While studies show that mobile bill pay adoption is increasing, this adoption is less than stellar. Lack of mobile bill pay adoption is a missed opportunity for financial institutions to gain and retain more customers, because once consumers leverages their bank or credit union's bill pay services, the likelihood that they will stay a customer goes from 87% to 97%. Additionally, mobile bill pay users tend to have higher account balances and expedited payment options create additional fee revenue for the institution.
By 2018, AlixPartners anticipates that 37% of all bill payments will be made through the mobile channel, exceeding all other channels, so banks must adopt new bill pay technologies to stay competitive and move more customers to the mobile channel.
The challenge is that many customers have the perception that mobile bill pay is not secure and/or it's too cumbersome to use. While this still hinders some customers' adoption of their bank or credit union's mobile bill pay offerings, in reality, today's technology has made mobile bill pay more secure and easier than ever before.
The top reason that customers are hesitant to use their smartphones for any form of mobile banking is the perceived security risk associated with mobile devices. However, most mobile banking security breaches occur due to the lack of security measures taken by the user, rather than the security of the application.
For example, most PC users would be hesitant to open an unknown link, but these same users would not take similar precautions on their phone or tablet. These careless activities create more opportunities for hackers to infiltrate users' accounts than the application itself, as today's sophisticated mobile banking software and security technology makes the mobile channel much safer than online.
Most smartphones require a PIN number, unique code or even a fingerprint to access the device, and even if a smartphone is lost or stolen, several apps exist today that allow the owner to essentially wipe the device of all data. Additionally, many smartphones have geolocation capabilities and when a bank or credit union detects that the phone is in an unusual location, they deny access to the account info until the user is prompted for additional authentication information.
Another consumer perception is that mobile bill pay is too complicated. A wealth of mobile bill pay technologies exist in today's market, however, several mobile bill pay apps require the user to enter the biller information using the keyboard on their phone, which is an even greater inconvenience than entering the biller information using a computer keyboard. The biggest barrier to bill pay adoption is this perceived inconvenience of setting up a payee, so to eliminate this barrier, today's financial institutions must explore innovative technologies that replace the keyboard.
For example, advancements in smartphone and mobile bill pay technology now allows customers to pay any bill with the simple snap of a photo, making payee setup incredibly simple and convenient. Not only are most customers already comfortable with this type of technology, but it eliminates the payee setup process, which particularly appeals to non-bill pay users.
Lastly, some customers are just uncomfortable with the thought of mobile bill pay because they have grown accustomed to paying their bills by mailing a check, calling on the phone or walking in to a place of business. Some customers even argue that mobile bill pay is unreliable, because if they pay bill with their phone — particularly when using their camera — how do they know that the payment will be processed?
Advancements in high-performing optimal character recognition technology guarantee higher automated read rates than ever before. When there is an automated read, the user can have real-time assurance that the payment has been processed.
In fact, using a smartphone camera to pay a bill actually has a higher read rate than using a smartphone camera to deposit a check. Mobile remote deposit capture is now generally accepted as a reliable way to deposit a check, and studies show that image acceptance rates for mobile photo bill pay is actually higher than mobile RDC. While it seems like a bill would be a more difficult image to successfully capture and read, checks tend to have higher failure rates primarily due to image quality thresholds for Federal Reserve check processing.
While these common misconceptions are hindering mobile bill pay adoption, it is also due to the lack of simple, convenient mobile bill pay technologies that financial institutions offer their customers. To remain competitive and attract and retain customers, banks and credit unions should partner with innovative technology vendors that deliver an easy bill pay experience for more positive results.
First and foremost, the key to successful mobile bill pay technology is simplicity. If today's institutions do not leverage unique applications that simplify the bill pay process on the mobile channel, customers will continue to be hesitant to embrace the mobile channel to pay their bills and will look for non-traditional providers who are stepping in to provide these services.
Bill Shepp is a vice president at Allied Payment Network.