
Interestingly enough, mobile services seem to be innovations that banks are leading many of the startups in their service delivery. Most of the startups have focused on their web presence and less on their mobile alerts strategy. However, with the number of startups and the amount of investment being made in helping consumers manage their bills, payments innovation is coming.
Source: American Banker May 2012