Today’s empowered borrowers have clear expectations about what they want in a lender. They are increasingly accustomed to a personalized digital connection that delivers the services they need on any device, at any time. Personal loans are the fastest-growing category in consumer lending, and customer experience will be the factor that makes one lender stand out from the competition. Here are five ways that lenders can meet borrower expectations and stand out from the crowd.
1. Know the Borrowers
In order to develop a borrower-centered strategy, lenders need to know who these people are. A younger demographic will have greater trust in a digital platform, whereas older borrowers will be more interested in face-to-face options at a bank branch or lending company. However, PWC found that over half of all borrowers up through the age of 72 prefer online channels for almost all steps of the loan process, including preliminary research, loan application, document submission, document review, and document signing. And the preference for digital channels becomes more pronounced for younger borrowers.
Getting to know customers as individuals is also essential. The analytic functions bundled into various digital applications can discern which customers produce the most significant value to the lender, and provide special premiums for those users.
2. Offer a Fast, Intuitive Application Process
Think in terms of simplicity. The easier it is to perform a transaction, whether that means ordering a pizza or arranging a ride, the more appealing that action will be to consumers. The PWC research found that younger borrowers are most likely to feel that the entire process of securing a loan was difficult. PWC warns:
“The younger borrowers of today will become the majority segment of the market tomorrow. The imperative is on lenders to provide the kind of experience that these customers have come to expect from other industries. If not, they may leave for a competitor with a platform that matches their expectations."
One key element of a pleasing online loan application is fast approval. Borrowers want answers quickly, and if they don’t get those answers, they will rapidly move on to other lenders.
3. Be Transparent
Everyone is a researcher today: People are accustomed to accessing contextual information about any transaction they’re thinking about entering. If a lender's website and mobile app offer clear tools that help the borrower calculate whether they can afford the loan payments, it will build trust. Borrowers want to understand the questions they should be asking, and then they want the lender to provide those answers openly. They want to know up front what all the fees will be, and what sources will be used to determine eligibility. They also want certain guarantees, such as the ability to lock in rates. And, they want to be able to compare loan products, so they understand all their options.
4. Provide Financial Management Tools
According to PWC, 30 percent of consumers have “never used financial management tools or financial advice services,” and in many cases, this is because they don’t have access to those tools. Providing this access can add value at relatively small cost, making customers feel that the lender is on their side. Some examples of such tools include payment reminders or the option to automate payments. Budget apps with visual graphs and charts are prevalent, along with expense trackers or envelope systems that allow users to save for specific goals. These planning systems fit in well with loan products, showing people a range of timelines for paying off debt. Consumers are also appreciative of anything that makes their credit scores and credit reports more accessible.
Add a Personal Touch
While many automated digital tools are attracting borrowers, it’s important to keep in mind that personal interactions are still valuable. PWC notes that a personal consultation about loan choices is in the top five services that borrowers said they wished for most. A supportive human contact can make all the difference in someone's decision to take out a loan, adding warmth to an otherwise streamlined online experience.
5. Provide Responsive Customer Service
A conversational tone that’s friendly and helpful may be more critical from a lender than from almost any entity with which a customer does business. The entire process of applying for a loan only arises because the borrower doesn’t have enough ready cash to do what they want or need, and the effort of describing why they deserve to be trusted can be stressful. One of the best parts of the job is approving clients, but denying some applicants will be inevitable. Maybe they don't fit your criteria, or it just isn't in the borrowers best interest to be getting a loan right now. But if they are treated with encouragement and respect, they may remember the lender as a potential ally, and come back in the future when they are better situated. The essence of an excellent borrowing experience is being human and communicating humanely.
A few ways that you can implement this kind of communication are:
- Live Website Chat
- Texting Support
Both of these tools allow for more natural and accessible communication between you and your customers.
A Growing Opportunity
In an era of surging personal borrowing, with balances reaching $120 billion in the first quarter of 2018 now, more than ever, opportunities to grow are knocking at your door. And the best way to take advantage of those opportunities? Putting a focus on being borrower-centered, offering a fast application process, being transparent, providing management tools, and having a responsive customer service team. These five practices will help you get the most out of your business in this coming year.