Today’s financial services account holders don’t compartmentalize. Every facet of their digital lives blends into a single workflow — how they buy things, how they communicate, how they seek entertainment, and how they obtain data to make decisions. Those interactions are constantly evolving. When one experience consistently lags the rest, the consumer will ditch the laggard. Think about being forced to visit a Blockbuster to rent a movie in 2020 — not likely!
One leader’s innovation changes consumers’ expectations of all other providers. Account holders expect better experiences than their traditional financial institutions provide. At many banks and credit unions, no area more desperately needs modernization than lending.
Often, poor credit application experience ends in abandonment, sending would-be borrowers to specialized fintech lenders instead. Institutions can avoid this by making improvements on four fronts:
1. Make Relevant, Personalized and Timely Product Offers
Deploying analytic tools can’t be considered optional any longer. Analytics can help financial marketing teams tailor offerings to each potential borrower, if they leverage these tools fully. Teams that fail to do so will increasingly lose share.
The goal is to identify and fill specific individuals’ needs, rather than indiscriminately publishing product promotions and rates into ad slots on a digital banking platform.
The best financial marketers use analytics to foster those customer relationships — and augment them with the human element.
2. Provide Both Quick Loan Applications and Quick Decisions
In a moment of real need, account holders will often turn to their primary financial institution first. Naturally, they do this before seeking out a fintech alternative because they expect their existing provider to understand them and their financial behavior.
And they expect this familiarity will streamline the borrower experience. Unfortunately, this act of goodwill is too often squandered because the institution doesn’t have the technology and processes to act with the speed and flexibility that consumers expect.
Result: The primary financial institution says it’ll be a week or two before a decision is made on a personal loan. It’s “game over” right there, as far as the modern consumer is concerned. Opportunity lost, and pretty soon, consumer gone.
Streamlining the lending process is often the primary difference between completion and abandonment. Driving change in how lending decisions are made takes a serious level of introspection and internal advocacy on the financial institution’s part. Decision-makers have to advocate for internal process review. They need to emphasize automation and work with compliance officers to determine what elements of the lending process they can eliminate or consolidate and what must be retained.
For example, I work with a bank that used to require 38 fields of information for existing account holders to input on an online PDF form. The bank already possessed all the information, but couldn’t access it easily from its core. The bank typically took three weeks to issue a decision on personal loan applications involving just a few thousand dollars.
A VP-level employee began to press for process change and technology adoption. Today this bank requires only five simple responses about income, residence and loan purpose to process loan requests. The rest it pulls from its core to auto-populate the loan application, and a decision is automatically made based on refined business rules.
As a result:
- The bank now has a 90% completion rate for online applications.
- Average time to application is 7-10 minutes.
- Loan decisions can be made in just a few minutes, and funds can be deposited in a customer’s account that same day.
3. Stop Selling Products and Start Advising Consumers
The best financial services marketing strategies market everything but your financial services.
Content and information designed to educate rather than to sell is by nature a better method of selling. A bank will never stay top-of-mind if all it ever advertises is competitive loan rates — all it takes is one competitor undercutting you to undermine that strategy.
The alternative is staying top-of-mind by delivering content that:
- Educates account holders on the best time to apply for a loan.
- Tells them what information they should have at the ready.
- Explains how quickly they can expect to receive a decision.
- Tells them who they can call to ask for more information.
Educating consumers on everything involved in the lending process except for the loan itself prepares them for making the decision to pursue one.
4. Ensure Context and Continuity Through Every Interaction
Context ensures continuity in each consumer’s financial journey and bridges digital and physical channels.
Let’s say an account holder pauses his application for the personal loan he needs to turn his man-cave into a baby’s room because his wife went into labor a little early. He shouldn’t have to start from scratch when he swings by the closest branch on his way home from the hospital a couple days later. He needs to get started on repainting the walls and hanging baby toys, after all, not sit in front of a banker and fill out the same information for a second time. This consumer should simply be able to pick up right where he left off by walking into the branch, finishing his application with his local banker, then heading directly to the closest Home Depot.
Financial institutions with a good lending experience might meet one or two of these requirements. But as lending moves further into the digital channel, financial institutions will need all four if they are to compete with leading fintechs looking to poach customer relationships.