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Digital Bankers Dreaming About the Frictionless Experience Need a Wakeup Call

For many bankers and fintech executives, the marketing term “frictionless experience” describes a nirvana where customers effortlessly initiate and complete their banking chores in seconds.

Blog,
Emily Steele – Executive Vice President, Field Operations and Delivery for Temenos North America

For many bankers and fintech executives, the marketing term “frictionless experience” describes a nirvana where customers effortlessly initiate and complete their banking chores in seconds using the digital devices of choice, unaided by human agency or interrupted by manual roadblocks.

But there’s a problem with “frictionless” that digital strategists are not addressing. What happens when every bank differentiates their offering with a frictionless experience? What happens when frictionless means data security risks? And worst of all, the newest problem that has begun to rear its head – what happens when, after you finally perfect your frictionless customer experience, you find that the well-greased, hands-off user experience you’ve built isn’t always what consumers want or need?

It turns out that the belief that creating a frictionless journey will provide the penultimate experience is a myth. And bankers that have woken up to that are coming out ahead.

Your customer experience needs friction

We’re seeing a shift in the market, as banks have started to find that frictionless is not the answer. Financial institutions are finding that their customers don’t always want ease, but they do want right – the right products and services at the right time. Where once the industry thought consumers wanted frictionless, now we see that what resonates, in fact, is friction-right.

Banking that is digital from end-to-end provides a vehicle to develop loyalty and deliver timely and valuable services. It feels like ages ago that online and mobile banking were on the cutting edge, for example. However, during the course of many banks’ pursuit of digital supremacy, it has become clear that friction is actually necessary.

Gaining trust, engaging customers, and developing loyalty can seem like challenging tasks everything is done digitally. Yet even without human interaction, it is still possible to deliver personal service through an innovative digital banking strategy that puts the account holder as the focal point and digital technology at the core. In order to grow profits in today’s environment, banks are now trying to optimize the digital experience to add value and offer personalized services.

There are two main categories that have emerged so far where “smart friction”, friction points implemented strategically, can add value to the customer relationship – financial wellbeing and account security.

Promoting financial wellbeing

One such example is new entrant to the marketplace, Koho, which allows users to add a friction point to their personal spending habits. A young professional getting ready for a night on the town can log onto Koho before the party starts and restrict the amount of cash available for the evening. The feature is similarly useful during a shopping spree or vacations, limiting overspending. The user is protected from overdrafts and dwindling funds, and the bank promotes healthy financial behavior. In this case, the customer decides the amount of friction in their experience, facilitated by the financial institution.

Protecting the customer

Wells Fargo is taking an integrated approach to fighting financial crime. Customers with the bank’s app receive a push notification when an unusual debit or credit card transaction occurs, allowing the customer to approve or deny the transaction. In this case, there is a balance between friction and seamlessness. We will continue to see this emerge and evolve as banks start to experiment with location services – allowing customers with a mobile app who make purchases in the same vicinity as their phone to bypass red alerts and automatically authenticate purchases, while raising flags for when purchases are made in a location separate from the app user.

More than 15.4 million U.S. consumers fell victim to fraud in 2016 costing them $16 billion, according to Javelin Strategy & Research’s 2017 Identity Fraud Study. Issues around customer protection highlight the necessity of balancing friction with a seamless experience. Not only is it for the benefit of the customer, but for the bank and its reputation as well.

Don’t fight friction, leverage it

Today, customers want it all. They want the value, convenience and the personalized touch. But most of all, they want to trust that their banks are doing right by them. Every aspect of the banking experience needs to be connected to deliver seamless digital banking with logical stopping points to ensure that the customer is being serviced correctly, whether it’s helping them save for a car, or nipping fraud in the bud.

Friction isn’t something to completely remove. Without friction you lose an important opportunity to add value and differentiate your institution.

Don’t believe the myth – frictionless is not the answer. If you want to enhance the customer journey and empower your customers, don’t fight friction, use it.

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Blog,
Emily Steele – Executive Vice President, Field Operations and Delivery for Temenos North America