Online businesses across the retail, travel and hospitality sectors have set the bar high when it comes to delivering a strong digital customer experience. They understand that to win over consumers, those people need to have an amazing experience at every online interaction and touchpoint. In line with consumer demand, the ultimate experience is seamless, consistent, and importantly, “frictionless.”

There’s a lot the financial services (FS) industry can learn from this. TransUnion’s customer experience research, carried out in May 2019, showed that 75% of consumers say it’s important that the applications they make for a financial product like a loan or credit card take place online or via an app. But the research also highlighted that businesses in this sector need to adapt their digital approach, and identified three critical ways that consumer expectations of the digital customer experience (CX) are different when looking for financial products.

Not frictionless, but ‘friction right’

When it comes to higher risk transactions, like taking out a mortgage or applying for a loan, consumers want a certain degree of friction in their purchase journey (vs. with everyday online tasks like booking a hotel room or ordering a food delivery). They want reassurances that there’s a higher level of scrutiny and stronger security measures in place.

“Despite expecting quick approvals and a smooth, convenient experience, consumers want to know that lenders and financial institutions are taking the right steps to verify their identities, authenticate consumers and prevent fraud when they apply for financial products,” explains Melanie Zimmerman, senior vice president of International Markets at TransUnion. “Success for these companies lies in finding the balance in these seemingly competing objectives.”

It’s a lesson that many companies have already put into practice.  71% of UK financial firms say consumer expectations have significant influence on their fraud detection methods according to research carried out by Forrester Consulting on behalf of TransUnion for its white paper on Open Banking earlier this year.

Poor CX influences FS abandonment rates 

Along with the growth of digital interaction, another element the FS industry is encountering alongside its retail counterparts is cart abandonment. With credit-based products, however, the FS sector is providing consumers with services that are generally more considered, and very necessary to their lives, whether on an everyday basis such as bank accounts or credit cards, or in terms of life goals, including mortgages and home improvement loans.

So, when we see that 50% of consumers surveyed by TransUnion say they have dropped out of a credit application process because of a poor customer experience, we should think hard about how bad the experience may have been to force abandonment of a considered, important transaction.

The research shows that of those who abandoned a transaction, dropouts occurred most frequently in applications for short-term payday loans (61%) and credit cards (55%). With credit product providers finding new ways of competing and differentiating in a regulated market, product and price are the clear focus. These figures suggest tweaks to the user experience could add a much-needed multiplier to the attractiveness of any company’s offer.

Brendan le Grange, a data researcher and author of TransUnion’s Industry Insights Reports, both in the UK and globally, notes a key area of CX where he has seen a real effect on revenue: “There is more to a great customer experience than turnaround time alone but the delay between a consumer applying for a credit account and that account is being opened is a decent proxy. In studies around the world we have repeatedly seen a measurable link between faster turnaround times and real financial benefits to the lender – in terms of increased loyalty and in terms of reduced bad debt.”

People want value in exchange for their data

Consumers are building a strong understanding of the value of the financial data they create. Alongside that, they understand that with the introduction of GDPR, they have greater control over the data that organisations have access to and what they use it for. But they’re willing to share it with finance providers if they stand to benefit in a meaningful way.

TransUnion’s customer experience research found that 84% of UK consumers say they would, to some degree, allow a financial services business direct access to bank statement data if it improved the experience of applying for a financial product. FS companies need to build this trust, making clear to consumers what they are using the data for, and that privacy remains of paramount importance.

The data capabilities behind credit referencing are evolving with a huge amount of material now being considered as part of that assessment to help consumers and businesses make informed, responsible decisions. The introduction of TrueVision™ – TransUnion’s suite of trended data capabilities – is a testament to this.

With over 2,000 data attributes and proprietary TrueVision algorithms, incredibly powerful insights emerge to help lenders truly understand the story behind the consumer’s credit score. TransUnion describes it as being similar to the difference between a snapshot and a moving picture. Where a snapshot only lets you know where a consumer is currently, a moving picture provides insight into where a consumer is heading.

As a result it will help more people access credit or better credit terms, alongside a smoother, more enjoyable customer experience.

Kelli Fielding, MD of consumer markets at TransUnion UK summarises: “We enable greater financial inclusion and improved customer service by creating the capability for financial services and other businesses to make better decisions, thanks to enriched insights and smart, easily-embedded tools that support a seamless customer journey.

“Helping consumers understand the value exchange on offer, which, simply put, means better products and experiences in exchange for consent to use their data, will drive greater consumer empowerment and enable consumers to harness the power of what we at TransUnion describe as using ‘Information for Good’.”

TransUnion’s latest white paper examines the role of customer experience within financial services and can be downloaded here.

Brendan LeGrange, Kelli Fielding and Melanie Zimmerman at the TransUnion Consumer Experience Summit