online banking rate

Document Sample
online banking rate Powered By Docstoc
					NEWS
For Immediate Release
Contact: Beth Halloran Director, Corporate Communications Online Resources 703.394.5248 bhalloran@orcc.com

CONSUMER STUDY REVEALS PRICING IMPACT ON ONLINE BILL PAYMENT ADOPTION Offering Service for Free Improves – But is Not Necessary for – Successful Adoption MCLEAN, Va., October 31, 2002 -- Online Resources Corp. (Nasdaq: ORCC), a leading outsourcer of e-financial services, today released results of a study on the adoption rates of Internet banking and bill payment services based on different pricing, packaging and incentives offered by its clients. Key findings suggest that consumer marketing and other factors may play a more influential role in consumer adoption than pricing. One key result indicates that financial institutions that charge a fee for their Internet bill payment service can cross-sell their service to their Internet banking users at rates that are comparable to those when Internet bill payment is offered free of charge. In addition, the study found a correlation between pricing of Internet bill payment services and adoption of Internet banking services. The data was gleaned from Online Resources’ large base of client financial institutions representing all sizes and types of financial institutions, which have provided Internet banking and bill payment services for more than one year. The study focused on Internet banking adoption rates, Internet bill payment adoption rates, and bill payment conversion rates, in which consumers who are Internet banking users also adopt Internet bill payment. Following are key findings from the study: Bill Payment Fee Structures The study looked at three fee structures: free Internet banking and bill payment; Internet banking offered free of charge with bill payment offered for a fee; and Internet banking and bill payment offered together for a fee.  As expected, adoption rates of Internet banking and bill payment services are highest when both services are offered free of charge.  When Internet banking is offered free of charge and bill payment is offered for a fee, there is a 50 percent drop in Internet banking adoption and a 20 percent drop in conversion to bill payment.  When Internet banking and bill payment are bundled for a fee, adoption rates drop 70 percent compared to offering both services free of charge, yet the conversion rate to bill payment is highest. (more)

Bill Payment Fees – Impact on Conversion Rates The study looked at six levels of monthly fees for Internet bill payment: free; $2.95; $3.95; $4.95; $5.95; and more than $5.95.  As expected, conversion to bill payment by Internet banking users is highest when the bill payment service is offered free of charge.  Conversion to bill payment services drops only 10 percent when the fee charged is between $2.95 and $4.95 per month.  Conversion rates drop by 35 percent, compared to offering the service free of charge, when the fee charged for bill payment is $5.95 and above. Free Trial Period Incentives The study focused on varying durations of free trial periods: perpetual (bill payment is continuously offered for free); 180 days; 90 days; 45-60 days; 30 days; and no free trial period.  Bill payment conversion rates of 90 to 180 days were meaningful and approached the conversion rate for perpetually free bill payment.  Bill payment conversion rates were not materially affected by free trial periods of less than 90 days. Bill Payment Fees – Impact on Banking Adoption Rates  When Internet bill payment is offered free of charge, banking adoption rates are highest.  Adoption rates for Internet banking negatively correlate with the level of the fee charged for Internet bill payment services. “While we urge financial institutions to push the envelope in raising consumer bill payment adoption,” stated Ron Bergamesca, Online Resources’ senior vice president of marketing, “our study suggests that financial institutions should focus first on developing a marketing plan that establishes full value for their bill payment service, using pricing incentives as a promotional and targeting tactic. A wholesale, one-size-fits-all approach is not appropriate for most financial services, and bill payment is no exception. Free bill payment makes a lot of sense for customers with deeper relationships, while meaningful free-trial periods may be appropriate for others.” A copy of the study results are attached to this release and also can be found on the Online Resources website at www.orcc.com. About Online Resources Online Resources (Nasdaq: ORCC – www.orcc.com) is an outsourcer of Internet banking and payment services to over 500 financial institutions nationwide. In contrast to other providers, Online Resources owns, operates and drives a complete set of integrated e-financial services that are both necessary for Internet channel success and enable a superior customer experience. The company’s industry-leading bill payment, call center, CRM and other services power more than 95 million transactions and $4 billion in consumer bill payments annually. Founded in 1989, Online Resources has been named one of the nation’s fastest growing technology companies by Deloitte & Touche. ###

Results of Study on Consumer Adoption of Internet Banking and Bill Payment Services
The following data was gleaned from Online Resources’ large base of client financial institutions representing all sizes and types of financial institutions, which have provided Internet banking and bill payment services for more than one year. The study focused on:    Internet banking adoption rates – number of Internet banking users/pool of checking account holders Internet bill payment conversion rates, in which consumers who are Internet banking users also adopt Internet bill payment – number of Internet bill payment users/number of Internet banking users Internet bill payment adoption rates – number of Internet bill payment users/pool of checking account holders

Bill Payment Fee Structures
Fee Structure Free Banking and Bill Payment Free Banking, Fee for Bill Payment One Fee for Bundled Banking and Bill Payment Banking Adoption 18% 9% 5% Bill Payment Conversion 31% 24% 41% Bill Payment Adoption 5.4% 2.1% 2.0%

Key Findings  As expected, adoption rates of Internet banking and bill payment services are highest when both services are offered free of charge.  When Internet banking is offered free of charge and bill payment is offered for a fee, there is a 50 percent drop in Internet banking adoption and a 20 percent drop in conversion to bill payment.  When Internet banking and bill payment are bundled for a fee, adoption rates drop 70 percent compared to offering both services free of charge, yet the conversion rate to bill payment is highest. Bill Payment Fees – Impact on Conversion Rates
Bill Payment Fee Free $2.95 $3.95 $4.95 $5.95 >$5.95 Bill Payment Conversion 31% 28% 28% 28% 20% 20%

Key Findings  As expected, conversion to bill payment by Internet banking users is highest when the bill payment service is offered free of charge.  Conversion to bill payment services drops only 10 percent when the fee charged is between $2.95 and $4.95 per month.  Conversion rates drop by 35 percent, compared to offering the service free of charge, when the fee charged for bill payment is $5.95 and above.

Results of Study on Consumer Adoption of Internet Banking and Bill Payment Services,
Continued Free Trial Period Incentives
Length of Free Trial Period Free Bill Payment 180 Days 90 Days 45-60 Days 30 Days None Banking Adoption 18% 9% 11% 5% 10% 8% Bill Payment Conversion 31% 24% 26% 21% 18% 20% Bill Payment Adoption 5.4% 2.0% 2.8% 1.1% 1.7% 1.6%

Key Findings  Bill payment conversion rates of 90 to 180 days were meaningful and approached the conversion rate for perpetually free bill payment.  Bill payment conversion rates were not materially affected by free trial periods of less than 90 days. Bill Payment Fees – Impact on Internet Banking Adoption Rates
Bill Payment Fee Free $2.95 $3.95 $4.95 $5.95 >$5.95 Banking Adoption 18% 12% 10% 10% 8% 9%

Key Findings  When Internet bill payment is offered free of charge, banking adoption rates are highest.  Adoption rates for Internet banking negatively correlate with the level of the fee charged for Internet bill payment services.

For more information on this study or Internet banking and bill payment services, contact Beth Halloran at 703.394.5248 or bhalloran@orcc.com.


				
DOCUMENT INFO
Categories:
Stats:
views:47
posted:2/13/2009
language:English
pages:4