Quest for Friction Less Experiences

Yesterday, I got to experience the WhatsApp payment flows. It surely felt like a neat experience both for adding/mapping bank accounts and for in-chat payments.

And in my excitement I forwarded it to a friend who didn’t have any UPI handle so far. And I was surprised by the reaction.

How does WhatsApp know my bank account ??!! 

Payment friction

And frankly I had looked at it the other way round – they are showing me the specific account that I want to associate here.

And this got me thinking about friction in digital consumer experiences.

I remembered my Amazon experience.

I have recently changed my laptop and phone and each time I logged into my Amazon account from a new device/browser I got a security challenge. I had to enter a security code that was sent on my email.

Friction during logging in

This is inspite of me using my Amazon login id & password. So why the additional step? Why add to the friction of logging in?


  • Its a friction-less way of doing XYZ !
  • We have drastically reduced the friction in each transaction
  • Our platform provides the most friction less experience for ABC

Am sure like me, you keep hearing how every venture and corporate is focused on reducing friction and there by making it a significantly better experience for their consumers/stakeholders etc.

And I get it.

If I almost always use an offers platform to look for offers near me on a mobile app, it should not ask me to choose a city, then location etc – it should just pick my location and show me the offers. I get it.

Similarly, if my online or in-app payment process need an OTP and there is a way to automatically read the OTP rather than needing me to toggle from the merchant app to the messaging app and back. It is definitely so much cooler and easier.

BUT, ALL FRICTION IS NOT BAD

What I don’t get is how suddenly friction has become such a bad thing.

Way back in my school days, we were taught in Physics that while friction caused wear and tear, it also was the main reason wheels work – friction prevents slippage and aids rotation. Snow chains for tyres – aid driver confidence by increased traction (apart from helping break the top ice layer).

My current thinking on friction less experiences is as follows:

  • All consumers are not same. What is a great experience for some may be a concern for others (elevators vs escalators) . Hence it may be best to have varying levels of friction available for consumers.
  • Friction can help build consumer confidence – esp amongst users concerned about security
  • Friction may be useful in the on-boarding or early days of consumer-product relationship. As confidence builds, some more steps can be reduced.
  • Friction is also an industry level phenomenon. As an industry matures and consumer confidence builds, need for a faster, smoother way to do the same old task would become stronger.

What do you think?

Migrating away from cash is intimidating – Stickiness of Cash Part 2

Ask any payment professional, and while they might disagree on what’s the best payment experience, they would all agree that Cash is sticky.

And one of the core reasons for the stickiness of cash is that the migration journey is intimidating for most cash-heavy users.

Too many choices

Here are some of the many questions the cash users who want to migrate away from cash, grapple with:

  • Is it safe to use a card for payments
  • Should I use a separate card for ATM withdrawals and purchases
  • What should I start using – prepaid, debit, credit , mobile wallets
  • If it’s a card, should I go for a basic, gold, platinum or some other variant
  • Should I get a product with shopping benefits or one with fuel? or the one with air-miles
  • Should I take a Visa or a MasterCard or a Rupay
  • I have accounts with multiple banks, whose product do I begin with
  • How do I apply for the card? Can I apply online, or do I go to the bank branch?
  • What is a UPI or IMPS payment? How do I do that? What is the fees on the transactions?

…….And it goes on and on.

The simple fact is that there are way too many products with different features, brands, offers,benefits and form-factors. It is a tough choice to make.

And post demonetization, most banks are  show-casing ALL their products in each of their ads. Leaving it to the consumer to pick and choose.

I have seen Mumbai buses covered with ads, that have all the digital payment instruments from that bank. Not sure if most consumers even know what those mean.

 

The famous Malcolm Gladwell research on choices, happiness and spaghetti sauce also harps on the risk of too many choices.

The migration away from cash, has to be made easier with fewer choices or a recommended path to walk on (recommendation itself coming from a trusted partner).

In the absence of this, most consumers prefer a wait-and-watch stance. And the product(s) with simpler choices and/or more brand-ambassadors will see higher adoption. No wonder, many a millennial adopted the mobile wallets. There were no variants of PayTM, Mobikwik etc.

And this brings us to the other point.

Hurdles in the migration

Ok, so you have a cash-user who is convinced about that one digital payment from your bank. How does she go about getting started?

Do you remember the forms you filled to get your first credit card.

I remember that during my Deal4Loans days, the card application forms used to have almost 50+ fields across some 4-5 stages of the online application for most banks.

While the consumer on-boarding has come a long way in the digital era, it still is complicated for many products/banks. Unless the consumer is really convinced about this migration, why would they jump through so many hoops to get the product.

The access and on-boarding has to be simpler. A convinced consumer should be active on Day 0 if not within Hour 1.

In my opinion, if we are serious about displacing cash, we need to make the transition a simpler choice for the consumers.

What do you think?


This is part 2 in a series of posts where I try to understand why Cash is sticky? What are the some of the obvious things, we may have overlooked in our zeal to digitize payments.

Here’s part 1 , where my humble submission is that Cash is not really the enemy. Atleast not in the eyes of the consumers.

Immediate reactions to the banning of Rs 500 & 1000 notes

As Anshul & I sat listening to the PMs announcement and then all the experts on CNBC, we couldnt help discussing what all must be happening around the country in the next 72 hours.

500-1000-note-banWe are surely living in interesting times.

Managing high denomination notes:

  • All secret saving places in the homes/offices/godowns will be cleaned and reviewed today.
  • Piggy banks of kids will be broken tonight. And parents will have a hard time telling the kids why they cant wait for the kids bday
  •  Many would queue up at petrol pumps to get their cars tank-fulled.
  • People with blackmoney would already be approaching hospital owners and petrol pump owners to help them convert their black money into white.

Getting cash with lower denomination:

  • Ppl would queue up infront of ATMs for withdrawing Rs 400/- . Multiple times. Confirmed.
  • People would watch their cash spends like never before.

Moving away from cash:

  • Payment apps will see a sudden spike in downloads and activation over tonight tomm.
  • Wallets will be topped up. Card activation rates will show a sudden spike, esp on the debit cards
  • Uber and Ola will have a field day as autos & kaali-peeli wont be preferred. Pls expect surge pricing.
  • Most small merchants will see a dip in transactions next 2 days. They will teach themselves how to accept cards.

Banks & Payment Providers

  • Opportunistic Banks would send SMS & emails to customers to activate their debit, credit prepaid cards.
  • The CASA books will see a sudden increase as the rate of deposits will be higher and faster as compared to rate of withdrawals from the account. Few dormant savings accounts may become active.
  • Merchant acquiring teams will suddenly be seeing incoming pull business rather than push.
  • Jandhan account activation rates will be very high.

Ripple Effects

  • Like Future Group, many merchants will be open almost till midnight tonight. Grabbing whatever opportunity that exists in this situation.
  • Zomato & food ordering apps will see a growth in business. Their market share of each partner restaurants overall revenues will increase.
  • COD rules will now need to incorporate not just pincodes but the order amount too. COD may be suspended for the next 2/3 days.
  • Property deals would be on hold till the new norm of the market emerges. Or till enough of the new notes find their way into the parallel economy.
  • Odd jobs at home will be postponed. Big hit to the daily wages skilled earner. They would be forced to ask their clients to deposit money into their Jandhan accounts.

Funny Thoughts

  • Patanjali would need a new theme for their campaigns. Kaala-dhan (black money) story would just not fly
  • Marriage season gifting needs more innovative ideas. Envelopes don’t cut it any more.
  • How will the rich temple trusts manage the shift towards less-cash?

Payments are a critical piece – Digital Banking ToolKit

In India, digital and mobile Payments is a really HOT space right now.

  • HDFC Bank introduced PayZapp which intends to be the gateway for all m-commerce transactions, with incremental offers as the initial incentive
  • ICICI bank introduced “Pockets” – a way for even non-ICICI Bank customers to have access to mobile payments
  • Axis bank launched Ping Pay and Lime
  • 11 new Payment Bank Licences have been issued. This not only includes some of the bigger telecom players but also the likes of PayTm.

All this action is triggered by multiple factors including a huge opportunity to move transactions away from cash. In the fact that ecommerce is booming and so is the comfort that consumers have in paying online or through mobile. Mobile, smartphone and 3G penetration is booming etc etc.

But from a bank’s perspective, payments are critical.

Why?

Payments are high-frequency use case

You would probably take 3.5 loans in your life.

Your salary gets credited into the account once a month. If you have a SIP instruction, the investments may also happen once a month.

You withdraw cash probably once a week.

But you make maybe multiple payment transactions everyday. And in most cases, banks do not have an idea of the payments we make.

More transactions allow banks to have more interactions with their consumers and hence move a step closer to being an Everyday Bank (Accenture coined this interesting term to bring banking into consumer’s day-to-day activities).

Payments provide rich-context

During my brief stint in the Life Insurance industry, the key challenge was that post acquisition, there is not much context to go back and start a dialogue with the customer.

The same is true (or will soon be true) for banks that miss out on the payments. Access to payment level data gives so much deeper insights into the consumer.

The bank understands where do you spend (which markets, which segments), when do you spend, your typical ticket size etc. This is really powerful data, which can help generate insights into customer segments and their needs. E.g. a banking customer who pays school fees (for her kids) online has told the bank that she might be a good target to be pitched Children Plans (life insurance).

It can also help the bank design better products that resonate more with the consumers.

Payments will see sticky behavior

In the early days of Digital Banking, it was said that the bank which manages to get Bill Payments on to its account will be a sticky account. If you can get the customer to map his utility payments etc, you were on a path to be the preferred banking account.

Why ?

Because these are important transactions yet not something customer wants to spend a lot of time on. Hence if he gets used to a specific platform/UI – until and unless something changes drastically, the customer would not move. Same reason why I am so loyal to PayTm ever since they made it so easy to pay bills and do set-top box recharges.

The bank or service provider, which onboards customers to a frictionless platform will be tough to unseat.

Thin Mobile App or a Fat one – Digital banking toolkit

Mobile is the new frontier and banks know this well.

Amongst the various choices to make as part of the bank’s overall mobile initiative, is the decision around the structuring of mobile app(s).

Thin App Vs a Fat App.

These might sound strange terms especially in reference to mobile apps and no, we are not talking about the size of the app in MBs.

A Thin Mobile App is a niche solution available for select instances or customers, which allows a small subset of activities to be handled.

On the contrary, a Fat app is one where all the possible features and functionalities are available in the single app.

Banks have chosen to tread either of the paths. E.g. ICICI Bank has multiple apps in the playstore and HDFC Bank has just one main app.

Bank Mobile App - Fat or Thin

As one would expect, there are pros and cons of both, and I am listing a few here that come to my mind.

Attribute Thin App Fat App
 Clean UI  Easy to deliver  Needs design assistance
 User Engagement  Higher – as less distractions  Lower as many features irrelevant
 App Marketing  App adoption slows as marketing dollars split across multiple apps  Overall downloads look better as one single app
 App Development  Becomes complicated with multiple apps in market  Easier since tracking just one app
 Channel Migration  Depends on how the bank approaches it   Depends on how the bank approaches it

I personally feel, more than the final choice, it is the reasons that drive the choice which are important e.g.

  • It makes more sense to have a separate thin mobile app, if there is a unique customer segment that seems to have very different transaction or enquiry profile as compared to the others. E.g. Retail bank customers vs SME business owners
  • Building Traction. Many banks want to keep their mobile banking app for transactions only and do not see value in building any pre-login use-case. This makes the mobile adoption target so much tougher as there has to be a very precise value that the customer foresees in using the mobile platform for transacting. Plus its a two stage goal, get downloads and then get usage. It might be useful to break it down into easier goals, get downloads by providing a use-case even if its a pre-login e.g. offers on debit and credit cards. And then get the customer who already has your app to start using it for transactions.

What do you think?

Digital India – its already here

Today’s the launch of the Digital India initiative and quite a coincidence that I had an experience which makes me believe that Digital India is already here.

Digital India

Here’s what happened.

I was in Mumbai and called for an Uber. I started talking to the cabbie to understand the target market for a specific use case for mTuzo . We are pitching to banks that with mTuzo we can help move their debit card customer from an ATM only to ATM + POS relationship.

So I asked him which bank account he gets his Uber payments in – it was a SBI account and it was his choice. Uber gives him complete freedom to choose the banking partner.

Next I asked him if he had a debit card for that account . Turned out he did.

I asked him if he’s been using that card at ATM or for shopping also. As expected he had been using it only for cash withdrawals.

Probing further I asked him what if he got 15-20% discount if he shopped using his debit card, would he consider switching from cash to card. And his response just stumped me.

He said he’s already used his card for online purchases at SnapDeal. He did his first purchase using COD (cash on delivery) but once he was sure that they delivered just fine, his next transaction was through his debit card,

Let me repeat that – a 30 something male who has been driving a cab in Mumbai for last 10 years, is only schooled till class 10th, who uses his debit card only for cash withdrawal, has used it online at SnapDeal.

And what really really shocked me was his first purchase on SnapDeal. I can bet you will never be able to guess it.

 

 

Take a few guesses…..

 

 

 

…….

He bought a selfie stick for Rs 300 (after a 66% discount). A selfie stick !!!!

I rest my case, Digital India is here.

Maybe we need a Digital Bharat initiative.

 

Why mobile payments must arrive soon

I try to go walking on most weekdays. And I prefer to do so light – carry just the minimal stuff.

On my way out for a walk yesterday, I stopped by to take some cash along with me – just in case.

And this got me thinking, with my smartphone (& earphones) I do not need so many other things.

I know the time(so that I am in time for that movie), can listen to music while I walk, I can track my work emails (allows me to stay away from my laptop) , I know I can be reached anytime if the need arises(through calls, SMS, messengers etc).

I can track my workout (and its just amazing what all some of the fitness apps can do), click high resolution photos while I am on the move and share it with my friends & family.

But I still need to carry my wallet when I go for my walk. I do so, because I might want to buy fruits on my way back. Or I might get a call from home to pick up some other groceries. Its usually not a planned spend but I want to have the confidence that I have money available to spend when I am out for a walk.

 

I don’t like the feel of the wallet while walking. I would love my phone – which is the digital swiss army life in most our lives – to be able to do that. I would want my phone to give me a sense of financial security too.

Swiss army phone

I know business strategists would say this an isolated and small use case. And I agree. But my point is, its a matter of time. While mobile has brought all these solutions into one gadget, payments cannot stay away for too long.

But then again, its not just me. When my mother goes out for a walk, she carries her phone and a small purse. Does she spend money every day – No. Would she go out without money/purse – No. Would she go out without her phone – No.

Why I use Paytm for all bill payments except Airtel

Consumer behavior used to be a course that marketing folks took in 2nd year of Bschool.

I stayed away , like most other marketing courses.

But over the years, time and again I have seen the importance of understanding the consumer behavior – why do consumers behave a specific way, why and how are habits formed, are all habits sticky, what would prompt a habit change and so on.

My Online Bill Payments Behaviour

Recently I just noticed something interesting about how I pay my bills. It brought up the importance of consumer behavior yet again.

So here’s what happened.

Every month I end up paying some 5-6 different mobile/landline and a couple of DTH bills.

A few years back I started paying the Airtel bills online – the process was easy and it was the same interface for all Airtel Payments – mobile or landline.

Just one drawback – there was no “Make another transaction” button.

One had to go back to home page, and start the flow again. I shared this with my friends at Airtel Money and quite a coincidence that this button was added on their web page (they confirmed that my raising it with them had nothing to do with the feature going live).

Since then its been how I have paid all my Airtel bills.

PayTm bill payment
On the other hand, my experience with TATA Sky’s online payment was horrible to say the least.

During one such failed attempt, I remembered about Paytm and decided to use it.

And boy was it an amazingly designed service.

  • The UI was really neat and intuitive.
  • Credit Cards were masked and stored for easy subsequent payments. One just needs to repunch the CVV and the Verified by VISA passwords.
  • Old payments were stored and it was super easy to bring up an old payment and make a fresh one against the same DTH/mobile account.
  • In case of a failed payment to the service provider, the amount is kept in a Paytm virtual wallet that is “automatically”(this is true customer delight) picked up first during any subsequent payments and only the delta amount is required to be paid by the card.

Needless to say my bill payments have migrated to Paytm .

But not all.

I suddenly realized that my de-facto reaction when making the Airtel payments was still to go to the Airtel website and not PayTm. This was strange because from a rational perspective I had no reason to not switch my Airtel payments also to PayTm.

And this got me wondering.

  • I am not really loyal to the Airtel website, its just a question of habit I guess. Its not a strong habit to the extent that one can explain it through muscle memory. But the reality is that I followed the above steps without thinking much – picked up the bill, went to the Airtel site, paid and got it done with.
  • Is my behavior sticky with Airtel because they managed to get to me first and delivered a decent experience? If yes, then the first-mover-advantage for consumer services should be the possible stickiness-hurdle it creates for new entrants.
  • Has PayTm got me as a dedicated customer for their wallet services? Would I choose to pay at lets say Myntra (flipkart has its own wallet and Snapdeal is working on one) through a PayTm wallet? I am not too sure.
  • Although I am an avid Android user with a lot of apps that I use regularly but I still don’t have the PayTm app on my phone. Why? I am not sure. But I remember seeing their messages online and have seen their app in the Google Playstore also. Again no logic to explain this behavior. Wouldn’t the guy in charge of Data Analytics at PayTm be looking at my profile and thinking this guy probably doesn’t have a smartphone or a 3G connection.
  • Now that I have spent some time thinking about my strange behavior, would I go back to the Airtel site or migrate to PayTm? What do you think?

UPDATE

I have long since downloaded the PayTm app and it is now the default way to make ALL bill payments including the Airtel one(s). I no longer wait (or bother) for the bill to be delivered – PayTm manages my bill presentment and payment experience end to end.

M PESA story

What are the things M PESA did right?
  • Clean and focused campaign – “Send Money Home” – focused only on national remittances – something that was done in abundance
  • Transaction fees were the lowest for any mode of money transfer
  • Fees clearly communicated with slabs/displays at agents
  • Differential pricing for customers paying to other customers vs non-customers. This brought in viral effects and drove further registrations
  • Security was the main plank as money transfer was not all that safe
  • Realized that trust resides in timely delivery of SMS receipt. Initial outages or delays created a lot of complaints. mPesa team upgraded the SMSC servers and the menu also
  • Low hurdles to join/sign-up. Any ID proof worked and there wasn’t much KYC done
  • Availability of agents was high. Uncomporable distribution reach.
  • Agents were handpicked, shortlisted after a comprehensive evaluation and then trained sufficiently
  • Agent level liquidity/cash management