When Friction Points Became Fatal: Meeting the Demands of Digitally Savvy Consumers
The explosion of e-commerce and tech-driven disruptors over the last decade has profoundly influenced consumer demands and expectations.
All of us are now accustomed to doing business with companies like Amazon, Uber and Netflix, often from the convenience of our smartphones, and we’ve grown to expect the instant and personalized gratification those now-iconic companies have given to us.
That’s why consumers are so resistant to any company that makes them feel like they’re stepping back in time to the 1980s in terms of paperwork, a clunky website or a lack of an online presence entirely. These issues are real friction points, and if there are too many of them causing headaches and hassles to customers and clients, they’ll walk away for good.
Consumer loathing of paperwork in particular is a big friction point. The modern-day antipathy for putting pen to paper highlights the challenges confronting many financial institutions and their employees, who must also be mindful of multiple regulatory and compliance requirements. Too many in this industry still rely on physical documents, parcel mail and in-person meetings to meet the needs of their customers.
Meanwhile, the enormous success of many digital-only fintech companies highlights the folly of those antiquated business practices.
Fintechs with fast, seamless digital offerings include lenders like Prosper, Avant and SoFi, while Tala and Branch are both seeking to offer microlending over mobile devices in developing countries. The Los Angeles-based fintech startup Dave, with its mission to save consumers from the evils of overdraft fees, is now worth $1 billion.
Some legacy institutions are following suit. Evolve Bank & Trust formed in Arkansas in 1925 to lend money to local farmers. In 2005, new owners bought the bank, and soon sat up and took notice of the fintech tidal wave that was quickly approaching. They formed partnerships with fintech firms, and now the Memphis-based Evolve has partnered with Dave, acting as a backstop for the startup’s financial management activities. All of it, of course, is wrapped in beautiful design and an easy-to-navigate customer experience.
It’s never been more clear: Consumers want seamless and easy in all aspects of their lives, and that includes banking and insurance.
This is particularly true for Gen Z-ers, those born in the mid-1990s. According to a recent PwC study, one in three of them used an online provider for a loan, more than twice as many as in 2018. The rate is growing for millennials, too. The report also found that the number of consumers who want a bank within close physical proximity to where they live is declining.
Consumers want an easy-to-use app. They want almost instantaneous service. They want as much paperwork as possible to be eliminated, and form completions to be digital. They are increasingly location-agnostic, and don’t want to have to come to a physical office for routine transactions. Their demands, if left unmet, can also be extremely stressful for front-line employees and can result in diminished morale and high turnover.
This all requires financial institutions to either build or buy cutting-edge technology infrastructure to support the new services they want to implement, both in terms of performance and cybersecurity. Enterprises should seek a true strategic partner in this important area.
A specialized software platform of the type we offer here at Liveoak is designed to help promote seamless integration during the sometimes messy graduation into the digital era. We’re happy to be helping financial institutions large and small eliminate friction points so that they can not only meet the demands of this new era of consumer supremacy, but exceed them.