The idea of ‘frictionless banking’ has been around for some time, but at its heart is the idea that it offers a superior customer experience: a convenient and seamless way for personal and business customers to access money and services, and to conduct financial transactions.
We’re used to this in retail, and particularly ecommerce, where brands talk about a ‘customer-first’ approach and compete to deliver omnichannel experiences that reduce or remove barriers to conversion and purchase.
Banks have been rather slower to change, but that change is happening. This is partly due to customers demanding better digital services. But the change is also accelerating because there are thousands of innovative fintech companies entering the market and offering alternative banking services that compete with the high-street establishment.
Faster, seamless and secure
The focus of frictionless banking is to provide better, more convenient and seamless access to financial information and services. Customer authentication should be straightforward and hassle-free. Passwords, PINs and fobs have been served their notice.
The new approach uses the powerful but convenient biometric verification technology built into ubiquitous mobile phones to authenticate users. Fingerprint sensors, iris scanners and even facial recognition technology are all quicker and safer than remembering PIN numbers and passwords.
From a small-business perspective, the main benefits are to make working with money and banks faster and more convenient, but also safer and less susceptible to fraud and error.
Biometrics make bank transfers, loan applications, bill payments and other transactions easier than having to recall passwords or to log in using a digital fob or security token. In addition, these digital services are accessible 24/7 via mobiles.
Furthermore, transactions become safer and less prone to error due to a reduced dependency on information that’s put in manually. With biometric verification, the risk of accidentally divulging passwords or other security information diminishes. And field-level error checking on digital forms helps reduce the risk of errors, helping to make banking less prone to human mistakes.
On the high street, this change has been a response to the demands of different demographics. The needs of Millennials and other tech-savvy customers have forced a change of mindset. The analogue generation may still want cheque books and hanker after pens attached to chains, but local branches are closing all the time. Banks have no choice other than to keep pace with the evolving needs of increasingly digital customers, some of whom may have never physically walked into a branch or written a cheque.
The same applies to businesses. SMEs are more disposed to agility and digital than are large organisations. There are no legacy systems to work with and no ingrained corporate cultures and fiefdoms to navigate.
Businesses operate at so-called digital speeds today. SMEs have a wealth of tech products and online services to give them advantages in every area. From accounting to HR, to project management and customer services, these products and services allow SMEs to be more agile and responsive to developing needs. It’s only natural that banking services need to follow the same evolutionary path.
Friction where appropriate
Some limits and barriers exist. Not all services can be released with a thumbprint on a smartphone home button. Not everyone will feel comfortable talking to a bot about a mortgage application. A little friction is needed when appropriate.
Naturally, banks and fintech companies need to comply with strict industry and compliance rules and regulations. Instant access or responses may not always be possible.
In addition, wherever there is money, criminals operate – so cybersecurity is a critical consideration for banks and their customers.
But a committed approach to seamless, hassle-free customer experience sums up what frictionless banking is all about. Frictionless banking services are now a competitive advantage for banks and fintech firms and offer huge opportunities and benefits for digital-savvy SMEs.