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@MikeSmith + 1. If customers don't get p****d off adequately to switch to another bank even after such a move by their bank, when will they? High time the millions spent on Current Account Switch Service started delivering ROI! 

@Mari-Anne Bayliss:

Totally agree but the operative term is "if done well".

Good you brought up biometric authentication. You probably have a high-end smartphone if you don't face any friction from fingerprint. I have a midrange smartphone and it takes an attempt or two for fingerprint authentication to work. I found the friction intolerable and disabled fingerprint authentication for opening the lockscreen. On my company blog, I've published a post titled Hardware Matters. In that post, I explain the high friction involved in fingerprint authentication, caused primarily by not-so-high-quality fingerprint scanner. 

While the common man may expect everybody to use “high quality” for everything, it’s not practical for large scale use cases to invest in high-end fingerprint scanners. With the kind of entry-level fingerprint scanners used in many of these applications, it’s very rarely that a user is authenticated on the first try. Ergo lot of friction.

"If done well" is right but, when it comes to compliance matters, there's too much temptation caused by cost pressures to NOT do it well. 

Then there are problems even on high end smartphones that are outside the control of the user. I know people who had a frictionless experience of Apple Pay with fingerprint ID now facing a lot of friction with Face ID from iPhone X onwards. They didn't ask for Face ID.

Obviously the bank pays for overinvestment in branches. Just like it pays for private jet used by its CEO and other expenses. 

Unless a bank levies an explicit charge towards "overinvestment in branches", the question of who pays for branches is moot. If and when it does, it will be obvious who pays for it - it's whoever the bill is addressed to.

Vicious circle is not a bad thing. Otherwise, I can't imagine the crowds - and degradation in CX - if customers from a closed branch visit the nearest open branch. 

Great post! I'm glad mine is not the only voice in the wilderness on this topic. I called BS on the topic of banking the unbanked 5 years ago here when I saw a bank and a glorified pawnbroker in the same building in rural South India. Many of the presently unbanked go to loan sharks and blade companies not because they don't have a bank to go to but because of speed and greed, two things informal financial sector gives them and banks can't. 

That said, I've a slightly different take on Credit Card. In India, there are 1B debit cards but only 50M credit cards. There's definitely a huge underserved market for credit card. Cardholders in India rarely revolve their outstandings, so they don't pay any interest. Credit MDR is less than 2%. In the latest Union Budget, we heard about the new #ZeroMDR rule. There's some confusion on its applicability but it mandates 0% MDR for digital payments. So your assumption of 3-4-5% cost for credit card and the resultant immoral charge you make against credit cards are not true in India. As a matter of fact, banks are NOT pushing credit cards so much. (On a side note, 24/7/365 realtime bank-account linked digital payments driven by UPI are quite popular in India e.g. Google Pay, PhonePe, PayTM. They charge no fees to Customer and <0.5% MDR to Merchants).  

"Frictionless SCA" is an oxymoron. Sorry to put so much focus on a small portion of an otherwise great blog post but, IMO, all other challenges for the merchant pale into insignificance if merchants expect SCA to be frictionless.

In the case of other quasi-oxymorons like paperless office, branchless banking, cashless economy, decentralized Blockchain, and the like, over time it's possible to strive towards less paper office, fewer branch banking, and so on, but I'm not sure if the same is possible with SCA / 2FA because payments suffers from one unique security design challenge:

My PSP should let me access my money with ease. At the same time, it should block anyone else from accessing my money, no matter how hard they try. How will my PSP know who is trying to access the money in it? Obviously, it needs to do something to distinguish between me and a fraudster. It's in designing that something without causing too much friction that the payment security design challenge lies.

Many have attempted but none has succeeded in making online 2FA card payments frictionless. I concede that online A2A payments must support SCA and that SCA is reasonably frictionless in that case but the challenge there is, in markets having high credit card penetration, why would a common man forego credit card payment benefits like rewards, float, superior fraud protection, repudiation, and credit history and opt for a bank-account linked payment method.

It's not only me. Strong Customer Authentication - a Litmus Test for Europe 

Great analysis. Resonates well with my post Blockchain - Calling BS On Decentralization And Resilience. 

With < 50M credit cards, credit is a highly underserved market in India. According to fintech lender LazyPay, there are 400M creditworthy people in India. Kreditech surely has a huge addressable market. Best wishes to Kreditech. 

2FA is not unknown - it's extremely well known. I've been facing it for +5 years. Many new regs are seen to make things easier e.g. FPS, Open Banking. Going by my personal experience and the publicly-expressed opinions of Stripe, et al, it's naive to believe that SCA / 2FA will bring about an easier way of working or reduce friction. TBH, I don't see the relevance of Estonia example of 2FA with Bank in the present context where the 2FA is with Merchant. 

Naive survey. No industry will be optimistic after being mandated to give away confidential customer info to its competitors. "Fearful" is the right way to be under the circumstances. As they say, only the paranoid survive.

We're seeing tech companies like LinkedIn fighting tooth-and-nail to shut down companies (e.g. hiQ) that do nothing more than scrape user data that LinkedIn anyway displays publicly. Imagine what they'd do if they were told to hand over all the customer info on a platter to their competitors and third parties. Banks are behaving perfectly rationally.

On a side note, I stumbled on to Open Banking Tracker yesterday. This new startup tracks "+130 banks in their journey to ... Open Banking compliance." I clicked thru' the status of around 5 banks. I recall that almost all of them have published documentation for APIs for Branch / ATM locations. This runs counter to the survey's claim that "a majority of banks have no plans to implement APIs that expose data in areas including ... branch/ATM location."