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More people are paying bills at bank or credit union websites than at individual biller websites, according to a new report from Javelin Strategy & Research.

"For the first time, more consumers paid bills via bank sites in the past month rather than biller-direct sites," James Van Dyke, President and Founder of Javelin Strategy & Research said.

"But many banks and credit unions have been slow to upgrade, which has created a wide gap in online capabilities and usage when comparing the nation’s biggest banks to smaller banks."

The report found six in ten of online households bank online weekly, a 12 percent increase from 2008 and seven in ten households pay bills online monthly, up from 64 percent in 2008.

Javelin says the increase in online banking is driven by the recession and people wanting an efficient way to mange their personal finances.

Key findings of the report include:

•  83 million households will bank online by 2014.
•  Smaller banks are struggling to keep up with bigger banks online.
•  Bank fees are the main reason people switch financial providers.
•  Consumer demand is building for online personal finance management tools that consolidate money-monitoring capabilities offered by free web sites with those offered by banks and credit unions.

"The playing field is dominated by Bank of America, Citi, JPMorgan Chase and Wells Fargo, which have set the bar high for what consumers can expect from a full-service online-banking operation," Mark Schwanhausser, Research Analyst at Javelin said.

"Nearly six out of 10 customers paid a bill online through these titans in the previous 30 days, which is significantly higher than the number of consumers that paid bills online at regional banks, community banks, and credit unions."