Challenger banks put themselves under intense pressure to create a superior customer experience, and with good reason. With banking being an industry reliant on customers continuing to purchase additional products, it is important that customers who switch to these new banks stay for life.
However, for challenger banks born in the digital era, customer experience expectations match those of other technology companies, not those of established banks. Because of this, customers are more likely to walk away over small things, like a poor mobile app UI. The CTO of Tandem Bank, Paul Clark, explained in an interview how quickly these customers can leave:
“There’s an expectation. If those other people’s apps are Uber or Facebook or Instagram or whatever your favorite apps are, then that’s the level of sophistication, of smoothness, of customer experience that your customers expect. And when they don’t get that, when they jar up against it, it’s very easy to drop one app and move to another.”
In other words, challenger banks must do everything possible to protect their customer experience. Yet, they also need to prevent fraud and be compliant. How can challenger banks protect their great customer experience from the negative impact of fraud? With a poor risk strategy, challenger banks run the risk of either increasing customer friction, by driving up false-positives, or decreasing customer trust through fraud occurrences like data breaches or account takeovers.