An experience to remember – Taking the friction out of banking

Narasimha Nagaraj, Head, Product Engineering & Digital Channels, Infosys Finacle

Download PDF Learn More


In December 2015, a study by a management consultancy reported that the top 10 retail banks in the United States could lose as much as US$229 billion worth of retail deposits and US$11 billion in retail revenues in 2016 because of friction and pain in their customer experience12.

Friction in customer experience is defined as “interactions that inhibit people from intuitively and painlessly achieving their goals within a digital interface”. Author and marketing thought leader Don Peppers says that when customers talk about excellent experience, what they actually mean is “frictionless”. He demystifies frictionless experience by distilling it down to four attributes13:

  • Reliability: The offering should perform as claimed without breaking down.
  • Value: The customer must receive fair value for the price paid.
  • Relevance: The provider must remember customers’ individual needs and preferences.
  • Trustability: The provider should be proactive in disclosing information, and put customer interest first.

But before banks can design frictionless customer experiences, they must identify the source and location of friction. And who better than the customer to turn to for help? There are two ways in which banks can gather their customers’ perspective on friction, namely through dialogue and engagement, and observation of the customer journey.

Using dialogue and engagement to identify points of friction:

Relevance is one of the four essentials of frictionless experience. Today’s customers expect their banks to recognize their individuality and respond with products, services and experiences that are personalized to their unique needs. Since digital interfaces, such as mobile apps, are increasingly responsible for experience delivery, they should be adaptive, personalized and contextual. For that, applications need to be able to continuously engage customers in dialogue in different channels (or take feedback in other ways), gain insights from those interactions, apply it to update (individual) customer knowledge, and revert to their customers with contextual, personalized and relevant offerings.

Australian financial services group, Macquarie14, takes a direct approach by conducting a “propensity survey” to understand what it is about the engagement experience that leads customers to recommend their services. Apart from undertaking such initiatives, banks should be looking out for points of friction in every customer interaction. For instance, if a customer with impeccable financial behavior calls yet again to request a temporary increase in credit card limit, the bank should learn from this and proactively raise the limit once and for all.

It goes without saying that customer-facing employees have a key role to play in delivering frictionless experiences. Clear communication and prompt resolution by attentive staff can take most of the rough edges off.

And with insightful support from systems that have remembered and learnt from each customer interaction, bank staff can actually elevate every experience into a delightful one.

Observing the customer journey to identify points of friction:

A great way to locate experience-killing pain points is to observe customers as they go about their business, or better still, undertake the journey oneself. How convenient is it to use a digital interface, such as a bank’s website? Does the bank impose a whole lot of technical and financial jargon – banking terms, network availability and characteristics, ISO codes etc. – on users, who while literate are not exactly financial wizards? Does it ask customers to choose a network, implicitly forcing them to reckon with things like cut off time, limit, type of processing, fees and charges, and so on? Here’s yet another example of friction-ridden experience design – when queried, does the website display account balance in all its components, such as clear balance, lien amount, sanction limit, and drawing power, none of which make any sense to the lay customer?

Most times, the answer to these questions is yes.

The reason for this is that banks have always designed the usage experience from theirand not their customers’ – perspective. Thus a payment transaction starts by asking customers to click the “fund transfer” menu option and choose a payment network, rather than asking whom they would like to pay (which is essentially what the customers care about). The way to mitigate friction of this kind is by taking a “lifestyle” view of experience – for instance, enabling a customer to finance a purchase in a manner that fits best (loan against FD, sale of equity, credit card, and so on) rather than giving a tedious presentation on loan products. This principle applies equally to basic customer experience elements, such as user authentication.

Banks should validate customers in a process that is an extension of their regular lifestyle as far as possible – for instance ask for biometric verification instead of multiple passwords, and a mobile phone-based second factor of authentication instead of a physical security token.

Forcing customers to derive, deduce or compute during a financial transaction also creates friction.   Banks should studiously avoid this by doing all the background work and presenting only the final outcome to the customer. For instance, rather than asking a borrower to check if there are sufficient funds in his account to pay the next installment, the bank’s system should reassure him when funds are available, and provide a timely warning when they are not. Another simple method of reducing friction is to require customers to key in very little information (remember they are mostly using mobile phones) and pre-populate documents with information that has been captured previously. Enabling customers to input information via a QR code is also highly recommended.

A global technology research and advisory firm says that 89 percent of marketers expect to compete on customer experience this year15. This offers banks an opportunity to learn from the kind of user experiences provided by industries that lead this race, such as hospitality and entertainment. For instance, some of the top hotels in the world are now allowing privileged customers to choose rooms, check in and even open the door, over a mobile app. Disney’s Magic Bands have given millions of visitors to their theme park in Orlando an experience that is not only smooth but also personalized to their taste. Banks that draw inspiration from these companies and go on to create industry-leading experiences will gain a competitive advantage that will be hard to beat.