Paying bills is an essential part of life, but it’s a task that has become increasingly complex. Because bills often come in various forms and require different payment types, it can be hard for consumers to stay on top of their finances.

In a recent PaymentsJournal podcast, Derek Swords, VP, Head of Product, Bill Pay at Fiserv, and Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, discussed the challenges consumers face when paying bills and the opportunities financial institutions have to provide value for their customers.

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A Fragmented Landscape

The volume of bills consumers receive has increased over time. In the past, consumers may have sent paper checks by mail to make those payments, but consumers now receive and pay bills in a wide array of methods.

Customers could pay a bill electronically through their bank, mail a paper check, or go to a biller’s website and make an ACH payment directly. Consumers receive bills via mail in some cases and email in others. All those factors have led to a significantly fragmented customer bill pay experience.

To consolidate that experience, new payment networks have been constructed on a digital-first framework. While the volume of bills is increasing consumers are increasingly paying billers directly. There has also been a rise in automatic payments from credit cards. Though checks can be problematic, it will take time for checks to be phased out because many smaller billers still rely on them.

Consumers are becoming more familiar with different payment methods, though many younger consumers may still not be aware that bank bill pay is an option. However, there hasn’t been significant innovation in the traditional bank or credit union experience, so many financial institutions are lagging customer expectations.

“Consumers are evaluating other payment methods because they want enhanced clarity, faster payments, and more payment choice,” Swords said. “They’re using their phone instead of the traditional desktop experience because it provides transparency and increased access. What they’re really looking for is an offering that rolls all their obligations into one, and that creates an opportunity for financial institutions.”

Around 85% of customers indicate that they would rather have a single, combined, integrated experience. Aside from simply viewing bills, consumers also want to make all their payments from that central, mobile platform, and financial institutions should keep that in mind as they design their experiences.

Beneath the Hood

In many cases, customers adopt a service based on the quality of their first bill pay interaction, so financial institutions should make it simple for customers to find their bills and enroll in applicable programs.

“Onboarding is extremely important because it lets customers know the capabilities beneath the hood, if you will,” Swords said. “It’s about informing customers about the offering and getting them engaged. Once they get there, the consumer should have full control of the payment, transparency on when the payment will occur, and confirmation the payment happened.”

Thorough onboarding will be critical as the market heads to faster and, ultimately, real-time payments. Instant settlement makes it even more important for institutions to provide an accurate, transparent experience. When customers get notifications, they should be able to immediately access their mobile app, make the payment, and get back to their lives.

“It’s not like the traditional bill pay model, where they stacked their bills by the desk and paid them one by one,” Swords said. “That’s not how consumers work today. They want an on-demand experience where they can get things done on the go and get advice along the way.”

An Advisory Experience

The advisory aspect is often overlooked in the bill pay experience, but innovative products now help customers proactively manage their finances. Timely push alerts and messages are critical functions. It’s not optimal for an accountholder to miss a bill because they were busy.

The advisory process should also be ongoing. After a customer sets up a bill, an institution might work to eventually transition them to an automatic payment. FIs might also offer customers the option to sign up for notifications or group certain types of bills. Banks and credit unions should inform customers about the different payment rails and the benefits of each.

“If a customer has a bill due tomorrow, they should be advised on how to use the fastest payment the biller accepts,” Swords said. “The goal is to make sure the payment is on time, the customer has a great experience, and users understand when money is sent or received.”

Financial institutions are constantly working to make it easier for accountholders to pay anyone, anywhere. There is an increasing demand for international payments, and that includes bill payments.

“It could be sending money overseas to family or paying for your daughter’s wedding in Italy, but customers want the ability to send money worldwide,” Bodine said.

The Future of Bill Pay

Whether a payment’s destination is domestic or international, the process should be seamless. The goal should be to design a user experience in which the customer doesn’t have to think about which rail to use or which tab to click on.

Many companies are incorporating intelligence that will make it easier for customers to discover the bills that are available for them to pay. From a ZIP code, for example, a user could be matched up to the local power company. With permission, a bank could do a soft touch to a customer’s credit report, which gives the institution insight into the bills a user pays.

Many upcoming bill payment initiatives revolve around small businesses. That includes a push for small businesses to self-enroll to receive electronic payments because checks are still a staple for many businesses. Card payments are also beginning to pick up steam with small businesses, because a credit card can offer an attractive short-term line of credit.

“Whether it’s for consumers or businesses, the goal is to create a profound, smart, all-in-one experience where users can see all their obligations and make any kind of payment in an advisory environment,” Swords said. “Bill pay is an essential service that drives digital engagement and loyalty for financial institutions, but it’s not enjoyable for most customers. For financial institutions, however, bill pay is a both a competitive necessity and a substantial differentiator.”

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