Electronic Bill Payment and Presentment Adoption Finally Takes Hold: 40 Million Households in 2005

Business Wire, Sept 21, 2000

Business & Technology Editors

NEW YORK--(BUSINESS WIRE)--Sept. 21, 2000

As Adoption Increases,

Banks Must Partner to Fend Off Pure-Plays or Be Left Behind

After false starts and promises, electronic bill payment and presentment (EBPP) will finally reach significant online penetration, with more than 40 million online households expected in 2005, according to a new report from Jupiter Research (Nasdaq: JMXI), the worldwide authority on Internet commerce. However, to gain a critical mass of billers and consumers, and to prevent pure-play intermediaries from stealing valuable customer relationships, banks must forgo selfish interests and become fast-moving allies of online EBPP services.

EBPP, a process allowing consumers to view and pay their bills online, has seen an extensive share of supply-side mergers, acquisitions, and significant new partnerships in its market, yet consumer adoption of EBPP remains almost nonexistent. A lack of consistency in deployment methods has positioned billers and consumers on the sidelines, waiting for the market to take shape.

"Banks are logical EBPP-enablers because of their trusted relationships with both consumers and businesses," said James Van Dyke, a senior analyst with Jupiter Research. "However, these financial institutions must stop watching this market and start driving it. Fast-moving technology companies that want to control the billing and payment process are poised to take over the online financial aspects of that customer relationship."

According to Van Dyke, the financial supermarket of the future will resemble a puzzle, with a Web storefront featuring a wide array of products, including insurance, mortgages, credit cards, Internet payment, checking and savings accounts, brokerage accounts, financial advice, and EBPP, which is the stickiest application in the puzzle. For financial institutions, EBPP is the most valuable piece of the puzzle, bringing consumers back to their site on a regular basis.

With the development of EBPP, consumers will have a strong reason to establish an online bank account from which to deduct their electronic bill payments. The combined potential of EBPP and online banking provides Internet-savvy financial institutions-- and the technology vendors that serve them--not only with the opportunity to reduce servicing costs and expand existing relationships, but also the opportunity to generate incremental revenue.

With its current low level of adoption, EBPP will grow more rapidly than either online banking or online shopping over the next five years. EBPP adoption will take off quickly in 2001 doubling in volume in the next two years. In 2003 the ability to view and pay bills online will, for the first time, become more popular than simply conducting online payment of bills that arrived via traditional methods of delivery. By 2005, Jupiter expects that just over 40 million households will view and pay their bills online.

Technology-based services such as EBPP will determine the destiny of many banks. Slow-moving community banks and credit unions, faced with eroding assets, will all but vanish. EBPP accelerates this eventual outcome by allowing large banks to market Internet-based solutions to existing customers of small community institutions that fail to keep up with the needs of Internet-ready consumers.

Electronic Bill Payment and Presentment Households
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(In Millions)           1999   2000   2001   2002   2003   2004   2005
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US EBPP Households       0.1    0.7    2.8    6.8   15.2   25.8   40.2
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Source: Jupiter Internet Financial Services Model, 5/00 (US Only)
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Jupiter will address and present research on EBPP and other financial issues at the third annual Jupiter Online Financial Services Forum, October 3 and 4 at the Sheraton Hotel & Towers in New York City. Jupiter will feature Tony Comper, chairman and CEO, Bank of Montreal; and Donald Marron, chairman and CEO, Paine Webber as keynote speakers. They will join more than 50 top executives from the insurance, banking, investment, and related financial services industries to explore the key issues surrounding the online financial space. Speakers for this year's forum include: Thomas O'Connell, president and CEO, Morgan Stanley Dean Witter Online; Jack McDonnell, CEO, Ameritrade; Glenn Tongue, president, DLJ Direct; Sukhinder Singh, co-founder, Yodlee; Amy Errett, chief asset gathering officer, E*TRADE; Clyde Ostler, group executive vice president, Internet services, Wells Fargo; David Espenschied, CEO, e-business division, Countrywide; and Robert B. Willumstad, vice chairman, global consumer group, Citigroup.

About Jupiter Research

Jupiter Research, a Jupiter Media Metrix Company, is the worldwide authority on Internet commerce, providing strategic analysis and insight to give businesses a competitive advantage in the complex and rapidly changing Internet economy. Jupiter Research provides its business-to-business and business-to-consumer clients with comprehensive views of industry trends, accurate forecasts and today's best practices, all backed by proprietary and industry standard data. Jupiter Research services cover broad business issues and industry and region-specific topics, providing written analysis, supportive data and access to expert analysts. Visit us at www.jup.com for more information.