Traditional payments are being replaced by new "frictionless" options that use customer-provided data to make a purchase without an explicit customer decision.

1. The Accelerating Growth
of Frictionless Commerce

2. Consumer adoption of digital commerce
and payments has become mainstream
The Accelerating Growth of Frictionless Commerce
Notes: Numbers may not add due to rounding. Digital purchases are defined as those conducted online on a desktop or laptop, using the Web browser of a mobile device,
or within a mobile app. Question: “How often do you make digital purchases?” N=7,002
Source: A.T. Kearney Q4 2015 Banking and Payments Study
Frequency of conducting digital purchases
% of banked consumers who selected each frequency
Using a desktop
or laptop
Using a
mobile phone
Using a tablet
86%
57%
41%
Annually
Quarterly
Monthly
Weekly
Daily
8%
8%
60% at
least
monthly
38% at
least
monthly
24% at
least
monthly
7%
18%
11%
9%
32%
17%
13%20% 12%
8%8% 9%
3%

3. Have already
used these types
of services
Have not used
any yet, but
likely to use in
the future
Have heard of
but have not
used any yet
Have not used
yet, and not
likely to use in
the future
Nearly 60% of US consumers are aware of and likely
to use innovative frictionless shopping services
The Accelerating Growth of Frictionless Commerce
Note: Question: What is your awareness of the examples provided?
Source: A.T. Kearney Frictionless Commerce Consumer Survey, February 2016, NPD Group, A.T. Kearney
What is your awareness of frictionless commerce?
% of respondents
Entertain-
ment
(Netflix,
Spotify,
Verlocal,
Facebook)
Grocery
(Amazon,
Google Express,
FreshDirect)
Home
meals
(Blue Apron,
Muchery,
Kitchensurfing)
Fashion
and
apparel
(Le Tote,
Trunk Club,
Warby Parker)
Wellness
(ClassPass,
Lumo, Zeel,
Zocdoc)
Overall
31%
6%
36%
27%
12%
8%
41%
39%
8%
7%
29%
56%
11%
9%
20%
61%
8%
7%
25%
60%
17%
7%
33%
43%
57%

4. Today, however, most digital purchases require
consumers to enter transaction-specific information
The Accelerating Growth of Frictionless Commerce
Notes: Digital purchases are defined as those conducted online on a desktop or laptop, using the Web browser of a mobile device, or within a mobile app. Question: “How often do you make digital
purchases? Which of the following do you consider your primary payment method (i.e., the one you most commonly use) for digital purchases (e.g., online desktop or laptop, on a mobile browser,
on a mobile app)?” N=6,550
Source: A.T. Kearney Q4 2015 Banking and Payments Study
Primary payment method for digital purchases
% who selected each primary method among banked
consumers who conduct digital purchases
61%
21%
17%
Other
Enter payment information for each transaction
Access the payment information held
on file at the retailer
Access the payment information held on file
at a third-party payment service provider
(e.g., PayPal, Visa Checkout)
1%

5. Innovative players
are now moving
to eliminate the
“friction” from
commerce, using
consumer-provided data
to automate the entire
shopping process
The Accelerating Growth of Frictionless Commerce

6. These innovators have simplified and sped up
the payments process, removing steps such as
payment details and transaction authorization
Source: A.T. Kearney analysis
Illustrative movers and shakers across the consumer landscape
• Automated and near
real-time fulfillment
• Personalized recommendations
• Automated shopping lists
and triggers
• Pre-authorization of
purchase and/or payments
• Little-to-no customer action
Consumer
data
Shop
Fulfillm
ent
Purchase
The Accelerating Growth of Frictionless Commerce

7. Frictionless purchases can then be
automatically made on behalf of the
consumer, with his or her advance
consent, using real-time, integrated data
from consumer preferences, past behaviors,
sensors, and other sources
The Accelerating Growth of Frictionless Commerce

8. Looking ahead, consider
how a smart refrigerator
could automatically order
groceries for home
delivery based on which
food items are running
low—and the consumer
never even pushes
a button
The Accelerating Growth of Frictionless Commerce

9. By 2026, frictionless commerce will likely reach
10 percent of all sales—and as high as 30 percent
in some merchant categories
The Accelerating Growth of Frictionless Commerce
55%
15%
30%
$2.8
$2.6
$2.4
$1.2
$1.0
$0.8
$0.6
$0.2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
$0.4
Traditional retail
Frictionless commerce:
Predictive algorithms
Sensor-based
Subscription
Digital: Web and POS
Between now and 2026,
frictionless commerce2
will grow annually by 24%3
1
Consumer spending is measured in constant 2014 dollar value.
2
Frictionless commerce category includes membership and subscription, sensor-based, and predictive algorithm commerce models.
3
CAGR is calculated based on dollar value.
Sources: US Census data; A.T. Kearney analysis
Annual consumer spending forecast1
(US$ trillion)
2026 spending
(% of spending)

10. The Accelerating Growth of Frictionless Commerce
Consumer attitudes are sharply divided, however, on
whether sharing data required to conduct frictionless
commerce provides benefits or is an invasion of privacy
Note: Question: “Which of the following statements best reflects your views regarding the use of consumer payment/purchase data by banks, retailers, or digital merchants
(e.g., targeted recommendations, special offers, marketing promotions)?” N=7,002
Source: A.T. Kearney Q4 2015 Banking and Payments Study
Consumer perception of providers’ use of their payment
or purchase data
% who selected each option among banked consumers
13%
30%
30%
11%
17%
A benefit, but only if consumers are directly
compensated for the use of the information
A benefit if consumers benefit directly from the use
of their information (e.g., special offers and discounts)
A necessary evil, with occasional benefits to consumers
A benefit because it improves retailers‘ knowledge
of the customer and the context for future purchases
(e.g., recommendations)
An invasion of privacy that should be prohibited

11. For banks, frictionless
commerce is a threat—
and an opportunity
The Accelerating Growth of Frictionless Commerce

12. Banks could become
“commoditized” as
frictionless commerce
eliminates consumer
payment type and
brand decisions
The Accelerating Growth of Frictionless Commerce

13. On the other hand, there are
opportunities to add value
everywhere: new mobile
sales solutions; retail
partnerships; investments
in mining customer data;
and offering “privacy
as a service”
The Accelerating Growth of Frictionless Commerce

14. Banks are in a strategically advantaged position in
terms of consumers’ trust in their ability to properly
manage consumer data
The Accelerating Growth of Frictionless Commerce
Notes: For each provider, excludes consumers who do not interact with that provider. Question: “Do you conduct any digital activity (e.g., sending emails, Internet browsing, social network activities,
shopping activities) either online (with laptop or desktop computer) or on a mobile device (smartphone or tablet)?; In general, how concerned are you about the privacy of the information that is
shared when you conduct digital activities (e.g., sending emails, Internet browsing, social network activities, shopping activities) either online or on a mobile device?; Consider the following types of
providers you may share your personal information with when conducting digital activities (e.g., sending emails, Internet browsing, social network activities, shopping activities). Please tell us how
comfortable you are with each of the following providers having access to your personal information.” N=7,898
Source: A.T. Kearney Digital Commerce Study 2015
Primary
bank
Level of comfort with providers having
access to personal information
% who said they are extremely or very comfortable
42%
PayPal
34%
Visa
31%
Amazon
30%
American
Express
30%
Master-
Card
29%
Discover
28%
Apple
23%
Google
19%
Twitter
17%
Large/
national
retailer
17%
Facebook
14%

15. Five ways banks and payment providers can
address the frictionless commerce trend
The Accelerating Growth of Frictionless Commerce
Participate in the deployment of frictionless commerce solutions to both
guide the evolution and become hardwired into future solutions1.
Pursue partnerships to provide and lever direct and
indirect contextual shopping data2.
Determine ways to use consumer and transaction data in more
meaningful ways for both consumers and merchants3.
Offer differentiated value-added services
to acquire merchants4.
Pursue and develop “privacy as a service” to help consumers manage
their personal data in the frictionless commerce world5.

16. For more information about
The Accelerating Growth of
Frictionless Commerce,
please visit:
www.atkearney.com/frictionless-commerce
The Accelerating Growth of Frictionless Commerce