Avivah Litan, vice president and research director for Gartner forecasts that bill payment will be the fastest growing online financial application over the coming year.

"Banks will compete fiercely with billers to lure consumers over to their sites to view and pay bills," she says. "Most of the growth in online bill payment will occur at the same site where consumers view their bills."

In a September 2002 Gartner Web-based survey of more than 1000 online adults, 79 percent of consumers viewed their bills at a biller's site, while only one in ten used a bank consolidation service.

"Consumers are drawn to billers' sites because they can find their bills easily and the service is free," says Litan. "Banks must strive to provide more value with their online bill payment applications to attract and retain profitable customers as well as reap the significant payment-related revenue. Bill payment will pay off for banks in 2003, if it is done right."

To attract new price-sensitive customers, Gartner advises banks to offer discounts or free trial service periods. Survey results show that nearly one-third of online consumers who currently do not view bills online would do so if the service were free.

"Aside from cost-saving incentives, banks should offer value-added features such as customer self-service, automatic enrollment, bundling of automated payment plans and a user interface that does not impose bank preferences on the customer," says Litan. "With only 16 percent of US adults banking online and just 15 percent paying bills online, a great amount of growth opportunity exists in this market."