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Competition Looms in Online Bill Presentment

Banking companies need to aggressively pursue the electronic bill presentment business or risk losing the opportunity to portals that already are consolidating many utility functions for online users, a new study says.

With more than 15 million US households expected to receive their bills online by 2002, banks and other financial portals are faced with a significant opportunity to capture the role of aggregator, consolidating and presenting these bills to consumers on one site, says the report from Jupiter Communications.

Jupiter said it expects that by the end of the year, the average U.S. online household will be able to receive three to four monthly bills (29 percent) through online bill presentment. This number will grow to approximately eight monthly bills (65 percent) in 2002, with bills from utility and telco companies already being offered online.

However, the war over which Web sites will aggregate and present these bills to consumers has yet to be won, Jupiter said.

"Consumers associate their banks with financial functions," said Marc Johnson, director of Digital Commerce Strategies for Jupiter Communications. "However, in reality, these bills can be aggregated and presented to consumers by any number of online players--from banks to brokers to portals."

A recent Jupiter/NFO consumer survey shows that 42 percent of online consumers would like to receive bills from their bank's Web site over other market players, such as personal financial management software providers (37 percent), America Online (13 percent), portals (7 percent), and brokers (1 percent).

Only a few portals have begun to pursue the online bill presentment opportunity, but according to Jupiter they pose a serious threat to banks.

"For banks, online bill presentment offers the last chance to drive recurring contact with customers. This is critical for both customer retention and cross-promotion of other bank products and services," said Johnson. "Portals have been very successful delivering utility-based functions, and online bill presentment would provide them with the huge win necessary to capturing financial portal status."