Is digital making people switch off?

For years, we have been told that digital makes everything better by making everything faster, cheaper and easier, and that the ultimate objective should be a world in which we can click here, tap there, buy now, pay later and complete the whole process without thinking about it.

The great mantra of digital commerce has been to remove friction, and yet something rather strange is happening because, having spent twenty years removing all of that friction, we are starting to put it back.

The reason is trust.

A fascinating study from the Institute of Customer Service finds that almost one in three UK consumers, 31%, have abandoned an online purchase because they worried that the website might not be genuine. That is quite a statistic when you consider how much time, money and technology has been invested in making online commerce effortless, because the issue is no longer whether the customer can buy something easily but whether they trust the person they are buying it from.

The problem is that scams have become industrialised and increasingly sophisticated. We have moved a long way from the badly written emails promising millions of dollars in exchange for your bank details, because today’s fraudsters can impersonate your bank, retailer, energy company, mobile provider, tax authority or delivery company with increasingly convincing messages, websites and telephone calls.

According to the research, 58% of UK consumers have been contacted during the past year by a scammer pretending to represent a genuine company. Fake text messages reached 53% of those targeted, while 49% received fraudulent telephone calls, and almost a third of consumers believe scams have become harder to spot during the past twelve months.

That last point matters because artificial intelligence changes the economics of fraud.

AI can write convincing emails, create websites, generate images, clone voices and personalise attacks using information gathered from across the internet, which means that one of the historic weaknesses of fraud — its often laughably poor quality — is disappearing. Technology is making genuine digital experiences better, but it is also making fraudulent digital experiences better.

The result is an interesting problem for banks and businesses because the damage is no longer limited to the money stolen from people who are successfully scammed. Fear of fraud is becoming almost as damaging as fraud itself because, if I receive enough fake messages pretending to come from my bank, I start distrusting genuine messages from my bank. If I encounter enough fake shopping sites, I hesitate before buying from an unfamiliar retailer, and if every unexpected telephone call could be someone trying to gain access to my accounts, eventually I stop answering calls from numbers I do not recognise.

In other words, scammers are not just stealing money. They are stealing trust.

That explains another striking finding from the research, which is that 84% of consumers feel safer dealing with brands they already trust. This is wonderful news if you are Amazon, Apple or a major bank with decades of brand recognition behind you, but it creates a much bigger challenge if you are a new fintech, a small retailer or an entrepreneur trying to persuade someone to transact with you for the first time.

It also creates an interesting contradiction around friction because, for years, banks and technology companies have obsessed about creating frictionless finance through one-click purchases, invisible payments and authentication processes that disappear into the background. Now consumers are saying that they may want some of that friction back if it makes them feel safer.

The survey finds that 35% of consumers would accept greater friction in return for better security, while 32% would sacrifice some security to preserve convenience and another 32% want high security without sacrificing ease of use. That sounds contradictory until you realise that this is exactly what customers have always wanted: they want everything to be instant, effortless and completely secure, even though those objectives do not always sit comfortably together.

Maybe this means that the age of completely frictionless digital commerce is reaching its limits, not because the technology has failed but because trust is becoming harder to establish. Banks and businesses increasingly need to prove that they are who they say they are, while customers have to prove the same thing in return, which means that authentication, passkeys, biometrics, behavioural analytics and two-factor security are no longer irritations sitting in the way of the customer experience. Increasingly, they are part of the customer experience.

There is an even bigger question behind all of this because digital banking was meant to remove the need for branches, online shopping was meant to reduce the need for stores and apps were meant to reduce the need for people.

Yet, when trust becomes uncertain, humans have an interesting habit of looking for something tangible again, whether that is a recognised brand, a telephone number they know, a physical location or a real person who can help when something goes wrong.

Maybe that’s why Barclays Bank is opening new bank branches?

Which brings me back to the question: is digital making people switch off?

I don’t think people are switching off digital, but they may be switching off from digital experiences they cannot trust, and that distinction matters. If every transaction begins with the thought is this real?, then the greatest long-term threat created by online fraud may not be the money the criminals steal. It may be the transactions that never happen because the customer no longer trusts enough to click.