20/20 (Bank Marketing) Vision

From Mintel Comperemedia‘s Susan Wolfe:

“I envy people with 20/20 vision, both literally and figuratively. On a professional note, having a clearer vision of the future would certainly make my job easier, but I suppose most people could say that. And on a personal note, it would be useful to wake up in the morning and be able to see.

Fortunately – or unfortunately as the case may be – hindsight is often 20/20 and that can have a positive impact on future decisions. I’m hoping banks can evaluate how they introduced customers to online banking, how it was positioned, and how the pricing model was determined. What price you ask? That’s exactly my point.

Eons ago, I used to use Quicken to manage our checking account. I also balanced my checkbook every month. To. The. Penny. It’s kind of like long division. Incredibly tedious and painful, but you need to know how to do it. At least in my opinion. But I suspect it’s a lost skill these days. With online banking I doubt most people bother to balance their checkbook anymore. Anyone? Anyone?

One of the beautiful things about using Quicken – all those years ago – is that if you were enrolled in online banking, you could download all your banking transactions into Quicken. Duplicate transactions (the ones you already entered) were automatically de-duped. Theoretically anyway.

Now that I think about it, I think I used Quicken for bill pay too. But it’s hard to remember what I was doing last week, yet alone what I was doing a decade ago.

At a certain point my bank implemented a charge to download into Quicken, so I stopped doing it. Then they started to charge to pay bills through a third party. As online banking became more sophisticated I simply stopped using Quicken. I could pay bills through my banks website. Free of charge! 24/7! In my pajamas! It was bill paying nirvana. Truly.

Since I’ve already admitted that my memory of decade old events might be faulty, I checked on the Comperemedia database to look at some really old campaigns to see how banks promoted online banking and bill pay. For the most part online banking has always been free. But banks did start out trying to charge for online bill pay. Back in the last century – okay, 1999 – Citizens Bank offered online bill pay free of charge to its Circle Gold customers, but its Circle customers paid $3 a month for online bill pay and other customers paid $5 per month.

To me $5 a month for bill pay seems really, really expensive. I would have thought, “$60 a year. No thanks.” I’m sure most people thought that. I’m also sure that most people, like me, didn’t think through the economics of it though. In 1999 the cost of a stamp was $.33. If customers paid an average of ten bills a month they were spending $3.30 a month ($40 a year) in stamps alone, plus the cost of the checks. In those terms, $3 a month would allow customers to save a bit of money. For $5 a month, customers needed to pay 15 bills a month to break even. Slightly fewer if you factor in the cost of the checks.

Interestingly I only found one bank who actually put it in those terms. USAA promoted online bill pay by stating in offers, “At just $4.95 a month, Web Bill Pay costs less than mailing a dozen bills every month, which is $5.16 when you total the cost of checks and stamps.” Instead, for the most part online bill pay was positioned as a way to save time and money, with lots of references to easy, simple, 24/7 banking, and stamp free.

Just to be clear, I’m not picking on Citizens – everyone was charging for bill pay. At LaSalle bank, customers could pay as much as $9.95 for online bill pay, at Citibank $8.95, at U.S. Bank $4.95