The solution is a mobile-focused strategy. “The use of mobile could help brands tap into a credit card transaction opportunity of nearly $38 billion, insurance premium income opportunity of around $70 billion and loans outstanding opportunity of almost $219 billion, by reducing media friction,” the Facebook Zero Friction Future report for fintech brands said. The report goes on to say that by 2022, mobile could create an overall sales opportunity of close to $985 billion for financial services brands in India, by reducing friction and influencing purchases of credit cards, insurance and loans.
Consumers expect and demand convenience, speed, automation and simplicity. When they don’t find that, they drop off. Alok Mittal, CEO and co-founder, Indifi Technologies says, "The fintech industry as a whole is working together to remove friction from day-to-day banking experiences.” He adds that optimising the use of mobile is vital for analysing and working on large data models providing use cases of what customers across various verticals in cities, sizes or age of business need.
According to the Facebook team, the purchase of financial products, by their very nature, is a high involvement process and requires assistance. Pulkit Trivedi, director, Facebook India said at the time of the launch of the report last month, “As more and more Indians access the internet on their mobile phones, there is a big opportunity for financial companies
to create a powerful digital experience that is intuitive, more seamless and free of friction points for their customers.”
Mobiles can help fintech brands provided they are able to design an experience that takes into account the unique needs of customers and also the data constraints faced by users across metros and small towns. Gayathri Parthasarathy, head, Financial Services-Advisory, KPMG in India said, “Digital savvy customers expect a nearly seamless, device agnostic experience in their financial transactions. Any inconvenience or an additional step in this path to purchase of a financial product can lead to loss of customers.”
While brands are aware of and are adapting to the new technology that is changing the way consumers transact, they are often caught unawares by the huge shift that this has brought about in customer expectations. Research shows that consumer pain points that lead to friction can occur across three main stages of the consumer journey: awareness, consideration and intent. Awareness friction refers to the problems consumers incur in getting to know the brand. Removing friction at this stage requires brands to make discovery and access a smooth process.
The next point of friction occurs at the ‘consideration’ stage. This takes into account every hurdle placed in the way of consumers when they are considering a brand. And finally there is ‘intent friction’ that kicks in when customers are close to making a purchase.
Mobile phones help cut the points of friction by cutting down the length of the purchase journey. As per the report findings, mobile-enabled purchase journeys are shorter than offline purchases by 22 per cent for credit cards, 17 per cent for insurance and 8 per cent for loan categories. Mobile can reduce friction by three percentage points across the purchase journey for credit cards and personal and other loans, while reducing friction to five percentage points across the purchase journey for life insurance.
LOST IN TRANSACTION
Financial brands are losing consumers by not fixing the friction points in their digital purchase journeys.
What is consumer friction: Consumer drop-out during the path of purchase due to unnecessary additional effort, incremental step or inconvenience
Media friction causes the maximum number of drop-outs, this occurs at all the touch points between brand and consumer
For credit cards, friction accounts for nearly 29% of consumer drop-outs. For insurance, it is almost 37% and in the loans category, almost 32%
The solution lies in optimising the use of mobile in the media mix:
Credit card brands can tap into a sales opportunity of nearly $38 billion and reduce cost of consumer acquisition by almost 21 %
Insurance brands can tap into a sales opportunity of nearly $70 billion and reduce cost of consumer acquisition by almost 30%
Personal and other loan brands can tap into a sales opportunity of around $219 billion and reduce cost of consumer acquisition by nearly 21% and 24 % respectively