How Friendly Friction Builds Better Banking Experiences

Consumers’ preferences are undeniably shifting digitally when it comes to banking and financial services.  According to a recent study by Citibank, 31 percent of consumers use their mobile banking app more than any other — placing mobile banking behind only social media and weather for most frequented mobile destinations.

And by all accounts, this digital migration is driven by consumer preference — according to the same study, 91 percent of mobile banking users prefer accessing their app over going to a physical branch, and 68 percent of mobile banking millennials believe their smartphones will eventually replace their physical wallet.

Which means, Entersekt Director of Channel Partnerships Jennifer Singh told PYMNTS in a recent conversation, banks and other and other financial institutions have a tremendous opportunity to leverage the mobile device that is literally always at the majority of customers’ fingertips at all times as the “fulcrum of trust” to unlock a host of experiences across channels.  Consumers, she noted, are certainly digitizing their behavior, but only 3 percent are actually digital-only customers.

“That means building an omnichannel strategy is crucial for banks. The recent winners we have been seeing in the space have really won because of seamless functionality and well-executed user experiences. And in some cases the banks have not really kept pace, but they do have an opportunity to really drive share of wallet through the mobile banking app.”

To start capitalizing on those opportunities, she noted, banks can focus on building from their strengths, specifically the relationship of trust they have with their customers.

The Unique Relationship

Banks are uniquely trusted by consumers, Singh noted, and this is a statement backed up continuously by data.  The Citi study referenced above, for example, found 87 percent of Americans would still trust traditional banks more than non-bank financial institutions.  And those relationships, she noted, are an excellent starting ground for succeeding with innovations “where other technology platform have recently failed.”

There are challenges there, she noted: banks serve widely-ranging demographics, some of which are more digitally native and savvy than others.  But on the whole, she noted, banks can greatly help their efforts in building and leveraging that trust simply by making more of what they do transparent to their customers when it comes to security.

“Banks need to expose more of their security aspects to consumers so they can seem them in action.  I think they also need to empower their customers with education on things like how they can use their mobile devices and things like biometrics and geolocation to provide extra layers of security across banking channels.”

Banks, she noted, also don’t need to be afraid of introducing a little friction — as long as it is of the friendly variety.  A seamless experience is important, she noted, but a healthy level of friction puts more control in the hands of the consumer, which further establishes trust. Singh noted that when Entersekt did a study on it last year, it came back that 90 percent of customers preferred to have the ability to approve before a mobile transaction was completed through their banking app, even if it add that little extra step.

“We are in an era where data can be found very easily on a customer given all the breaches, so it is no longer as secure to just have a username and password-based system, or even a set of knowledge-based data to answer questions with. Instead we need to give a little more control back to the user so they have the ability to see and approve the transactions they are making.”

And from that platform, she noted, banks can really more fully open up the possibilities for a seamless experience for users.

Bringing the Bank Back to the Center of Commercial Life

There are changes big and basic coming in the era of secured multi-channel banking, Singh said, that over the next few years could change how consumers are interacting with their banks an awful lot. There’s small stuff, she noted, like the ability to send PIN codes to customers digitally instead of via the mail, so they can use a newly digitally-provisioned ATM card right away when they have to replace a card. It might mean incorporating innovative payment experiences like Zelle directly into their mobile offerings.

“But there are other things they can do to really extend their position of trust to be at the center of a third-party loyalty ecosystem as well,” she said.

That might involve being able to make an order at Starbucks or another retailer directly from a banking app instead of having to use a phone.  Or creating a space where customers can log in with their mobile banking app in stores and collect digital offers or coupons. The options, she said, are many — and the banks’ unique set of channels to operate over and relationship of trust with consumers give them an unique leg-up in the race, if they can properly leverage those things.

“I really think the bank’s omnichannel capabilities are a strong competitive advantage if they are used properly because they give consumers multiple ways to engage with a bank, whereas pure tech platforms really can’t offer all those channels. I think it is a core advantage that is often overlooked and underutilized.”