US banks are set to grab back a major share of the surging electronic bill payment and presentment (EBPP) market over the next five years, according to the latest forecasts from Forrester Research.
According to the research - which is based on a survey of more than 68,000 US households - approximately 47 million US households will pay bills online by 2010, a 75% increase from the end of last year.
Over the past few years, most new online bill payers have used individual billers' Web sites - such as credit card companies and mobile phone operators - to view and pay bills. But Forrester predicts that banks will surge ahead in growth over the next five years as more firms follow the lead of Bank of America, Wachovia, and Washington Mutual in dropping fees for online bill payment.
Forrester says by 2010, the EBPP market share in the US will be split nearly in half between banks and individual biller sites.
"Smart banks have stepped up their efforts to grow their base of online bill payers by eliminating the monthly fee. They now understand the impact these customers have on the bottom line," says Catherine Graeber, principal analyst at Forrester Research.
Graeber says EBPP is becoming a commodity product and what will differentiate providers in the future is ease of use, the speed of payments and security.
She says in order to sustain growth banks have to involve their branches - the most successful firms are getting at least half of their online bill-paying customers from initiating sales conversations and enrollment in branches.
However, despite the growing use of e-bill services, Forrester says annual EBPP growth rates are slowing dramatically and will continue to do so over the next five years. The 26% year-over-year growth rate in 2004 will drop to just seven per cent in 2010.