By: Barry Kirby, SVP, CuneXus
The following post is part of a series of blogs written by MeridianLink Partners who will be attending the MeridianLink LIVE! User Forum in May 2022. To learn more about the event, click here.
Consumers today are banking when, where, and how they want–whichever route allows them to reach their end goal in the most convenient way. It could be with their trusted financial institution, a fintech, or through a well-known big tech company, like Apple or Amazon. If a customer is in need of a loan, they will choose to bank with whoever can deliver the quickest and most painless process.
Banking is the only industry today that often leaves the heavy lifting to the consumer. This is especially true in lending methods where most loan application processes are obsolete and based on the idea that consumers will come looking to borrow funds. However, when following this approach consumers are often faced with lengthy applications and rejections, ultimately driving them away. According to industry anecdotes, it’s not uncommon for 70% to 90% of applicants who clicked ‘apply now’ to abandon the process before their applications are submitted to the financial institution for decision. This is not surprising, as we live in a world of technology that drives almost instant experiences and gratification, especially when it comes to money.
The digital experience has evolved, and consumers no longer need to go on a journey to get to their destination. In fact, a customer on a journey is anyone’s customer—meaning a customer on a mission to find a new credit card, loan, etc., will most likely find it elsewhere, especially as the competitive landscape continues to strengthen. If a seamless, digital journey is the goal for your bank or credit union, you’re already behind.
Financial institutions have more than enough information on their account holders to determine the products they qualify for. The idea of an existing customer or member being rejected for a loan should be archaic. Instead, financial institutions should be leveraging the internal and external data that is readily available to them to gain a holistic view of their account holders’ spending patterns, lifestyle, credit worthiness, etc. The financial institution can then anticipate each account holders’ needs and empower them with personalized access to loans across multiple product lines–before they begin the ‘search journey’ for credit. This proactive approach can ultimately end the customer journey all together, eliminating the chances of them looking elsewhere, while providing insight into their personal buying power and allowing them to shop with confidence.
Companies like Amazon and Walmart are already providing this type of convenience and immediacy and some savvy lenders have already started adopting alternatives that curate this white-glove service.
To remain a key role in their communities and in consumers’ financial lives, financial institutions must implement a business model where–via online banking–account holders are presented with a digital menu of products and services that are available to each appropriate consumer as soon as they log onto their online banking portal. This approach is much like what consumers experience with Amazon, as they put the consumer in the driver’s seat to choose what is best suited for their lifestyle, rather than making assumptions and placing each in buckets.
Lenders who deliver this “Perpetual Approval” strategy, meeting consumers before they shop with relevant products that are just a click or tap away, will address the need for a personalized, on-demand banking experience, and eliminate the traditional lending model of reacting to the customer once they have already expressed an interest. It also helps financial institutions eliminate the need for branch visits and removes the fear of rejection and confusion that can occur when applying through a traditional lending solution.
Financial institutions have a timely opportunity to equip their customers and members with every opportunity for financial excellence–especially as consumer spending returns to normal. A proactive approach that ends the customer journey once and for all will allow banks and credit unions to not only empower financial wellness, drive engagement and strengthen customer loyalty, but gain a competitive advantage and ensure that they are top of mind anytime consumers enter into a purchase market.