Banks Need to Copy eCommerce’s ‘Friction-Free’ Experiences

Eric Foust, VP of Banking Partnerships, North America at Trustly, said that in the wake of the pandemic, consumers are looking toward banks to deliver the same ease of use and personalization that’s been a hallmark of eCommerce.

The great digital shift, he said, has been taking shape for decades. Back in the 1990s, consumers first encountered the ability to access their bank account information online.

“You did not have to look at your checkbook anymore,” he said, “and you didn’t have to make a phone call to the branch to go and see what your account balance was.”

Fast forward to the present day, Foust said, and banking, with the use of mobile devices, can be done in the palm of one’s hand. 

Foust’s comments came as part of the “What’s Next in Payments” series focused on examining the new landscape within financial services and answering the question, “What is a bank?”

Brick-and-Mortar on the Way Out?

The digitization of banking has extended into the brick-and-mortar setting, Foust said. He noted that, not all that long ago, he received a cashier’s check, went to the bank to deposit that check, and found that the local branch had become consumer-focused and high-tech, with screens and ATMs everywhere and bankers stationed at platforms in the middle of the establishment.  

But: The branch experience may be destined to go the way of the pay phone or the video-rental store, as more services are delivered direct to consumers, 24/7/365, across the mobile channels where they want to be met.  

“Over the next five years,” he predicted, “you’re going to see a pullback in the number of branches and the [dollar] amount of investments being made in different markets for brick-and-mortar banks.”

In the meantime, Foust said, eCommerce firms are aiming to make their engagements with consumers as frictionless as possible. So, too, are the banks embracing everything from biometrics to faster payments.

“We have new payment rails,” Foust said, “like RTP and FedNow that don’t go to sleep … during bank holidays or on the weekend.”    

Still Addressing Some Frictions

That’s not to say that there are not some hiccups when it comes to digital banking. Foust recounted to PYMNTS that opening an account online may be easy enough … but it can take several days for the funds to be transferred to that new account. In an age where consumers are used to same-day delivery of goods and groceries to their doorstep, such a long waiting period is less than ideal. But, as he noted, there are companies and services that are emerging to help move those funds more quickly. 

The continued rise of open banking, especially here in the U.S., will go a long way toward meeting the new consumer expectations of a speedy, personalized banking experience. Open banking and the Dodd-Frank Act, help regulate the sharing of consumers’ financial information between financial institutions (FIs) and third parties.

“There’s structure here,” he said, “and data sharing will become more reliable.” 

Banks and FinTechs are moving toward more collaborative relationships, where once the goal of the digital upstarts would have been to disrupt the banking industry on as seismic a scale as possible. FinTechs, Trustly among them, have the tech-enabled nimbleness to create new experiences for consumers, while banks have the consumer base, numbering tens of millions of clients, to bring scale to those innovations.

“We’ve evolved,” he told PYMNTS, “to a strong partnership ideal.” 

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