Citi is doubling-down on its push to make customers switch to paperless billing. The bank is threatening to cut customer’s access to their bank accounts online if they refuse to go the paperless route.
The new policy, which rolled out on Oct. 24, is part of a pilot program that is being tested on a single-digit percentage of customers who receive paper statements, but still use their accounts online, according to a source with knowledge of the situation.
Customers who are automatically enrolled in the pilot program will receive three notifications encouraging them to go paperless. They are able to ignore the first two, but the third notification will require them to make the switch. If they fail to authorize they will lose access to their bank accounts online.
They are able to switch their preferences back to paper billing at any time, but in order for them to gain access to their accounts online, they have to submit a one-time paperless authorization.
The source also confirmed that customers who are experiencing financial hardships are excluded from being automatically enrolled into the program.
Related: T-Mobile's latest change forces customers to pay more
The push from banks to make customers go paperless isn’t only because they want to be environmentally friendly. Paperless billing is also a way for banks to cut costs.
In 2017, it was reported that financial institutions save an average of $594 million annually if they crack down on customers who still receive physical bank statements. Some banks even charge consumers a fee of up to $5 a month for having paper bank statements mailed to them.
The source also told TheStreet that paperless banking allows Citi C to use the extra money it saves to invest in more digital features, including one that involves digital receipts which is set to roll out later this month.
Even though the recent move from Citi could be beneficial for the institution, a large majority of consumers may be resistant to the change. About 78% of Americans believe that they should have the choice on whether or not they should receive important information from their providers on paper or electronically, according to a 2021 survey from Two Sides North America.
The survey also found that 64% of consumers are concerned that their personal information being held electronically puts the data at risk of being “hacked, stolen, lost or damaged.” Respondents of the survey who were above the age of 65 were the most concerned about these risks. Also, 53% of respondents believe that paper bills and statements are better for record-keeping than the electronic versions.
Even though paperless billing can be a convenience for some, for others, it can be a challenge as the option comes with a few setbacks.
First, it is easier to be forgetful of certain payment due dates if you don’t have notifications for billing set up on your phone. Second, remembering your username and password for your online bank account is even more crucial with paperless billing.
And last, some banks even limit the amount of bank statements that are available to be viewed online. If you are one who likes to keep a long record of those documents, you may have to go through additional steps to access them.
Citi shares jumped 3.5% on Nov. 3 to $42.26,. For the week, it was up 10.5%, benefitting from the huge rally that swept Wall Street. But 2023 has not been a great year. Citi is down 6.6% for the year. The KBW National Bank Index ^BKX, which includes Citi, is down 21% this year, even after an 11% gain this past week.
