Banking App Experience – Moving from Fractured to Frictionless

Sunil Mishra, Senior Principal Consultant, Infosys Finacle

Learn More

In 2015, Exicon, a mobile solutions provider and app developer, estimated that between them, the world’s 15 largest banks had spent close to US$80 billion on developing 606 mobile apps. Citing app proliferation among banks, a well-known research firm says some have built more than 20 apps to fulfil a range of customer needs. Yet, mobile banking apps lag many others in innovation and quality of experience: an analysis of 140 apps from 35 top retail banks found that they were strong in basic functionality, but distinctly lacking in innovative features, such as personal financial management tools, chat and messaging.
Customers, meanwhile, are quite frustrated at having to switch between multiple apps.

When surveyed recently, 75 percent of 700 millennials said they were dissatisfied with their mobile banking experience.

The fractured experience provided by banking apps is at complete variance from one of banks’ top priorities, which is to create a customer-centric organization. It is also a matter of huge concern because in a few years from now, 89 percent of marketers are expected to compete, not on product or price, but on the strength of their customer experience.

Banks are clearly in a difficult position. The retinue of apps costs a lot to maintain, but currently yields little or no return. Worse, because the apps are usually not integrated, they cannot match what customers enjoy with other providers – a unified, consistent, seamless and convenient user experience. A great example here is Uber, which has taken the API route to integration with a number of travel and hospitality apps, from Google Maps to Trip Advisor to United Airlines, to provide a complete travel experience to users.

Banks should accept that the future model of success is one of distribution, decentralization, and disintermediation, and adapt their app strategies accordingly.

Business considerations apart, there is a regulatory push towards a more open form of banking from initiatives such as PSD2 in Europe and UPI in India. Banks that fail to heed these signs could end up as utilities, and cede their customer relationships to their more progressive rivals, including challenger banks and Fintech companies.

Hence there is a need for a fundamental change in the approach to mobile banking apps. In future, app design should adapt to customer expectations and behavior, rather than the other way around. Banks must also focus on enhancing their apps so that they not only provide banking functionality but also improve their customers’ lives in several ways. They can do this by visualizing the customer journey and designing apps that cater to various needs and add value at every stage; instead of offering a fragmented experience through various apps across different functions. The apps must also remember their interaction with customers, and use that learning to make relevant, contextual propositions.

If the ultimate goal is to eliminate friction in the banking experience, then banks need to ensure the following:

Apps are consolidated differentiated and highly personalized

A provider of mobile and Internet banking in the United States says that banking policies, procedures and (inadequate) communication are responsible for 70 percent of negative customer feedback on mobile banking apps.

Until now, banks have followed a bank-centric app strategy, designing and organizing apps by function or line of business and so on. This has imposed a very inconvenient experience on customers, who are forced to contend with a plethora of apps for their various banking needs. A cumbersome authentication process, and multiple passwords, adds to the frustration.

A frictionless experience requires banks to do the exact opposite of what they are doing today, starting with consolidating and integrating apps from a customer point of view.

And rather than offering the same apps at everyone, banks must target different apps to suit the needs of individual segments, for example salaried professionals and small business owners. This may well increase the total number of apps for the banks, but it would do the opposite for customers.

As banks are looking at increasing mobile capabilities to provide frictionless experiences, a new crop of users have become more commonplace. People who were not well-versed with smartphones earlier, are now increasingly choosing smart virtual assistants (SVAs) as a means to interact with their mobile phones. Banks are already looking at this channel as a means to offer products/services for these customers, and this channel holds a lot of promise for the future. For example, OCBC Bank has integrated Siri to offer banking transaction services through smartphones.

Apps provide functionality beyond transactions

Banks need to look beyond core functionality, such as account views and payment methods, at innovative add-ons that are a natural appendage to banking services. These add-ons could be financial in nature, for example wallets, or non-financial, such as educational content. The idea should be to fit the bank seamlessly into the various activities that a customer goes through in a day – shopping, product research, event planning etc. – at every life stage. Currently, very few banks do this.

A benchmarking survey of mobile banking functionality among 46 leading banks found that only six had installed an app-wide search engine to make it easy for customers to find what they needed.

Apps integrate with third-party providers in the ecosystem

In many parts of the world, regulators are encouraging open banking with directives such as PSD2 and UPI, which will open up banks’ data resources to the ecosystem. This will create an opportunity for banks to partner with service providers, and in the process, access more customer data that they can use to personalize offerings and differentiate experience at the level of the individual customer.

Apps are compatible with a variety of mobile touchpoints

Today’s customers move between a number of mobile devices and operating systems and expect their apps to follow. Hence banks should make sure their mobile banking apps work on different touchpoints, including wearable devices and tablets, and their respective operating systems. Here, they can draw inspiration from China’s WeChat, which even caters to those who do not own smartphones.

The goal should also be to make it easier for customers to access even offline touchpoints, such as nearby branches and ATMs via geolocation apps.  Here it is worth citing the example of an app from a leading U.S. bank, which has an inbuilt option to call the bank’s representatives.

To conclude, banks must consolidate and integrate their mobile banking apps from a customer perspective, offer innovative additional functionality, integrate apps with other providers, and make them work on as many touchpoints as possible. But even as they make these changes, banks should not lose focus on earning a return on their app investments. Since apps are costly to maintain, banks must clinically eliminate those which do not perform, and balance investments between a limited set of successful apps and a strong mobile web, which would be cheaper to run. It is a good idea to invest small to begin with, and deploy further funds after figuring out what works and what doesn’t.

An experience to remember – Taking the friction out of banking

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

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 experience.

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 attributes:

  • 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, Macquarie, 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 year. 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.