As an executive at some of the world's largest banks, I spent most of my career working aggressively to get friction out of the products we offered. Our goal was to automate as much of the transaction initiation and approval steps as possible; to remove customer and bank intervention (and thinking) from the process. Originally we did that to reduce costs and to speed along the process, and we did it well. Large value transactions, often running in the $100’s of millions were set up once and then executed flawlessly over and over again at the touch of a button. Soon we were automating consumer transactions, paying everything from your electric bill to the daily cup of coffee at Starbucks with little or no interaction from consumers. Success!? Well, maybe.
Turns out that removing friction from activities, especially financial transactions, may not always be good for consumers. Removing friction often removes consciousness of action from the transaction, leaving us to mindlessly continue behaviors without consideration of the ramifications, especially the long-term consequences. This takes on added significance when you consider our decision-making wiring has a bug (or a feature, take your pick) that makes it difficult for us to properly weigh decisions in the short run that have long-term consequences.
Take the example of a credit union, working to get their moderate-income members to save more. The credit union knew the savings rate of these members was very low; these members often came into the branch and cashed their paychecks rather than depositing any of the funds. Promotional marketing campaigns, financial education classes, monetary incentives were offered, but none of these initiatives had any real impact.
Finally, working with experts in behavioral economics, the credit union introduced friction into the process of cashing a check and saw remarkable results. Deposits during the check cashing process increased significantly and the resulting balances showed measurable stickiness.
Friction is neither always good or always bad. Analyze the behavior you are trying to change and then determine which tool or tools are most effective. Friction, defaults, framing and anchoring are all nudges that, properly applied, can make a huge difference in the way consumers connect with your products and services.
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