ANALYSIS: Why no killer app for paying bills online?

Sep 15, 2011, 1:23 p.m.
A Motorola Droid phone is seen displaying the Google search app in New York August 15, 2011. REUTERS/Brendan McDermid

By Beth Pinsker

NEW YORK (Reuters) - If you want to manage all of your money and all of your monthly payments in one convenient online place, you're pretty much out of luck.

You can pay bills with some services, manage your budget with others and organize your financial planning with still another set of programs. But if you want one system where you can auto-pay your cable bill through your checking account, review your mortgage statements from a different financial institution and coordinate payment for soccer sweatshirts on the fly, you're dreaming of a future world that doesn't yet exist.

"The industry is at a crossroads," says Mark Schwanhausser, senior analyst at Javelin Strategy & Research, which just released a study on online banking behaviors. "I'd like to be able to see more things in one place, yet banking systems are not yet satisfying those needs. Online banking needs a pick-me-up."

While financial institutions are still the leading online destination for consumers to actively manage their money and payments online, the new research from Javelin shows that even though 81 percent of people who manage household finances banked online in the last 12 months, consumer behavior is very scattershot when it comes to paying bills. It further found that banks are not adequately providing needed services and risk being surpassed by third-party ventures that attempt to fill in the white space. Even heavy online users still pay some bills with paper checks, still receive paper statements from some companies and still go to some billers directly instead of going through their bank's websites.

"Where we're headed is mobile wallet. We will be able to carry around all of our financial decisions and products and tools in a smart phone. That day will come, but pieces have to fall into place. Right now we have people fighting over various parts of the turf," says Schwanhausser.

Data from a recent survey from Fiserv backs this up, showing that while 66 percent of 3,000 household money managers say they use online banking to manage their money, 46 percent say they also use paper check registers, 14 percent still use a regular spreadsheet and 13 percent use financial management software.

With the U.S. postal service cutting back deliveries and raising stamp prices, and banks pushing customers to bank online, people are going to have to figure this out sooner rather than later. To determine the best options for a fluid bill-paying routine that will save you time, money and the hassle of late fees and overdrafts, you have to break it down by billing activity, because there will be no one-size-fits all.


Among the 89 million American households that participate in online money management, the starting point for most of them is now the website of their primary financial institution. Bank websites vary in functionality, but most of them offer some variety of bill-paying service, either through automatic deductions from checking accounts or by setting up a vendor as a payee in the system.

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