Banks Urged to Emulate eCommerce’s ‘Friction-Free’ Approach

Eric Foust, VP of Banking Partnerships, North America at Trustly, emphasized the need for banks to mirror eCommerce’s seamless experiences, especially in the wake of the pandemic, as stated in PYMNTS News. Consumers, he noted, now expect banks to offer the same level of ease and personalization that eCommerce platforms provide.

Foust highlighted the evolution of digital banking, citing the 1990s as the era when consumers first gained online access to their bank accounts, eliminating the need for physical checkbooks or branch visits to check account balances. Today, with mobile devices, banking can be conveniently conducted from the palm of one’s hand.

Speaking as part of the «What’s Next in Payments» series, Foust discussed the shifting landscape of financial services and posed the question, «What is a bank?»

Foust pointed out that the digitization of banking has even affected traditional brick-and-mortar banks. He described a recent experience where he visited a local bank branch and found it transformed into a consumer-centric, high-tech environment, complete with screens, ATMs, and bankers available at platforms throughout the establishment.

However, Foust predicted a decline in the number of physical bank branches and the amount of investments in brick-and-mortar banks over the next five years. Instead, he anticipates an increase in direct-to-consumer services delivered through mobile channels.

eCommerce firms, Foust noted, are focused on making consumer engagements as smooth as possible. Banks, too, are adopting strategies such as biometrics and faster payment methods like RTP and FedNow, which operate continuously, even during holidays and weekends.

Foust acknowledged that while opening an account online has become relatively easy, transferring funds to a new account can still take several days. This delay contrasts with consumers’ expectations for fast delivery of goods and services. However, he mentioned emerging companies and services that are working to expedite fund transfers.

Foust highlighted the increasing importance of open banking, particularly in the U.S., in meeting consumer expectations for a fast, personalized banking experience. Open banking, along with the Dodd-Frank Act, regulates the sharing of consumers’ financial information between financial institutions and third parties, ensuring more reliable data sharing.

Foust emphasized the evolving relationship between banks and FinTech companies, noting a shift towards more collaborative partnerships. While FinTechs like Trustly can create innovative experiences, traditional banks bring scale with their large consumer base.

Foust emphasized the move towards strong partnerships between banks and FinTechs, highlighting the evolution from disruptive intentions to collaborative ideals.