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How Much of a Business Threat is Digital Friction? (Hint: It’s Driving Nearly Half of Your Customers Elsewhere)

Story Board Problem

Digital Friction refers to the unnecessary effort customers face when trying to interact online with a financial institution, including via mobile devices. Resistance opening an account or applying for a loan, for example. In addition to driving up customer dissatisfaction, multiple studies show that friction also leads to high abandonment rates.

In fact, when an account opening takes longer than five minutes, 60% of customers simply give up according to research from Jim Marous, co-publisher of The Financial Brand. The longer it takes, the higher the attrition. Bain & Company has similar research findings, showing that 48% take their business to another financial institution when they experience digital friction during account opening. 

It’s painful to realize that customers who wanted to bank with you are moving on to a competitor at such high numbers. Digital friction is more than a mere inconvenience for customers; it’s an inflection point that drives business away. 

Understanding the various types of digital friction can help you address it and start retaining more customers who seek to onboard or apply for a loan online. 

Examples include:

  • Too many steps within an already complicated process

Account opening needs to be rigorous to meet regulatory requirements, such as Know Your Customer (KYC) and Know Your business (KYB), but without the heavy lift for customers. Automating the verification process to digitally collect credit scores and income data with a customers’ consent simplifies what has traditionally been an arduous on-ramp for onboarding. Simplifying the highly complex digital lending process can also dramatically increase conversions.

  • Unclear or ambiguous options

Confusion only increases the abandonment rate. In addition to automating the process, a good account opening solution will guide customers through potentially difficult questions, such as how they want to transfer funds from one account to the new one. And don’t assume customers understand even basic banking concepts, such as the difference between a checking or a money market account. Seek to avoid any ambiguity.

  • Roadblocks where customers cannot continue without contacting an agent

When your customers choose to open an account online, why force them back to live representatives to complete the account opening? This is a critical moment where many customers give up and look for another financial institution. The effort of having to make a phone call or visit a branch — and start all over — is the opposite of effortless and even conveys that your institution is difficult to work with. 

Note that you should still offer live assistance when a customer requests it. This is very different for pushing online and mobile customers to representatives without their choosing, because the online process is unable to complete the account opening.  

Given the very high percentage of customers who simply walk away from a straightforward account opening as soon as they face a challenge, removing digital friction should be a top priority for growing deposits, converting more loans and building long-term relationships. Don’t drive your customers away before they even get started. Look for solutions that automate, guide and most importantly simplify the onboarding and lending processes. 

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ATTUNE helps banks and credit unions generate new revenue streams with our frictionless automation platform that increases deposit growth, digital lending and valuable cross-selling opportunities. Learn more at www.getattune.com